Advice - is an iva a good idea for me?

glamb15

fatbelly said:

There are always two sets of fees and they are built in.

A full soa would still be useful.

But there's no harm in talking to some IPs and see what you think. Your £250 surplus should be enough to play with. You say 'I’m not looking at doing an iva as a way to only pay a small percentage.' But that is the big plus of an IVA. My rough figures were that you would repay 20p in the £

You do need to do your research and go in with your eyes open. Mwarby is right to state the negatives, because the IVA-pushers won't.

The problems I've seen are where someone wants to move within the 5 years. They are then surprised to find that they can do that but all the debts must be repaid in full, plus all the fees (and interest can be added). 

Thanks, think I was getting confused with no upfront fees. 

I realise that a big plus of the Iva is that I don’t pay anywhere near as much I was just pointing out that wasn’t the main reason, as I’m happy to own my debt and pay it all back if I can. the main reason it appeals to me is that it’s legally binding and I’ll stop being harrased. That’s good to know that my surplus is probably enough to get one moving. 

Would my wife being self employed be a problem? She has three years books. 

mwarby

fatbelly said:

There are always two sets of fees and they are built in.

A full soa would still be useful.

But there's no harm in talking to some IPs and see what you think. Your £250 surplus should be enough to play with. You say 'I’m not looking at doing an iva as a way to only pay a small percentage.' But that is the big plus of an IVA. My rough figures were that you would repay 20p in the £

You do need to do your research and go in with your eyes open. Mwarby is right to state the negatives, because the IVA-pushers won't.

The problems I've seen are where someone wants to move within the 5 years. They are then surprised to find that they can do that but all the debts must be repaid in full, plus all the fees (and interest can be added). 

Does that 20p in £ include the equity release ? IIRC there was over 100k of equity

mwarby

Depth_Charge said:

, No,Ive not seen a no fee IVA yet either. If anyone knows of such a thing could you please let us know who & where?

And if they find a money tree while they’re at it  

I suppose we can’t expect the IPs and associated staff to work for free. I’d strongly suggest if you find one, you look closer because there will be some fees somewhere

fatbelly

The equity release is a bit of a gamble. Historically most people can't release equity at the end and so do a further year. I haven't seen any current stats on this and it's definitely a question to ask a prospective IP.

The best article I have seen on this (as usual) is from Debt Camel:

https://debtcamel.co.uk/iva-equity-release/

My 20p ballpark figure was what the starting arrangement might say, based on £250 per month. Just to show that this case would be suited to an IVA on the figures given.

To comment on a couple of other points -

• self-employment is not a problem
• the protection from harassment angle is to my mind over-sold by IPs. It is true, but once a debt management plan is up and running, few people have harassment issues from creditors. You might get the occasional odd letter.

I post on this board because I do a lot of DROs in my job at Citizens Advice. My clients are rarely suited to an IVA so I cannot claim to be an expert in them. Anyone thinking about one should do loads of research first.

mwarby

It's not a problem when high LTV is common, and the housing market has taken a tumble, as there is little equity and little appetite to lend. This has been the case for a while due to the pre 2008 boom and following cautious housing market

In the OPs case there will likely be equity, of course we can't predict how easy it would be to get a mortgage or secured loan on 5 years, and what the equity situation would be then.

All I'm saying with a good chunk of equity now its something to bear in mind, you might get lucky and just do a 6th year, or you might get saddled with secured loan or remortgage

glamb15

Surely the Iva and defaults would still be on my credit file after 5 years making it near on impossible for me to remortgage for the remainder?

fatbelly

glamb15 said:

Surely the Iva and defaults would still be on my credit file after 5 years making it near on impossible for me to remortgage for the remainder?

I think it's the 'secured loan' clause that has muddied the waters a bit. I would tend to agree with you. But in my time here I have seen very cautious lending and very reckless lending. Who really knows where we will be in  2025?

mwarby

glamb15 said:

Surely the Iva and defaults would still be on my credit file after 5 years making it near on impossible for me to remortgage for the remainder?

I purchased a house at 90% LTV at 5 year point. So a mortgage with the right lender if affordable is possible, especially if you have a good internal score, by always paying mortgage on time etc. 

With secured loans there were many keen lenders because they could charge rather more than standard mortgage rates(I suspect in some cases there maybe a nice kickback for the nice IVA company that arranged it to)

Suseka97

glamb15 said:

I realise that a big plus of the Iva is that I don’t pay anywhere near as much I was just pointing out that wasn’t the main reason, as I’m happy to own my debt and pay it all back if I can. the main reason it appeals to me is that it’s legally binding and I’ll stop being harrased. That’s good to know that my surplus is probably enough to get one moving. 

You've had good advice here, but having been someone whose been in a DMP with starting debts around the £90k mark over 14 creditors/accounts, I just wanted to add some further thoughts.  As you've said, your main concern is the legally binding aspect of an IVA and clearly you are keen to avoid being 'harassed' by your creditors.   Well, in my experience of the DMP - once that was up and running then I had no problems of that nature across the 5/6 years the DMP ran.  

Yes, at the start you do get those computer generated letters which do cause a bit of worry due to the terminology used - warnings of defaults and further action, but that's just part of the process.  When you stop making your contractual payments then it just triggers a process whereby you'll get letters asking you to pay those missed payments, then it moves into warnings about 'further action', then it'll start saying things about 'may result in default' and so forth.  Interestingly those computer generated letters tend to be accompanied by a separate piece of paper offering you advice about what to do if you are experiencing financial difficultly, pointing you in the direction of the debt charities - often StepChange in my case.

At the time I was in a job where Bankruptcy and possibly IVA (although I never properly looked at that) would have been looked at unfavourably, but my main reason for opting for the DMP was because it was an informal arrangement and basically unless I chose to tell anyone - it remained between me and my creditors (and eventually the DCAs). 

I spent close to 5 years on the DMP and then I started to negotiate full and final settlements and ended up wiping off around £15k of debt that way - but that's another (long) story.

Anyway, all I'm trying to say is not to just write-off a DMP - it's manageable and you are more in control of your finances that way.  If you were to follow the DMP route, you could pretty much set that up to pay the £250 per month and then, if circumstances allow, you could up those payments and clear your debts sooner if you wanted.  Or, alternatively - if your financial situation worsened (say, for instance you lost your job for a period of time) then you could adjust your DMP payments until you were re-employed.  

For me the benefit of a DMP was flexibility and ability to manage my own finances to suit my circumstances as I journeyed though the DMP - to not be held accountable to an IP.  I started the DMP not knowing about this forum and had I known then, what I know now (or had the benefit of its support) I would have done it much sooner (with less debt) and fewer sleepless nights.

The best thing to do is properly research all these options and make the choice that's right for you  - not because an IVA company tells you so.

fatbelly

That's a really helpful post from Suseka - nothing beats first-hand experience.