I have been offered an IVA..

Frank_Ducks

Hi, earlier today after the dreaded look at my online bank account I decided to try and find some help online, I got as far as a debt help website where I entered my details and received a phone in under a minute of giving my details. The girl I spoke to was great and took down my details, how I got into debt etc and then I was passed to a second person who went over the details and gave me some options - bankruptcy which he advised against, a debt management plan and an IVA.
My debt in total is 10k, I make all the payments with no problem but my income after tax and insurance is not a lot. I have two children and I privately rent a 2 bedroom flat just so I could have my children overnight. So I sought out advice and as stated was offered the IVA. I had to end the call as I had an appointment but in the meantime, I came across this section of the forum and have read a couple of posts about IVA and I'm thinking that this is not for me, my brother who is very financially intelligent advised me against it saying I'd be better off taking another loan to pay all the loans and just have the one payment. I won't qualify for a loan now, my credit score is "very poor" so that's out of the question. I'm in the mind that I should just grit my teeth and get on with things as they are and forget about the IVA. Would anyone think this is the way to go?


Apologies for the diatribe! 

kimwp

What was the name of the debt help website? It sounds like they make money selling IVA's.

RAS

An IVA is suitable for people with over £30K in debt and a house to protect or another significant asset like a yacht. The fees are generally about £9K which can be added to the debt if your income rises or you get a windfall. And a third fail. They are also permanently recorded in the Insolvency Register. So, an IVA is not suitable for you.

There are dozens of companies who earn money recommending IVAs to people for whom they are not suitable, from the introduction fees they earn by referring those their adverts attract to Insolvency Practitioners. There is a bit of a crack-down on some whose names mimic those of the three debt charities; Stepchange, Nationaldebtline and CAB, or make false promises. 

For free non-judgemental debt advice, contact either : Stepchange, National Debtline, or CitizensAdviceBureaux.

What exactly you need is difficult to tell from you comment about "making all the payments with no problem but my income after tax and insurance is not a lot." But we can also guess that a consolidation loan is not a good idea, even if you could get one. 

Do a statement of affairs (SOA) and we can help you decide how to tackle this. SOA CALCULATOR (for DFW newbies): SOA Calculator

Meantime, tell the IVA provider you are going to speak to one of the debt charities and cancel their involvement. For the record IF an IVA was the most suitable option, Stepchange have the lowest fees.

Frank_Ducks

kimwp said:

What was the name of the debt help website? It sounds like they make money selling IVA's.

The company is called Debt Advice Line. They were helpful but I had not done any research until I came here.

sourcrates

Frank_Ducks said:

kimwp said:

What was the name of the debt help website? It sounds like they make money selling IVA's.

The company is called Debt Advice Line. They were helpful but I had not done any research until I came here.

The company you spoke too are what`s known as a "lead generator" for an Insolvency Practitioner-

"Debt Advice Line is a trading style of Debt Movement UK Ltd who propose and administer Individual Voluntary Arrangements (IVAs)."

So, you would have been speaking to a commercial company, who are a business, and sell debt solutions for a living.

So, their "advice" is not always tailored to your specific circumstances, but more to what they want to sell you, which is usually an IVA, as they make money from the fee`s that are charged.

They also sell DMP`s as well, again chargeable monthly.

These companies do not employ debt advisors, they employ salespeople, when they go through your situation on the phone, all they are doing is seeing if you meet the criteria for an IVA or a DMP, then attempt to sell you whichever one they are flogging that particular day.

Companies such as this should be avoided at all costs, debt advice should only be taken from someone who is not trying to sell you anything, such as the debt charities listed in my signature.

FYI, an IVA is only suitable for a very small percentage of people, they were designed as a bankruptcy solution for those who had massive debts, but also had an asset such as a house to protect, so unless you're a homeowner with 30k plus of debt, then an IVA isn't for you.

fatbelly

Good advice above, and if you could post a statement of affairs we could look at the detail.

There's absolutely nothing in your post that would indicate that an IVA would be the best way forward

What makes you say that your credit score is poor? Have you missed any payment in the past two years? Do you have any defaults or ccjs on your record? Are you not on the electoral roll? Have you moved addresses a lot?

GhibliFan

IVA's were on Rip-Off Britain the other day.  Look out for high fees and a "Windfall" clause. Poor man on TV inherited a bit of money from his Mum and hadn't noticed a Windfall Clause, they wanted 15% of his inheritance, plus what he owed and he'd already paid thousands in fees to them. Scoundrels.

