Do I do an IVA?

Wannabehousebuyer

Hey guys, woild
live your thoughts on this, as all of your advice blows my mind every day! 

I am shared ownership 50% - zero equity. Single 35 

I have about £35k debt including unpaid council tax that has gone to ballifs to take goods. I got in a spiral when I lost my mum and just borrowed as my income went down (commission based job). According to pay plan and step change would take 19 years on a DMP and they believe IVA is my only route out. 

My sticking points: 

being 35 I will likely have kids (if I do have them)  before it’s over which means I can’t move on an IVA and in a one bed flat- who knows 

Being commission based I will have to give 50% of my earnings over (above the 10% grace) if I start to be earning more money - that’s a hell of alot
to hand over (I realise it’s less than the debt. ) 

what’s everyone’s thoughts- I think you always give the best advice! Thank you in advance xox 

elsien

What assets do you have, and why are they recommending an IVA over other potential debt solutions? 

sourcrates

I`m going to move this to debt free wannabe as you will get more traffic there than on this sub forum.

fatbelly

As a homeowner, albeit one with no equity, your choices are more limited.

An IVA locks you into a solution for probably 5 years.

It sounds like you have £150 surplus, which does make for a long dmp.

 IVAs are getting a bit better from next month

https://www.gov.uk/government/publications/individual-voluntary-arrangement-iva-protocol/iva-protocol-2025

Another option is bankruptcy ,which carries an up-front fee of £680 and the risk that your home could be valued in 3 years time, and then have equity that has to be realised.


As you have a basic income plus commission, I wonder if a long dmp, saving commission in a pot on the side, and trying full & final settlement deals somewhere down the line, might be the way forward.

Wannabehousebuyer

elsien said:

What assets do you have, and why are they recommending an IVA over other potential debt solutions? 

Just my flat, assest wise. They said DMP would take too long and bankruptcy puts my flat at risk 

Wannabehousebuyer

fatbelly said:

As a homeowner, albeit one with no equity, your choices are more limited.

An IVA locks you into a solution for probably 5 years.

It sounds like you have £150 surplus, which does make for a long dmp.

 IVAs are getting a bit better from next month

https://www.gov.uk/government/publications/individual-voluntary-arrangement-iva-protocol/iva-protocol-2025

Another option is bankruptcy ,which carries an up-front fee of £680 and the risk that your home could be valued in 3 years time, and then have equity that has to be realised.


As you have a basic income plus commission, I wonder if a long dmp, saving commission in a pot on the side, and trying full & final settlement deals somewhere down the line, might be the way forward.

, 

Yes I think they said £150’pcm. 

Is there a difference between Iva and bancrupsy? As in what could happen to my flat? I assume if it went up by £30k they would only count £15k as I own 50% 

I did think about this, however spending too much got me into This situation I worry that after 4 years of living hand to mouth, I wouldn’t actually put money aside? But that being said, I also worry about the bailiffs turning up
or worse as payplan told me unpaid council tax you can go to prison. 

I feel this is pushing my hand towards the IVA but I really don’t know what’s for the best 

RAS

First off, fatbelly explained that the rules on IVAs change in July. 

As little as I understand, they are going to be a better option then. So you need to take some time to fully understand the new rules. 

Under the old rules they were not a great product, unless you were one of the companies advertising on TV and the media. They got the referral and insolvency fees, the creditors often got very little, the debtor lived on a tight budget for 6 years and if they got a windfall could end up paying more than they owed in the first place. Read the link fatbelly provided.

The downsides are you've got fluctuating income and that IVA budgets are tighter than DMP.

Stepchange decided that IVAs have a place in debt relief and set up their own scheme with much lower fees, so they'd be the people to speak to.

You've got council tax debts. Right now I'd suggest that you take advice on how to manage that problem and stop paying your other creditors. It's important to know what's owing for which years. Some debts may already have all available bailiff fees added, others may be more attractive to bailiffs because they can add fees. 

