IVA advice for anyone considering it..

GXN

My wife and I had been struggling with debt for near on 12 years. We are quite high wage earners and although we had always managed to stay on top of things we just got more and more deeper into debt, particularly over the past 3 years or so. Stupidly, we would borrow to pay off other loans and credit cards just keep our head above water. Things finally came to a head just before xmas when the money ran out and we could no longer borrow from anybody. We worked out our outgoings just for these unsecured debts were £2200 per month and in total we had £130K of unsecured debt. Yep, you read right! This left us with about £1200 per month to pay rent (£800) , council tax (£200) petrol, food etc, so we had nowhere near enough income to pay all of these finally making us realise how bad things were. We considered BR but my wife’s job meant she would have had to declare it and probably lose her job.
Then the calls started. Creditors calling, 10 calls a night, the phone was in meltdown and it all started to get very stressful.
We had to do something, we couldn’t just ignore it. So, we considered the options: BR –, no, DMP would probably take 15 years to repay and we had already been on a DMP in the past with CCCS but took back management of creditors ourselves which was a mistake as creditors will always threaten you with something just to get more money. Quite frankly, some of the methods creditors use to get more out of you is nothing short of daylight robbery.
My wife happened to be speaking to a loan company who also offered IVAs (mmm...odd that) when they suggested an IVA. So we looked in to this. However they worked out we would have to pay back £1100 per month for the IVA based on 30p in the pound. They appeared to be very pushy and very “salesy” (I wont mention their name) and were continually calling us. So, via this site I found a lot of people in the same boat using Payplan and contacted them. I have to say they were absolutely fantastic and worked out we could afford to pay £825 on an IVA. They also offered some brilliant advice like making sure your bank account isn’t associated with any of your creditors. We had to open a new bank account that offered a debit card which was fine. We filled out the paperwork and the Creditors meeting was set for Jan. We waited anxiously at home and the call came through, IVA agreed – only Northern Rock (suprise suprise), Barclaycard and Amex opposed the IVA but we got enough votes to get it and 15p in the pound. However, conditions were set: the monthly amount was just over £900 and oddly on my wifes IVA, she has to declare half of any bonuses but not on my IVA. The calls stopped pretty much straightaway. The odd call or letter that came through we just pass to Payplan and they deal with it. All in all it took about 2 months to sort everything and we know that in 5 years time we will owe nothing. I know it’s our own fault but I think lenders should take some of the responsibility for allowing people like ourselves to get into such a mess without doing proper checks first, and I mean proper checks. We do want to pay as much as we can back as ultimately, we made the wrong decisions. The ironic thing is, we don’t have a lot to show for all the money spent! But one thing is for sure, I will never ever get credit again. We now appreciate we have to save for anything we want but we can now manage our monthly budget based on the figures Payplan worked out for us. No more sleepless nights now, no creditors bills to pay, life is getting back on track. Creditors cannot calls us, write to us or threaten any legal action unless we breach the conditions of the IVA.I wanted to post this to show to people that it is possible to get help but please, please speak to the right people. My advice is to speak to Payplan or CCCS, avoid anyone else like the plague.

NekoZombie

You sound like the type of people IVAs were designed for - I hope this all works out for you; looking at the limited info you've given about your I&E, it should be more than affordable for the two of you. Good luck with it all.

Vici

I am in an IVA through Payplan and they have been nothing but helpful. Sadly, my circumstances have changed quite considerably since starting the IVA and it seems its no longer going to work for me. Would deffo recommend them tho

malestrom07

Thank god your all sorted out now. If anyone else is looking for an IVA and the salesmen seem too keen or too pushy, steer well clear. There are many problem IVA's out there and it seems to be getting worse. There are new rules and a new code of practice for IVA providers which should weed out some of the sharks. This is worth a look
http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/policychange/foum2007/plenarymeeting.htm

It’s great to see that the SoS are increasing their monitoring and visits to licensed insolvency practitioners. Although this is a highly regulated market it seems that way too many mistakes have been made to date and potentially hundreds of people face ruin by miss-sold and badly managed IVA’s.

It seems the OFT is ramping up it’s monitoring activities regarding the advertising of IVA’s, especially as IVA advertising in general had left a lot to be desired. Having lost so much of their income and share price the worst offenders had to pull the majority of their campaigns often aimed at the day-time-TV-audience. The ads were opaque and gave the impression that an IVA was a panacea and came without risks or conditions.

The need for greater transparency and detailed information about the risks associated with these arrangements is long overdue. The ad’s in general were glossy, light hearted and aimed at the financially naïve who should never have got into their present predicaments. It’s good to see that there may be financial dis-incentives by way of fines or penalties if they are in breach of the required standards. This should end the appearance of such blas! advertisements.

