New legislation - should I bother?

johnandkymberley

Hi all 

Me and my husband have a joint IVA - we had a lot of debt due to emergency medical treatment 

I’ve just read about new iva guidance since the cost of living is going up. 

At the moment we pay £100 a month and have never faulted. We understand we are in the poo basically. 

Our circumstances are the same apart from our children being older. We have in the past still used food banks and we have an amazing lady who visits us once a fortnight and brings us nappies and wipes etc. My dad is very judgemental about us. Saying how food banks are low of the low but now I’m being honest and saying we use them and I don’t care. In my retirement days, that’s where you will find me in a food bank to help others

anyway 

so shall we ring them or is £100 a low amount on an iva anyway? We have just finished our second year so I don’t think it would be an option that they would end our agreement early would it? 

Many thanks for anyones input

JCS1

How much are your debts and are you a homeowner?  Just wondering if IVA is the right solution for you.

johnandkymberley

Hi yes we are homeowners and it totalled about £22k, we pay £100 a month and going into our third year 

sourcrates

Err, you cannot have a joint IVA, as the name suggests "individual voluntary arrangement" is a singular affair.

What you actually have are two IVA`s running concurrently, but you just make the one payment from your household income, which is then distributed by your IP to your various creditors, it`s usually referred to as an "interlocking IVA" and they are not very well known about.

£100 is a very low payment for an IVA, any reduction in your payment can result in an extra year of payments, however the new guidance suggests that it can be for no longer than 7 years in total, which is still another 5 years for you, its unlikely your creditors would take what you have paid to date as full settlement, mainly because there won`t be much in the pot as yet.

The fee`s that are payable on your arrangement get taken first, so as you have just completed year 2, the pot will be virtually empty right now, its likely your creditors have not even had their first disbursement yet, so your debts will not have decreased one bit at this point.

I would try and keep this arrangement going if I were you, can you afford the £100 a month ?
You can by all means ask for it to be lowered, but keep in mind your arrangement will be extended if you do, and £100 is pretty close to what the minimum payment would be anyway.

johnandkymberley

Apologies, I’ve just got it in my joint file in my laptop but interesting that you say they aren’t very well known about. 

Yes we really do make the £100 payment we have never failed. 

I may not rock the boat 

Just out of curiosity, in your signature you say over a third of Iva’s fail? Do you mean payments aren’t made or down to other error? 

Also if you don’t mind me asking what’s your thoughts on spout loans? The agreement states remortgage 6 months before the end of the iva but on another site there is sprouts loans?  

sourcrates

IVA`s are commonly mis-sold to those who don`t really need them, they are designed for homeowners, who cannot go bankrupt, but are commonly sold to non homeowners, who would have been better off with a different solution.

Six or seven years is a very long time to maintain a strict budget, in order to meet your IVA payments, as such, a lot of them fail, as people don`t budget correctly, and end up unable to afford there other payments, and something has to give.

Sprout loans are a relative new comer to the scene, my IVA ended in 2013, long before this became an option.
I believe you have a choice of either the loan, the re-mortgage, or failing those two options, another year of payments.

I have seen threads from those who have gone down this path, so far they seem happy enough with there choice, opting for the loan would see your restrictive budgeting come to an end, but then on the minus side, you would have a loan to service, it depends what your disposable income is going to be, and what your circumstances are at the time I suppose.

RAS

I'd hang on in there and hope IVAs become the next mis-selling saga. 

johnandkymberley

The only thing that bothers me is the sprout loans are more money than the iva so in my case that would be worse. 

Maybe the last year of the iva review the sprout decision as to not have to remortgage. Would have to speak to our mortgage advisor on that I believe? Who is a very good friend so I trust he would be 1000% honest

So are IVAs commonly mis sold? Where has that come from? 

Learning lots today! 

RAS

Just look at the ads on TV and social media. Maybe even record the ones for your provider, introducer. Did you fully understand the charging regime? Times 2?

Then look at what would have happened if you had gone for DMPs?

johnandkymberley

I don’t think we could of gone for a DMP as we are home owners and our debt was about £29000

To be honest if you did me a quiz on iva terms I would fail, probably my own included if I was truly being honest with myself. But one payment of £100 a month to keep all the creditors and court dates away is such a good feeling. 

I have briefly googled mis sold iva and all I can find is the wrong amount that you pay. What I’m reading online £80-£100 is the lowest monthly amount though and we do make that payment.

It’s all too confusing for my brain! 

RAS

Go to one of the debt charity web-sites, details nicked from sourcrates.

For free debt advice, contact either : Stepchange, National Debtline, CitizensAdviceBureaux.

Put in your debt situation and see what comes up.

You must both be below the DRO limit but are excluded by homeownership
You could go for bankruptcy but would almost certainly lose the house.

That leaves IVA or DMP.

The fees for a IVA are about £9k (presumably each), so if you were to try and buy yourselves out (say an inheritance), you'd pay the original debt PLUS the IP fees of £9Kish. It's likely you'll be asked to re-mortgage in year five to increase the take for the creditors. 

There are no fees for a DMP, and your money goes to the creditors from day 1. You'd be expected to pay back the whole lot in theory. But after a few years, you might get some of the debt collectors to whom it's passed offering full and final settlements at a reduced rate. So you could end up paying less than the full amount. On the other hand, if everything hits the fan, you could reduce your payments below £100.