ManyWays

I dont think the IVA rule changes in July make much difference to you; they mainly concern the equity release provision which wouldnt apply to you anyway as equity release isnt possible in shared ownership. The other change is that the IVA firms can reduced payments by 20%, this was previously 15% so thats an improvement but tiny, on a monthly payment of £150 it could be reduced to 120 a month rather than the current 15% reduction to 127 a month.

The massive problem of an IVA is that you would probably not be able to afford the IVA payments if you have a child, ignoring the problem of needing to move, and at your age putting off a baby until afterwards may make it much less likely that it will ever happen. A baby doesnt sound imminent but ruling one out for 6 years is a major life decision to make aged 35. 

As @fatbelly says, bankruptcy is a possible option, crossing your fingers and hoping that there will be no equity in the house after 3 years (unless there is someone in your family that could potentially buy back the equity from the Official Receiver at that point if there is any.)

Your other option is to default now on the consumer debts (can you list all your debts?) and clear the council tax arrears fast. If Payplan were suggesting imprisonment for non-payment of council tax was a reason to choose an IVA, that is disgusting (unless they also explained your other options, such as bankruptcy and prioritising the CT payment and then having a debt management plan).  Then a DMP for the other debts would at least be flexible (an IVA isnt and may fail); it would let you make affordability complaints speeding up the DMP; and it would avoid insolvency on your credit record in case you meet Mr Right and want a mortgage together. 

fatbelly

Imprisonment is only a theoretical possibility for council tax debt, and not even that if you live in Scotland or Wales.

The main reason we treat it as a priority is that councils are quick to get a Liability Order and pass it to bailiffs.

If you allocated your £150 per month to the council tax debt, how quickly could you clear it?

Wannabehousebuyer

ManyWays said:

I dont think the IVA rule changes in July make much difference to you; they mainly concern the equity release provision which wouldnt apply to you anyway as equity release isnt possible in shared ownership. The other change is that the IVA firms can reduced payments by 20%, this was previously 15% so thats an improvement but tiny, on a monthly payment of £150 it could be reduced to 120 a month rather than the current 15% reduction to 127 a month.

The massive problem of an IVA is that you would probably not be able to afford the IVA payments if you have a child, ignoring the problem of needing to move, and at your age putting off a baby until afterwards may make it much less likely that it will ever happen. A baby doesnt sound imminent but ruling one out for 6 years is a major life decision to make aged 35. 

As @fatbelly says, bankruptcy is a possible option, crossing your fingers and hoping that there will be no equity in the house after 3 years (unless there is someone in your family that could potentially buy back the equity from the Official Receiver at that point if there is any.)

Your other option is to default now on the consumer debts (can you list all your debts?) and clear the council tax arrears fast. If Payplan were suggesting imprisonment for non-payment of council tax was a reason to choose an IVA, that is disgusting (unless they also explained your other options, such as bankruptcy and prioritising the CT payment and then having a debt management plan).  Then a DMP for the other debts would at least be flexible (an IVA isnt and may fail); it would let you make affordability complaints speeding up the DMP; and it would avoid insolvency on your credit record in case you meet Mr Right and want a mortgage together. 

All debts are defaulted - most with debt collection agencies. 

mostly credits cards of 2/3k two loans on 9 and 5k , sofa, 3000 , I have 14 creditors in total- plus now the council tax. SC said that  basically said bankrupsy and dmp aren’t viable and IVA only. But the council tax would be my responsibility to deal with. The main appeal of the Iva for me personally is I have 3 debts with Rundles the people that will take goods and Iit includes them . That would be the only reason  

Wannabehousebuyer

fatbelly said:

Imprisonment is only a theoretical possibility for council tax debt, and not even that if you live in Scotland or Wales.

The main reason we treat it as a priority is that councils are quick to get a Liability Order and pass it to bailiffs.

If you allocated your £150 per month to the council tax debt, how quickly could you clear it?

Oh really?! 

That’s what I have 4 liability orders . 

They (Rundles) won’t take any less than £300 per month per debt - which I cannot afford . That’s £1200 a month!