Potential IVA

madeye25

I have been recycling 0% credit cards for just less than a decade, it has now caught up with me.

I have had to take a significant pay cut at work (around 20%) and my other half is critically ill and been signed off work for 12 months (as of April 2024), she gets sick pay but it reduces over time.

I have approx £51,000 debt across 8 credit cards and 2 loans. I have no savings and no assets.  The car I have is a company car, I do not own it, the contract is between the leasing company and my employer.

I have a mortgage of £278,000 on a property that we paid £315,000 for in 2021, it is probably worth £350,000 now.  In 2023 we took out £30,000 to ease the pressure on our unsecured debt, which didn't really help.

I am employed full time and paid PAYE monthly approx £3,600.  My bills amount to £2,400 (mortgage, electric, council tax etc) not including shopping etc, I pay child maintenance of £400 per month.  Once I include shopping and other expenditure I don't have any money left.

My partner previously contributed around £400-£500 per month which she will no longer be able to do. It is possible she can contribute a small amount each month based on the ill health benefits she receives and her own bills and debt are covered,

The £51,000 debt costs me £1,300 a month.

So for a few months now my expenditure exceeds my income and the only way to afford to pay it all is to use new 0% balance transfer credit cards, pretty much every month.

However, as you may have guessed, the 0% offers are no more.  Interest is now being applied, to the loans and some credit card spend, give it a few months and I will completely drown as the minimum payments increase.

I haven't missed a payment yet on any of these debts, but in a short space of time I will, I won't be able to stop it.

As I understand it, a DRO isn't possible as I have a mortgage.  A DMP may not be practical as there is a large debt and very little left each month to pay - is an IVA the most practical option?

fatbelly

Potentially yes. The question is how much do you have available to pay into the IVA?

If you do a statement of affairs it should give the answer

https://www.lemonfool.co.uk/financecalculators/soa.php

ManyWays

I am employed full time and paid PAYE monthly approx £3,600.  My bills amount to £2,400 (mortgage, electric, council tax etc) not including shopping etc, I pay child maintenance of £400 per month.  Once I include shopping and other expenditure I don't have any money left.

In that case, there is no money for IVA payments, is there? You may think that £300 is less than the £1300 you are currently paying, but it sounds as though £300 isn't sustainable over a long period of an IVA. Lets see your statement of affairs. 

Dont rush into anything here, it is better to tell all your creditors now that your wife is ill and offer a token £1 a month payment. 

If your wife gets better, you are in a very different situation. If there is any chance that she could get worse and die where you will inherit her half of the house, then you dont want to be in an IVA unless the IVA is clearly worded to exclude that inheritance as an asset. 
 
What is your current mortgage rate and when does your current fix end? 

madeye25

Apologies for not posting sooner, I appreciate the responses. 

I got approved for an IVA earlier this week. All creditors either voted to approve with minor adjustments or they didn't vote at all. 

I will now pay £150 back each month for 6 years and will need to attempt a remortgage towards the end of the IVA. 

It's clear that it's in the interests of the companies who refer you for an IVA, or the IVA companies themselves for you to take an IVA as they get their commission. 

They were really helpful, the whole premise of an IVA is that it is affordable for the 6 year duration and they did help simplify some of the more complex elements of my situation. 

The £150 a month is affordable, my house is safe, my debt will be cleared, yes I may pay more back if my income or situation changes but it's far better than the mess I was in.

I look forward to longer having the temptation of credit cards. 

If anyone reading this is in a mess, send me a message or reach out. Seek help, there are people who can make complex situations become manageable. 

fatbelly

Make sure you keep a note of this thread, as people like me will have subscribed to it. Let us know how you get on as time passes.

IVAs are designed for people with large debts, some but not much surplus income, and an asset to protect so it suited you.

Your creditors will not get much back. If you continue at this payment you will pay 9k in and the IP will take half of that, so maybe they will get 10p in the £ or a bit less. That'the was this insolvency solution works

sourcrates

If you have assets to protect, such as a house, then an IVA can work well for you, but not so well for your creditors.

Judging by the lack of enthusiasm to agree to it, can`t really get exited about 10p in the £ can you, however that is not your concern, you managed to convince the required 75% of creditors by value of debt, that this was the best way forward, so I wish you well with it.

Mr_Blue52

madeye25 said:

Apologies for not posting sooner, I appreciate the responses. 

I got approved for an IVA earlier this week. All creditors either voted to approve with minor adjustments or they didn't vote at all. 

I will now pay £150 back each month for 6 years and will need to attempt a remortgage towards the end of the IVA. 

It's clear that it's in the interests of the companies who refer you for an IVA, or the IVA companies themselves for you to take an IVA as they get their commission. 

They were really helpful, the whole premise of an IVA is that it is affordable for the 6 year duration and they did help simplify some of the more complex elements of my situation. 

The £150 a month is affordable, my house is safe, my debt will be cleared, yes I may pay more back if my income or situation changes but it's far better than the mess I was in.

I look forward to longer having the temptation of credit cards. 

If anyone reading this is in a mess, send me a message or reach out. Seek help, there are people who can make complex situations become manageable. 

You may find that you will be paying the IVA Supervisors fees first prior to your creditors. Depending on how much your repayments are, it might be a while before these fees are paid. 

sourcrates

All fees are deducted from your monthly payments, by your supervisor.

At certain points throughout the arrangement, they will also make disbursements to your creditors, once all payments are made, and all fees/charges/interest etc etc have been collected, payments disbursed, and everything is wound up and found to be satisfactory, you will be issued with a certificate of completion.

Mr_Blue52

sourcrates said:

All fees are deducted from your monthly payments, by your supervisor.

At certain points throughout the arrangement, they will also make disbursements to your creditors, once all payments are made, and all fees/charges/interest etc etc have been collected, payments disbursed, and everything is wound up and found to be satisfactory, you will be issued with a certificate of completion.

In my previous job, I worked in a debt recovery department for a high street bank and dealt with IVA firms.

I remember one firm that would collect their fees from the debtors repayments prior to paying the creditors. Sometimes we had to wait around 18 months for them to start paying us a dividend.

fatbelly

Yes, that's probably typical. It could easily be longer.

madeye25

My IVA agreement states a breakdown of how much the IVA practitioner is paid and how much my creditors. 

My creditors barely get anything for the first two years.