The documentation for the Standard Condition For IVA’s, lays down clear and transparent guidelines which one would hope are not open to interpretation by unscrupulous parties. Although some of the guidance looks basic in it format, it clears up areas that have caused many of the present problems with the huge rise in failed arrangements.

The changes to the rules are many and varied and may not be of interest to the vast majority, however as a technical framework it’s a really encouraging set of guidelines, clear, to the point and the changes, however subtle reflect the need to clarify the obligations and requirements of all parties.

The composition of the IVA Standing Committee is also a very positive development and it’s great to see that CCCS are welcomed as an observer, at least CCCS can keep an eye on developing trends and witness first hand any further proposed developments.

I dealt with a case on Tuesday that reflects the need for greater control and transparency, starting with the advertising stage, the requirement for plain English documentation and an honest declaration of the fees involved as well as the demand for a standard and mandatory “Summary Sheet for Proposed IVA’s”.

This one sheet of paper could have helped avoid a disaster such as this one.

A middle aged couple with debts of £54,000, approached an IVA provider they had seen advertised on television. The couple were visited by a representative of the company and after a few short days had decided to sign up for an IVA and pay a deposit of £500.00.

The original budget was tight to say the least and left very little for the couple to live on after the IVA contribution had been made. In fact the budget was so unrealistic they both took part time jobs to produce enough income to cover food and general living expenses. They approached the IVA provider who basically said “you signed the contract”. A year passed, in line with statutory requirements the pair submitted their end of year P60’s to the Insolvency Practitioner who then realised that there was a further £2800.00 undeclared income and demanded that this be paid into the IVA (this is standard practice) within 6 weeks.

The situation was now completely unsustainable and as homeowners they faced the possibility of bankruptcy, should the IVA fail

One could assume this couple were completely naive. Upon further discussion it became clear that they were blameless. I asked if they had read the contract and they were adamant that they had never received one until after the IVA had been set up and they had sufficient evidence to prove this.

So, they were lured by a glossy ad, mi sold by an unscrupulous salesman, subsequently entered into a dangerous legally binding agreement with a budget so unsustainable that it failed within six months. They worked extra hours to feed themselves and now face ruin as that money (now spent) is being demanded as well as their over inflated contribution. This is an IVA which should never have happened. Sold by an unlicensed commission hungry salesman who now couldn’t care less.

If they don’t pursue this through the FOS, then there is little that can be done. They could lose their home! Not good.

Ah, I almost forgot, if this IVA does fail along with countless others that are doomed, this particular company will have a very hard time indeed getting a creditor to agree to another one.


However back to the Summary Sheet, this would clearly detail the Fees involved, also any potential Equity Release that may be required (how many who have an IVA understand this implication?).

I get so angry when I hear these stories. The desperation is palpable! Decent hard working people who face ruin and who can win or gain in this situation?


Herein lies the rub!

Northern Rock and some others were the first to attempt to scupper the increase of IVA’s refusing to negotiate outright with almost all IVA providers and look where that attitude as well as their cavalier lending have got them. I for one have absolutely no sympathy for Northern Rock, however now that there are balanced guidelines and the market has had a well deserved though somewhat expensive shock, we should see creditors being realistic in their attitudes to accepting reasonable, well balanced and sustainable IVA proposals. We should also see IVA providers kept in check by a host of regulatory bodies, working within the guidelines.

I can see a few firms going out of business very soon indeed. It’s not that they can’t toe the line and adhere to the standards; it’s more likely that they can’t make a profit without bleeding their customers dry.

I can’t wait for an eventual statement by the FOS! They can be very entertaining indeed.

GXN

Thanks for the response. I forgot to mention in my original blog that the first company we approached wanted £1100.00 UPFRONT in order to start the IVA paperwork etc. Payplan didnt want anything until the IVA had been agreed and our first payment was at begining of Feb.

GXN

alexbe1971

If we had known now what we have learn't from this site we would never have signed up an IVA with Debit Free Direct :mad:

At my place of work we don't get sick pay instead we get attendance allowance which is paid ever 6 months which used to come in handy for the summer & Xmas. However I now have to pay DFD 60% of that:mad:

After 2 years we were promised that our payments would decrease & that all deductions in money coming to use i.e. child maintance,family credit etc would be taken in to account.This they haven't & eventhough our salaries have increased it's not enough to keep up with the rising living costs.
If anything our payments have increased.

Another thing that alarmed me was that the ASA had a complaint about DFD advertising http://www.asa.org.uk/asa/search/search.htm?xsearch=debt%20free%20direct

Then DFD tried to take the ASA to the High Court about this issue which they quite rightly lost :rotfl:

We have also discovered though a copy of the Annual Report to Creditors that out of the money that we have paid so far they have taken half as payments to themselves which is far too much :mad: :mad:

We were never told about these costs & that we might have been better off trying taking out a more affordable loan or trying payplan.
From this we believe we have been mislead into taking an IVA with them & we are looking now to settle early & complain about this.

plumduff-2

How convenent that you phone Payplan and they recommend an IVA to you.. no doubt through their IVA in house provider... making themselves some nice fees in the process..