Apparently the Windfall can be any unexpected money you get, even overtime payments.  Outrageous IMO,

fatbelly

GhibliFan said:

IVA's were on Rip-Off Britain the other day.  Look out for high fees and a "Windfall" clause. Poor man on TV inherited a bit of money from his Mum and hadn't noticed a Windfall Clause, they wanted 15% of his inheritance, plus what he owed and he'd already paid thousands in fees to them. Scoundrels.

Apparently the Windfall can be any unexpected money you get, even overtime payments.  Outrageous IMO,

I commented on that here

https://forums.moneysavingexpert.com/discussion/6395827/iva-on-bbc-09-15

sourcrates

GhibliFan said:

IVA's were on Rip-Off Britain the other day.  Look out for high fees and a "Windfall" clause. Poor man on TV inherited a bit of money from his Mum and hadn't noticed a Windfall Clause, they wanted 15% of his inheritance, plus what he owed and he'd already paid thousands in fees to them. Scoundrels.

Apparently the Windfall can be any unexpected money you get, even overtime payments.  Outrageous IMO,

The pitfalls of an IVA are well known within the boundaries of this forum, however not so much in the real world.

Those who have never found themselves needing a debt solution before just tend to use a search engine in the first instance, and click on the first thing that comes up, which unfortunately, is usually a debt management company flogging IVA`s, as they pay to be at the top of the list.

The fact other solutions may exist, including those you don`t need to pay for, eludes most people, it`s only once they find their way to a forum such as this that the full story gets told.

The industry requires a regulatory shake up, banning private DMC`s completely, and making debt solutions only available via the debt charities (for DMP`s/IVA/DRO), and Government (for Bankruptcy), cut out the fee charging middleman altogether.

EssexHebridean

Frank_Ducks said:

Hi, earlier today after the dreaded look at my online bank account I decided to try and find some help online, I got as far as a debt help website where I entered my details and received a phone in under a minute of giving my details. The girl I spoke to was great and took down my details, how I got into debt etc and then I was passed to a second person who went over the details and gave me some options - bankruptcy which he advised against, a debt management plan and an IVA.
My debt in total is 10k, I make all the payments with no problem but my income after tax and insurance is not a lot. I have two children and I privately rent a 2 bedroom flat just so I could have my children overnight. So I sought out advice and as stated was offered the IVA. I had to end the call as I had an appointment but in the meantime, I came across this section of the forum and have read a couple of posts about IVA and I'm thinking that this is not for me, my brother who is very financially intelligent advised me against it saying I'd be better off taking another loan to pay all the loans and just have the one payment. I won't qualify for a loan now, my credit score is "very poor" so that's out of the question. I'm in the mind that I should just grit my teeth and get on with things as they are and forget about the IVA. Would anyone think this is the way to go?


Apologies for the diatribe! 

Hi OP - others have dealt with the rest of your post already but I'll focus on the bit in bold. 

I'm going to question whether in fact your brother is as financially intelligent as you believe I'm afraid - he may indeed be very good at managing money when there is sufficient of it to meet all needs, but consolidating debts all too often leads to someone ending up in further debt along the line, so this suggestion isn't really the greatest, albeit I do appreciate that he was trying to offer a solution. The key thing for someone in your position is to accurately establish how the debts have occurred - whether it is a single event that has caused the issue - borrowing to pay legal fees for a divorce for example - or whether it is a cumulative thing that has crept up over time as a result of having no real budget to live by and as a result spending more than is earned. Once that is known, then formulating a plan to deal with the debts (possibly by means of a DMP through one of the free debt charities as mentioned previously) alongside a proper well structured monthly or weekly budget should help you get things back under control. 

For clarity - the issue with consolidation is that all too often it's used as  a stacking plaster - those that go that route never work out the cause and, worse, also often never close off the other lines of credit they have previously relied on. First the "extra money" created by the consolidation gets swallowed up in routine spending, and then that spending creeps back above the level of available income to cover it - then the credit cards come back out, and before the person knows it they have the consolidation loan plus the same about of debt as they started the whole process with all over a again, and is back in the position of being unable to make payments. "Going through the process" in a DMP gives a far better chance of someone learning from their previous situation, and avoiding more debt in the future.

MEM62

Frank_Ducks said:

my brother who is very financially intelligent advised me against it saying I'd be better off taking another loan to pay all the loans and just have the one payment. 

Or maybe he isn't, as alluded to by @EssexHebridean.  You cannot borrow your way out of debt.  The advice you have received from others on this thread is much more astute.