Confused and unsure what to do getting an IVA

xcharlie87

Hi, I’ve spoken to the debt advice helpline and they’ve said my only option is to get an IVA. I currently have 16k on a loan and 14k over 4 credit cards. It’s just snowballed with getting a house,having a baby then covid hitting ( he was furloughed then changed jobs)  Me and my husband work full time and have stable jobs. We also have a little boy. At the minute everything is paid on time but leaves us with next to nothing for the month. 

The helpline said it would reduce all my payments but now I’ve been reading the forum posts I’m more confused than ever. My husband and I are both on the mortgage and it’s due for renewal in 3 years, as the Iva is 5 years does that mean we can’t get a new mortgage? Also I’ve read I have to have a separate bank account. At the moment we have a joint one. Do I have to separate all our finances?

sourcrates

Hi,

Be careful who you take advice from, most "debt helplines" are fronts for debt management companies who want to sell you a debt solution, in this case an IVA.

You should only take advice from one of the free advice organisations in my signature.


If your debt is approx 30k, and you are a homeowner, then only two debt relief options exist for you, they are either -

Debt management

or

IVA (Individual Voluntary Arrangement).


Debt management

This an informal solution, wear by you repay your debt at an affordable rate over a period of time, with hopefully all interest and charges stopped by the creditors, although this is not a guarantee.

Upside its informal, affordable, and you are not normally chased for your debts whilst in it, downside, it can take a long time to complete, you have no legal protection from court action, sometimes interest is not stopped.


IVA (Individual Voluntary Arrangement) 

IVA`s are designed for homeowners who cannot go bankrupt due to the asset they own (there house usually) it is a full blown insolvency solution which provides you with legal protection from your creditors, and lasts around 60 months.

Upside payments are fixed, unless income increases, you have legal protection from your creditors, which means no hassle of any kind.
Downside, can last up to 7 years dependant on circumstances, there is a re-mortgage clause in most IVA`s that requires you to re-mortgage in year 5, if that`s not possible, another year of payments is the norm.

Also bear in mind IVA are not that closely regulated, and a lot of cowboy operations exist out there, they are the number one mis-sold debt solution in the UK.

Your circumstances seen to suggest that an IVA may be suitable, in which case you should contact either National Debtline for further advice, or Stepchange debt charity.

All IVA`s attract fee`s, they are deducted from your monthly payment on an ad hoc basis, Stepchange has a specific department that deals with IVA`s, they charge the least in fee`s, there are lots of private debt management companies out there selling IVA`s, they should be avoided.


Any debt solution will leave negative marks on your credit file, that, I'm afraid, is unavoidable, most folk in debt can get re-mortgages by using a good broker, so don`t despair.

xcharlie87

We spoke about the debt management and because of the level of debt it wouldn’t be effective and not set in stone so creditors can change their mind. I’m just confused about the having to have a separate bank account. I’m with Santander at the moment and have no debt with them 

Grumpelstiltskin

Charlie Are you sure you spoke to one of the charities in Sourcrates signature?

xcharlie87

It was debt advice helpline.org that I spoke to I thought with the .org that they would be in partial

Grumpelstiltskin

Debt-helpline.org.uk is a trading style of Phoenix Insolvency Practitioners Limited. Registered in England and Wales. Registered number: 12437227. Registered office: South Court Business Centre, 3rd Floor South Court, Sharston Road, Sharston, M22 4BB.

They are not a charity  as Sourcrates says contact one of the charities in his signature.

sourcrates

xcharlie87 said:

We spoke about the debt management and because of the level of debt it wouldn’t be effective and not set in stone so creditors can change their mind. I’m just confused about the having to have a separate bank account. I’m with Santander at the moment and have no debt with them 

They are an IVA lead generator towting for your business, best to avoid such companies

As for the need for a new bank account, some banks are not insolvency friendly, and if they see your in an IVA, will close your account, some banks, not all, and I don`t have an exhaustive list to hand unfortunately.

Also as its a joint account, any debt solution you sign up to, will reflect on your partners credit file, so best to sever that link completely before you do anything else.

Another reason for a new account is because of having debt with the old bank, although not in your case.

To be fair, most debt advice services recommend you open a new basic bank account as a matter of good practice, just to avoid any issues as stated above.