Leave IVA?

Smiler2214

Has anyone left their IVA to deal with creditors directly? I entered an IVA end of  2019. At the time I was in  just over 10k  of debt with about 5 different creditors. The creditor I owed the most to was a credit card company for 5k. In hindsight I think I rushed into an IVA without considering any other options. My mental health was at an all time low due to my money worries and when the  adviser told me my 2 options were bankruptcy or an IVA after going through my finances and that they would deal with my creditors on my behalf in exchange of £200 a month it felt like the perfect solution. Fast forward almost 3 years later I have now taken a second job and I am in a better position financially. I have worked out what I am paying to the IVA company I am pretty much paying back everything I owe. I really don't want to be stuck in an IVA until November 2024. The IVA company I am with takes a cut out of every payment I make and I know for certain I won't owe them anything if IVA fails. I checked on my credit report and I owe just over 5k. Any advice greatly appreciated.

sourcrates

Yea you were badly advised to take an IVA for a debt of 10k.

Pretty sure you were talking to a debt management company who likely got a sweetener for flogging IVA`s, its a familiar story Unfortunatly.

All IVA`s attract fee`s, its just that an IVA was not right for your circumstances, they are meant for homeowners with massive amounts of debt, who cannot go bankrupt, I doubt you fit that category.

If you stop paying your IVA, the debts that remain will just return to collections again, and you can make whatever arrangements are necessary at that point.

It can take a while for the arrangement to fail though, 6-9 months is not uncommon.

fatbelly

So if you want to do a self-managed dmp, stop paying the IVA and wait for it to fail.

See who comes out of the woodwork and what balances they quote.

In the meantime keep saving your £200 into a separate pot.

You were badly advised - £200 would have cleared 10k in 50 months so a 60-month IVA made no sense except for the IP who was collecting their fees. They need to be better regulated.

Smiler2214

Thank you so much for your replies!
I'm so cross with myself for jumping in with an IVA :-(  At the time  Christmas was coming up,I started getting declined for credit and I hadn't told my husband about it. He still doesn't know the whole extent of it all. Up until then I had always kept my head above water so I was new to being being in debt and when they promised me the letters and phone calls would stop if I signed up I jumped at the chance. 
Will I need to contact the iva company or should I just stop payments? I really can't face it if they pressure me to stay in an iva. 
Thanks again for your replies, really appreciate it. 

Maskface

At its worst I owed around £17,000 but was never advised to enter an IVA. I spent 8 years doing various repayment plans through Stepchange with the odd token payment plan here and there. By last year it was still only down to around £12,800 so I cancelled my arrangement with Stepchange and approached the creditors to see what the least they would accept in full and final payment would be. They accepted £6,800 and even then were prepared to accept a reduced amount in installments. There are always options. I was amazed how willing the creditors were to reduce the debts. For example I owed one £3,500 and they accepted £1,200 in full and final settlement. Just 7 months after that I now have several credit cards and an overdraft which of course I'm managing very carefully not to get in trouble again. I'd approach the creditors and ask what the minimum amount they will accept in full and final settlement is and then decide if it's worth dealing with them direct. For me it was the right thing to do and halved the debt. 

funny_bunny

@Maskface: Just a quick question - I heard defaults drop off credit file afte 6 years but what happens to the remaining debts you are  still paying to OC/DCA, maybe through SC or self-managed DMP? Do they still show on credit file or disappear too? Thanks in advance.

Maskface

The debt collection agencies listed the default from when I originally defaulted with the original lenders, so by the time I had made settlements most of those had already dropped off of my credit file. The rest show as partially settled. If you enter into payments with them directly they still update your file to show that payments are being made.  What I can tell you is even after trashing my own credit history there was nothing bad enough showing 8 years later to stop me getting 7 credit cards, an overdraft and 4 catalogues six months after settling all the historic debts. I honestly never thought I'd ever be back in this position again but it didn't leave my credit file in the tatters I expected and I'm now back in the place I was before I messed up. 

sourcrates

Smiler2214 said:

Thank you so much for your replies!
. 
Will I need to contact the iva company or should I just stop payments? I really can't face it if they pressure me to stay in an iva. 
Thanks again for your replies, really appreciate it. 

Stopping your payment is the first step in the dance, then write them a good old fashioned letter explaining how you feel you were mis-sold this arrangement, that it was not in your best interests, and that you felt pressured into accepting it in the first place.

From then on, obviously keep an eye on what they send you, but otherwise you can just ignore them.

It will take a while to filter through to creditors what has happened, and eventually collection letters will start again, basically round them up, see what they will take in settlement, if you have the funds, or make other DMP arrangements, its your choice at that point.

funny_bunny

Maskface said:

The debt collection agencies listed the default from when I originally defaulted with the original lenders, so by the time I had made settlements most of those had already dropped off of my credit file. The rest show as partially settled. If you enter into payments with them directly they still update your file to show that payments are being made.  What I can tell you is even after trashing my own credit history there was nothing bad enough showing 8 years later to stop me getting 7 credit cards, an overdraft and 4 catalogues six months after settling all the historic debts. I honestly never thought I'd ever be back in this position again but it didn't leave my credit file in the tatters I expected and I'm now back in the place I was before I messed up. 

Well done, you have made it through. 
We all live and learn.

sourcrates

Maskface said:

I was amazed how willing the creditors were to reduce the debts. For example I owed one £3,500 and they accepted £1,200 in full and final settlement. Just 7 months after that I now have several credit cards and an overdraft which of course I'm managing very carefully not to get in trouble again. 

There is a very good reason why they accept such low settlement offer`s, when your debt is sold, its sold as part of a bulk purchase of accounts, the actual figures are a closely guarded commercial secret, but they pay around 11-15p in the pound for these accounts, so they buy them for peanuts, and then come after you for the full face value.

But that leaves them with miles of wiggle room you see, should you make them a settlement offer, of course they may hold out for higher figures, its how they make their money after all, but occasionally if your circumstances are such that no realistic offer can be made, they will drastically reduce or even write off debts, dependant on your situation.

funny_bunny said:

@Maskface: Just a quick question - I heard defaults drop off credit file after 6 years but what happens to the remaining debts you are still paying to OC/DCA, maybe through SC or self-managed DMP? Do they still show on credit file or disappear too? Thanks in advance.

The defaults may drop off your file after 6 years, but any remaining debt will still legally exist.

It`s just that no further status reports are made on any defaulted debt older than 6 years, so no public record of that debt will be seen after it drops off your file.

funny_bunny

@sourcrates I was told by an advisor at CAB that oustanding debts (even on DMP) will continue to appear on credit file 6 years after the last default until settled, and that confused me.

It's much clear now, and thank you as always.