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Is an IVA right for me?

I have 32,000 pounds worth of debt and earn 33,000 a year. I’m currently on maternity leave which has forced the issue because I can’t afford the repayments. Payplan have suggested an IVA with repayments if 500 a month once back at work. On one hand, This seems higher than I have seen for many IVA’s but then again, is less than I pay in Loans monthly currently. My main concern is that I see many people who feel they should not have got an Iva on her and am afraid of making a mistake which will last for 5 years and destroy my credit rating. I have the Payplan income and expenditure but can’t find a way to share on here. It has got to a point where I am loosing sleep, as a teacher I would be horrified if anyone I knew found out about this and am just ashamed of the position I’ve got myself on, which is tainting my time with my baby. Any advice would be great, thank you!

Comments

  • sourcrates
    sourcrates Posts: 30,031 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Hi,

    There is a simple yardstick measurement to determine weather an IVA is suitable or not, if your a homeowner, your only other option is debt management, if your not, then bankruptcy may be better.

    32k will take a while to repay via debt management, possibly longer than an IVA would take, both options require you to have an income.

    IVA’s are suitable for people with assets to protect, such as a house, if you don’t own a house, go bankrupt, it’s quicker, easier, and less of a drag, and only lasts a year, you could do it while on maternity leave.

    The priority is to clear the debt, your “credit rating” is not your top concern.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • When do you go back to work?

    I would suggest a debt management plan in the interim. IVA's are meant for people who's financial circs are stable. You have a new baby, new expenditures etc. It would be better to go back to work and know what you costs are exactly before commiting to an IVA payment. Use a debt management plan in the interim so you are lower your monthly repayments and giving yourself time to adjust to being back at work after maternity and understanding exactly what is affordable. This also gives you time to know whether an IVA is definitely right for you without the pressure of trying to maintain the unaffordable minimum repayments.
  • I go back at the end of May, Payplan have said I would be able to have IVA payments of around £40 until I go back to work in May.
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Dont worry about your credit rating, you cannot afford any more credit until you have cleared the £32K, which is going to take years any way you slice it.

    How did you get into that amount of debt?

    How much where you paying while were working full time?

    What are the interest rates?

    For me, you need to owe double what you earn and have property to keep or If you cannot clear what you owe in 3 years due to low monthly payments or high interest then its a good shout to go down IVA road as there will be an end to it.

    What you dont want is to be in debt for 5+ years trying to chip away at it without good budget and a fund for unexpected things to pay for as it will take months to make inroads into a credit card balance only for it to be used up to replace a boiler or repair a car.
  • sourcrates
    sourcrates Posts: 30,031 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    I go back at the end of May, Payplan have said I would be able to have IVA payments of around £40 until I go back to work in May.

    Can you confirm if your a homeowner or not ?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • No I’m not a homeowner. At the moment I’m paying £600 a month on loans, 70 on financed items and would probably need to pay another 300ish on the credit cards which I can’t afford. I could just about afford the minimum payments when I go back to work.
  • The debt was incurred from things breaking, holidays and mostly general overspending keeping up with the joneses, with some gambling (I have now self excluded).
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    The debt was incurred from things breaking, holidays and mostly general overspending keeping up with the joneses, with some gambling (I have now self excluded).

    Personally I would see if you can increase your debt a little, stooze for a few months and build up a little sneaky pot and lock the cash away under the floor boards or in the loft and push the button on an IVA after defaulting for 3 months, also keeping the cash that you would of paid for christmas, then spend the next 5 years learning how to budget properly and live within your means. It doesnt matter that you cant have a holiday once a year if you cant budget from it or if you dont have a big tv, new car or iphone 12 or whatever.

    5 years of budgeting and living within your means will change the way you think about credit and saving.
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