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Struggling :(
Comments
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Yes that's true. But you do not need something legally binding. In fact it may be best that you are not legally bound if all you are dealing with is nonpriority debt. We'll be able to see that more clearly from a full soa. In a dmp, creditors do accept offers and freeze interest. It's a well-worn path.
I can't say that an IVA is wrong for you but it is a little concerning that the sales pitch of Citizens Advice (if it was genuinely them and not a clone) sounds exactly the same as an IVA lead generator who stands to earn £1000 from referring you to an IVA firm.
I work for CA and in 20+ years I've only met a handful of people for whom an IVA was the best option.
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the lady at the CAB told me that, she said on a DMP I would continue to make the payments until all 50k debt has been cleared, were as an IVA would be paid for a max of 6yrs because I own my home, although it will stay on my credit file for 7 yrs, but after the IVA has ended, any debt that is still outstanding will be written off, this wouldnt happen on a debt management plan, I would continue to pay for many many years until the full amount has been cleared, which could possibly take me 10/15 years, if I'm still here in that time
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I echo @fatbelly's comments. Please tell us the name of the IVA firm you have been referred to.
And please post a Statement of Affairs. You can tell some of us are alarmed at an IVA being suggested without a full exploration of the alternatives.
"She said that I can't declare Bankruptcy as I own a property, I can't do a DRO as I owe more than £30k, which leaves an IVA" bankruptcy is a silly idea if you own a property mortgage free. But the DRO limit is 50k, the reason you can't have one is because you own a property, not because your debts are over 30k… And a DMP is an option. This does not inspire confidence that you have been given good advice.
One point, your PCP will end while the IVA is running. At that point, with insolvency on your credit record (an IVA has the same bad effect as bankruptcy on your credit record) you will NOT be able to get a new PCP deal. You may have to buy an old car on HP at 30% or interest…
An IVA may be a decent option for you but let us look at the details. You may be one of the few it's right for, in which case we will say.
Once again, here is the link to our preferred SOA format https://lemonfool.co.uk/financecalculators/soa.php1 -
It was an CAB representative, as she gave me a call last Tues. As for the SOA, I have tried to complete one, but some of the questions, I have struggled to answer. Also at the end of the SOA there was a few questions that apparently I either hadn't answered or answered incorrectly, but I dont know which ones they are talking about
Click here for our SOA privacy and usage information.
* Are you really paying no rent and no mortgage?
* You have included petrol but have missed other car related expenses.
* Enter a 12th of your annual birthday/christmas present spend.
* Please include a 12th of your annual clothing spend.
* At least one debt amount is not a valid number. Please correct.
* You appear to own a car but have not added it as an asset.
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https://forums.moneysavingexpert.com/discussion/comment/82172827#Comment_82172827
I haven't been referred to an IVA firm, she said she would send me details of some that the CAB recommend, via post.
I did ask what would happen when my PCP deal comes to an end, because I need a car to get to work. She told me that providing I have kept up with the payments on the PCP (which I have) it is possible that the same finance company (Santander) will accept me again, as the finance is on the car not me, and if I default on the payments, the car will be collected.
I have tried to complete the SOA but wasn't sure what to put down for certain questions. And when I have completed it as much as I can, it gives me questions at the end, that apparently I have not answered correctly
Click here for our SOA privacy and usage information.
* Are you really paying no rent and no mortgage?
* You have included petrol but have missed other car related expenses.
* Enter a 12th of your annual birthday/christmas present spend.
* Please include a 12th of your annual clothing spend.
* At least one debt amount is not a valid number. Please correct.
* You appear to own a car but have not added it as an asset.
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She told me that providing I have kept up with the payments on the PCP (which I have) it is possible that the same finance company (Santander) will accept me again, as the finance is on the car not me, and if I default on the payments, the car will be collected.
It's possible, but it rarely happens. (I also feel this also sounds like an unlikely thing for a CAB adviser to say. It is too specific in an area where most CAB advisers feel they do not know much. )
Those questions:
* Are you really paying no rent and no mortgage? A sensible thing to query as usually it means something is missing, but in your case it is right* You have included petrol but have missed other car related expenses. If this is right, go back and add car insurance, road tax, servicing, parking…
* Enter a 12th of your annual birthday/christmas present spend. Have you put zero in there? That is fine if you never ever buy a present, but wrong for most people. If in doubt put £1 a month in
* Please include a 12th of your annual clothing spend. Same answer, but here you have to put something in. Everyone will need to replace some jeans, trainers and underwear in a 6 year IVA.
* At least one debt amount is not a valid number. Please correct. Have a look at them all. Put a letter O in for a zero?
* You appear to own a car but have not added it as an asset. Did you list the car finance as car finance or a loan?
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This advice sounds odd. Even without counting, I can tell you thousands of people who have posted on MSE have done DMPs successfully. If they stay with one of the debt charities throughout, they may pay back 100% of their debt.
We recommend here that people build up a good emergency fund before they start the DMP and ensure that their budget allows them to build what we'd might call a fighting fund.
The aim is to be getting offers from creditors of discounted settlements. The amount varies between creditors but if you've got adequate money in that fund, you might pay 35-50% of the book value to settle the a debt. Sometimes less. It's actually best if the debt is sold on to a debt collectors first. They paid 5-30% of the book value and any settlement over that is profit.
An SOA helps because people here know a bit about which creditors can be difficult.
Has your CAB advisor talked to you about affordability claims?
If you've have not made a mistake, you've made nothing1 -
As a CA debt adviser, my understanding is that I am not allowed to recommend an Insolvency Practitioner. I would be interested to see who is on that list
On the car issue, that seems another part-truth to me. Yes, if you have poor credit, then car finance like HP (PCP or not) may be easier to obtain than say a personal loan, because the lending is secured on an asset. However, when you are insolvent, be it DRO, IVA or bankruptcy, no-one should be lending to you.
If the arrangement was straight HP, then there is no balloon payment, monthly payments are consistent but higher, and the car is owned by you at the end of the agreement. I wonder if that would work better for you, given that in your situation you would regard this as a priority, and stop paying the nonpriorities.
As ManyWays implies, I think you could refinance the existing agreement, but this is not an area that I have much knowledge in.
Edit: a quick google shows that there are firms who offer this either as a refinancing of the balloon payment or (subject to the terms of the pcp) during the agreement
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No I dont pay a mortgage, this was settled when I lost my husband, regarding car expenses, I have included car insurance, road tax. I don't have servicing or parking costs, I get my MOT, and servicing free as my son works in a garage so he gets the things my car needs through work as its cheaper and he does the work for me. Yeah for birthday etc I don't buy anything, but I will go back and put a £1 in as you suggest. I don't know what it means by a valid number, anything that is zero I have left at zero, and I haven't counted my car as an asset because its not mine, it belongs to the finance company, and I did list it as car finance. If I could copy and paste the SOA on here I would, but when I try to save it, it saves it as a blank document, so no idea how to do it
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I am very sorry, but I didn't understand your comment. I don't have an emergency fund, and there is no way that I would have anything to start an emergency fund. As for the affordability claims, I have never heard of them
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