IVA vrs real cutting back

cantfindanamenotin

Hi. I hope for no judgement but need to post on a place where people have worked hard to get out of debt. I have large debts (which I do pay monthly - so not any defaults and not at maximum credit limits). However my situation is very very tight and am very close to an IVA (spoken with company who are putting together a proposal). I thought this was a great idea reduce repayments by £250 and write off the rest. But I did feel a bit more doom and like an IVA was the only option when I spoke to a few companies that do IVA's really sick and panicked. Like it was the only option. Slowly as I am cooling off I feel that in essence these companies are businesses and it literally pays for me to get an IVA with them (they get a piece of my payment). My partner thinks the better way is for us truly cutting back. When I spoke to the IVA people I felt like I'm living on credit to survive but as my partner pointed out a large part of this is due to us not truly compromising or budgeting (for example he pointed out rather then a case of no food in the fridge food is expiring and being thrown), we sometimes get stupid things we don't need and do stuff with the kids and rather then budgeting put on credit cards etc and basically it's spiralled. He thinks rather then get an IVA we really live to a budget and concentrate on getting down the credit cards and paying the loan. He thinks our job situation could improve (secondary work - and we can get ourselves out of debt and maintain our credit rating) he thinks we should try and do this first and if by April we really haven't improved then look at debt management plans / IVA's. I just want peoples opinions on this. And also if you think I need to try the option of strict budgets tips or signposting to threads and blogs that can help me would be great. My brother said for me to get an IVA but he has one himself and isn't a responsible person (his words were to get one and rack up more credit while I wait) . Also if I decide not to can the IVA company fine me for wasting their time. They haven't mentioned a cost if I don't go through with this but I'm a bit worried.

sazaccount

Hi,

I didn't want to read and run, I suggest if you haven't already speak to a debt charity like payplan or stepchange and see what they say.

fatbelly

cantfindanamenotin wrote: »

in essence these companies are businesses and it literally pays for me to get an IVA with them (they get a piece of my payment)

Exactly. They actually get all your payment for an appreciable time.

So please could you post a statement of affairs - link is to a calculator. Please format for mse. We'll talk you through the different options.

IVAs have their place but they are monstrously mis-sold and poorly regulated - particularly the IVA lead generators.

Even stepchange and payplan are not blameless in this.

cantfindanamenotin

When I looked at step change this was not a route they thought I needed. I know it sounds odd but near the end of my IVA call on Friday it felt I really was being sold something. After bills and debt payments I have £500 to cover food etc. Compared to some people who actually have nothing or minus nothing I am starting to think that is ok IF I change the way I live (and I'm not paying minimum on credit cards I do chuck a bit to try and bring it down and my cards are on interest free for another 20months ). I think by taking real tips off this site and others and really being responsible I can do this.this thought excites me where as IVA really upsets me

enthusiasticsaver

I would always opt for cutting back and living in budget unless there was no alternative. Why not post an soa?

clairebeth

You're going to have to cut back even if you take out an IVA, to stop yourself getting into debt again. So start doing it now and get yourself out of this situation before it gets worse, what have you got to lose by trying?

Post a Statement if Affairs here so people can give you more detailed advice. You can do this!

cantfindanamenotin

Thanks . should have come here first . What put me off about the IVA is all the if you work over time you can earn x amount and after that you can only keep 10% . I feel like at the moment I can with effort get in control and if I do get overtime or extra money I can put it towards debt or of I need to get more hours to pay for something (like car repairs) I can do that. I think I can be debt free by 2024 (the final loan) and with dedication have had the cards paid offf in the next 20 months . And this is where I don't think the IVA is the best option for me as that would be the same amount of time but leave me with a bad credit rating (which I know isn't the end of the world). Since deciding that something needed to be done I dropped my first shopping bill to £80 (from 100!!!) And this week my online shop came to £55 so I feel I have a chance. But speaking to IVA companies they (possibly unintentionally) made me feel that it was the only thing to do. I will do my budget and post it and I think I need to try and do this myself and if it's unmanageable look at DMP through a charity and leave the IVA I think that should be the last option. Thanks helps to talk with people who are interested in trying to get out of debt or have been through this

fatbelly

cantfindanamenotin wrote: »

But speaking to IVA companies they (possibly unintentionally) made me feel that it was the only thing to do.

Not unintentional - you were talking to a salesperson, not a debt adviser.

cantfindanamenotin

I said I wasn't sure now was the time to go for an IVA and maybe I should wait. They said if I continued to borrow it could be seen as fraudulent and if I later went for an IVA I would probably be refused. With that in mind I felt IVA was the only option (but in fairness to me I set a goal in September not to use any cards and stuck to it despite my partner having no work all month - as he agency works) We are at the point where they are drafting a proposal.... So think I would be safe to say please don't continue . I haven't signed anything to say go ahead. Surely a cool off period applies ?

normanna

You just need to call them up and tell them you've changed your mind. Nothing will have gone to your creditors yet if they're just drafting the proposal.

Suseka97

cantfindanamenotin wrote: »

I said I wasn't sure now was the time to go for an IVA and maybe I should wait. They said if I continued to borrow it could be seen as fraudulent and if I later went for an IVA I would probably be refused.......

Another 'sales' tactic - "... do it now, or else it'll be refused...." yeh, right. An IVA company is not going to refuse anyone, because they make money from it.

From everything you have said - its clear you have a very good chance of getting out of your current poor financial situation by cutting back and budgeting properly. You should set up a spreadsheet, or simply use a notebook, to track your spending habits and you'll easily see where you can cut back. Also, if you earn extra - then start throwing that at the highest debt APRs first (a method referred to as snowballing).

Your partner's suggestion was spot on - do the cutting back first and see where that gets you.