Creditfix - More Like Creditbreaker

pauljrowland

I have been in an IVA with Creditfix since 2018 as I amounted about £41k through reckless borrowing as a late teen and guy in my early 20s at the time. 100% My own fault and I’ll never deny that. 

Naturally debt became too much and I ended up seeking help and was recommended to Creditfix, who signed me up to an IVA. Brilliant, no - biggest mistake ever and I’m almost suicidal after the latest email. 

I am 36yo earning £45k. When the IVA was taken out, I lived in a flat I owned with a mortgage. Bankruptcy was advised against as I’d lose the flat - so 5 years of IVA and would be “debt free”. 

Two years in, the mushy stuff hit the fan and I lost my job, getting into arrears. OK, back on my feet - Creditfix wallop 2 years onto the arrangement. 5 Years is now 7…
I had to reach out to them at one point as the payment was far too much. Guess what, 7 years became 8.

Due to a few issues with the area - I took the police and council’s advice and moved house. Problem was, the flat was in negative equity so I was unable to sell, settling for renting it out and renting a place of my own. That went well - then Covid struck and the tenant stopped paying rent. I couldn’t evict them and even after a 6mo statutory break I gave them - still no rent. Of course the mortgage got into arrears and once the government lifted the restriction - I was forced to evict them and sell up. Finally got the sale last month and had to agree to a £9k shortfall. It was offered by a family member to cover this - however Creditfix said the terms of the IVA stated it had to be included. I asked a “senior insolvency advisor” there several times what this would mean - and they just said “ you will still be required to maintain your monthly contributions until the end of the plan.”. No mention of breach of terms or extensions etc. 
Guess what, the IVA has breached as £9k is more than 15% of the original admitted debt. They need to call a variation meeting and suggested I offer another 12 months extension otherwise it is likely to be rejected and fail. 

That’ll then bring the IVA to 9 years, and from what I’m reading - because I’m no longer a home owner, it may be extended further, pushing it well over a decade! So much for debt free in 5 years whilst paying back as much as you can. 

I am disqualified by the charity commission from being a trustee at the charity I do so love, plus every time I need money to pay for something like a car repair, I can’t afford it or unable to use services such as PaymentAssist as I’m insolvent. I once managed to get a loan (with permission) to pay for a repair - however due to my credit score - the interest was more than the loan!!
What would people suggest I do - as I’m considering letting it fail and accept a potential bankruptcy order? Im really worried that being  a single guy, renting, earning £45k will probably be subject to quite a strict IPA and I’ll probably lose my £6k car I’ve got on finance. 

I understand some people may say £45k is a good salary - however I’m scared that even with the cost of living taken into account, an IPA will be so high, I’ll still be unable to lead a normal life for the duration, given I originally should have completed in 3mo time. 

Thank you for your advice. 

sourcrates

Its unusual for the IP to make you bankrupt if you fail an IVA.

Many IVAs include a clause that allows for the provider or one of your creditors to make you bankrupt if you breach the terms of the agreement, however in practice they are unlikely to do so unless you own a property with substantial equity, have received a large redundancy payment or an inheritance that you had not declared.

Bankruptcy comes at a significant administrative cost and your creditors will not get paid until this has been settled.

Usually the creditors will just re-start collection activity, once it has officially failed, which can take about a year, until then you are protected.

You could then deal with each debt individually, its likely some have been sold, or assigned, so settlement deals will be a possibility, that would make life a lot more bearable for you.

pauljrowland

Thanks @sourcrates for the reply. 

If they were to start collections, I assume that would probably lead to CCJs and bailiffs etc.?
Some debts are only a few hundred pounds, but there is also £11k, £9k and £2.5k that’ll be the hardest to tackle. 

fatbelly

Two important points that the IVA pushers never mention are

• Many IVAs fail and many last more than 5 years. I'd say it's the minority that complete successfully at the 5-year point, though stats are hard to come by.

• Any change of circumstances, particularly a house sale, can have a big impact on an IVA, and you can end up paying more than the value of your debts.

I was going to make other points but sourcrates got there first.

Court action is unlikely in any event, and very unlikely (like zero chance) if you are making an offer either to pay in instalments or a lump sum

I just noticed about the latest problem - it seems they are assuming that you borrowed the 9k. Surely if this was a gift from the family member there is no breach

Andyjflet

Morning, what is your current total debt? What amount are you paying on the IVA, I'm guessing you also have to pay them? How much?

pauljrowland

Andyjflet said:

Morning, what is your current total debt? What amount are you paying on the IVA, I'm guessing you also have to pay them? How much?

The total debt is £51k and I am currently paying £261pm into the IVA. 
Been going since June 2018 and set to finish 2027/2028 after all the extensions. 

pauljrowland

fatbelly said:

Two important points that the IVA pushers never mention are

• Many IVAs fail and many last more than 5 years. I'd say it's the minority that complete successfully at the 5-year point, though stats are hard to come by.

• Any change of circumstances, particularly a house sale, can have a big impact on an IVA, and you can end up paying more than the value of your debts.

I was going to make other points but sourcrates got there first.

Court action is unlikely in any event, and very unlikely (like zero chance) if you are making an offer either to pay in instalments or a lump sum

I just noticed about the latest problem - it seems they are assuming that you borrowed the 9k. Surely if this was a gift from the family member there is no breach

The £9k was never received. 

I had to seek permission from Creditfix to sell as they had to remove the restriction on the land registry title. 

There was a £9k shortfall and it was then they suggested the terms state it needs to be included (as the mortgage was taken out before the IVA, and thus an included debt).

The breach they are referring to is that adding the £9k to an existing £41k arrangement, increases it by more than the allowed 15%. 

Andyjflet

So total payback on the IVA estimating 10 years is £135,720.

Have you spoken to any of the debt charities, Stepchange? Not sure if they will if you are in the IVA, what happens if you exit the IVA?

Meanwhile start re arranging your budget to overpay or at least put money away in anticipation of paying it down quicker.