Advice to take out IVA or set up agreements with creditors ourselves

flower_girl_3

My husband and I have a total of 65000 unsecured debt ( credit loans with accrued interest and personal loans) we have a mortgage and second mortgage total of £92000.
we are keeping up with all priority bills and insurance for house. But we are no longer able to keep paying all our credit cards . We have ben paying minimum amount but not making much headway . 

We have had lengthy phone call with payplan to go through our finances which was a helpful process however they recommended an IVA. My husband and I are really concerned about this and would like to try to negotiate with our creditors independently. 

What are views of others? 

fatbelly

Well an IVA is for people with large debts, significant surplus income and an asset to protect.

That does sound like you.

You would need two interlocking IVAs.

Give us a statement of affairs if you want advice

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

sourcrates

We really need to see your income/expenditure, because specific advice is dependant on those factors.

Speaking generally, you are a possible candidate for an IVA, but it depends what you will have available for debt repayments, as its a formal insolvency solution, you would have to maintain an agreed monthly amount for up to 60 months, so it has to be sustainable.

An informal arrangement is not subject to any such restrictions, if you manage it yourself, which is not difficult to do.

There is no negotiation with creditors at all, you work out a budget you can live on, and what`s left is your disposable income for your debt repayments, you simply split it between them, either by % of debt or pro-rata.

Its all about affordability, so they get what your budget says you can afford, and that`s it, its the basic system the FCA insists the debt industry work with.

ManyWays

A statement of affairs will help us see what is happening. Is the secured loan expensive? When does it end? 

fatbelly

Have a look at the rules on protocol IVAs and note that yours may be set at 72 monyhs

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

flower_girl_3

Thanks for your input
One major reason for not wanting an IVA is because I have ME/CFS and I’ve had worsening symptoms this year which has had an impact on my income . Also being self employed, my income is not guaranteed.  As I understand it, an IVA needs a fixed amount to be paid and is not able to be flexible to change once set up.  

We have used the wonderful Budgeting spreadsheet on this website and now know what we have left each month to offer creditors.  

I presume we divide the amount we have left pro rata for each creditor? 

RAS

Based on the new information, a DMP may be more suitable.

If you sign up with a debt charity, they will distribute the monthly money pro rata.

That's not a requirement for self-managed accounts. And I'd suggest setting up the repayments based on your stable income and setting aside money any better month to pay extra on one or two debts. 

You've not posted an SOA, but do you have any debts with credit unions or Amex?

flower_girl_3

Thanks RAS. I’m not sure what credit unions are. I have £690 left to pay to credit spring.  I’ve got a £1,560 debt with American Express and they have been in touch to offer setting up payment plan and have frozen interest. 

Those are the ‘tip of the iceberg’. 

SOA? Is this Statement of Affairs?  How would I show this and where? 

Grumpelstiltskin

fatbelly said:

Well an IVA is for people with large debts, significant surplus income and an asset to protect.

That does sound like you.

You would need two interlocking IVAs.

Give us a statement of affairs if you want advice

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

SOA link is here.

Format for MSE and post on here.

fatbelly

flower_girl_3 said:

Thanks for your input
One major reason for not wanting an IVA is because I have ME/CFS and I’ve had worsening symptoms this year which has had an impact on my income . Also being self employed, my income is not guaranteed.  As I understand it, an IVA needs a fixed amount to be paid and is not able to be flexible to change once set up.  

We have used the wonderful Budgeting spreadsheet on this website and now know what we have left each month to offer creditors.  

I presume we divide the amount we have left pro rata for each creditor? 

There is some flexibility in the new protocol IVAs.

Did you see Part 3?

https://www.gov.uk/government/publications/individual-voluntary-arrangement-iva-protocol/annex-1-iva-protocol-2025-standard-terms-and-conditions#part-2-your-iva-the-start-effect-and-duration-of-the-arrangement

flower_girl_3

An update: Last week my husband and I have worked out a realistic budget including my actual tax and NI payment for last tax year. I’ve managed to complete my tax return for 2024-2025 so I have a real figure. 

We are now able to contact our creditors, credit cards and loans, to make an offer of payment. 

Could we use the MSE spreadsheet we have used to help us ( what an amazing budget planner that actually captures real life) 
my only concern is that we have budgeted a realistic amount for Christmas and birthdays based on our income, bills and debt.  £50 a month.

I presume creditors would not accept this and would want that to be used as part of our money left over after priority bills and essential outgoings? 

Is there a different firm we should use and would it carry more weight if it was produced by a recognised debt agency?