You are going to stretched to the limit over 5 years, as your budget is no doubt tight on the IVA for them to get it accepted in the first place..Especially with all the hoo-har TIX are creating in the IVA industry...

I really hope the IVA works for you... But wonder, was BR mentioned, as you rent and thereofre have no property to protect, BR could have been a more viable option.. You could have been paying into an IPA for 3 years rather then the 5 year IVA... And the OR is much much more generous with expenses esp. compared to IP's..

Good luck.. x

empty_wallet_2

My OH is in the process of getting an IVA but the figures dont really add up,we have been looking at a review website and the people she is going with have all good reviews and their customers have had plans accepted for between 25p to 52p in the £ but there seems to be no clear method in what you should pay back, with the figures they are asking my OH to agree to it works out at around 47p per £ (26k debt) but they want her to pay at least £250 a month yet the I&E figures they have supplied show she only has £220 a month surplus, they have now said she could pay a lower amount but over 6 years instead of 5.

rog2

I am so pleased that I have seen this thread, and sorry that I missed it before (work getting in the way of DFW again :mad: ) as it must serve as a 'warning' to anyone who is tempted by the 'glitzy' adverts that make 'promise' to 'write off up to 90% of your debts, using a little-known Government loophole'.
Some months ago, we had a poster on the 'Bankruptcy' board - http://forums.moneysavingexpert.com/showthread.html?t=550970
This poster, in spite of the advice given by CAB, invited Debt Free Direct for a 'home interview'.
The man from DFD suggested 'tweaking' some of the figures in order to make it more 'attractive' to her creditors, and 'surprise-surprise' were happy to offer an IVA.
Following advice, from this forum, the poster spoke with CCCS who suggested a 'joint IVA' at around £200 per month lower than that proposed by Debt Free Direct.
Whilst there are still problems, for this poster, regarding the 'joint' nature of the proposed IVA, it certainly highlights the discrepancy between a 'Get Rich out of Other People's Misfortunes' company like Debt Free Direct and the impartial advice that Debt Counselling Charities, such as CCCS, National Debtline or CAB can offer when the word 'profit' is removed from the equation.
An IVA, for many people, is a real alternative to Bankruptcy, and, as such, is a very serious debt solution. It is a form of 'Insolvency' and should, with all of its implications, be considered very seriously indeed. IVAs are managed by registered Insolvency Practitioners, who negociate legally binding deals, on behalf of the 'debtor', with creditors. These 'deals' can be as low as 20p in the £, but must be agreed with a majority of the debtors' creditors. The Insolvency Practitioner, quite rightly, has to be paid for his role in the negociation and administration of an IVA, and his 'fee' is included in the rate negociated on behalf of the debtor. This, effectively, makes it look as though it is the 'creditor' who is paying for the IP - indeed many of the 'IVA Factories' will actually go so far as saying, in their publicity, that it will not cost the debtor a penny in fees, as their charges are 'paid for by the creditors'.
With Insolvency Practitioners' fees of around £8,000, it is easy to see how the practise of 'selling IVAs' has developed into a lucrative business, which, in the same way as 'Consolidation Loans' will, inevitably, attract the type of scavenger who feeds off of the misfortune of often the most vulnerable members of society in the pursuit of a 'fast and easy buck'. Whilst, legally, a licensed Insolvency Practitioner must 'oversee' the IVA, it is easy to imagine that it is seldom more than a 'computer program' that is actually handling, at a cost of pence, the debtor's IVA, whilst the legally required Insolvency Practitioner may, in fact, just be a 'rubber stamp' on hundreds, maybe thousands, of IVAs.
Anyone who is considering an IVA should be aware that a very high percentage of IVAs fail, and that personal bankruptcy is an almost inevitable result of a failed IVA.
Since many of the IVA 'Factories' structure their 'IVAs' to ensure that their charges are taken before money is paid to creditors, they tend to be both unsympathetic to, and unaffected by, a debtor's failure to maintain IVA payments due to unforeseen circumstances, and will simply 'shrug their shoulders' at that debtor's impending bankruptcy.

I welcome the new rules, and code of practice, as posted by malestrom, as there are too many 'predators' in this field, and their 'bad work' is overshadowing the extremely good work of those genuine Insolvency Practitioners who work extremely hard, not only to establish the best 'deal' for both debtor and creditor, but also in the long-term administration of IVAs.

scootw1

alexbe1971

I was the one who made that complaint about DFD. I was fed up of seeing all the adverts on TV advertising IVAs as "not costing you a penny" so decided to do something about it.

rog2

scootw1 wrote: »

I was the one who made that complaint about DFD. I was fed up of seeing all the adverts on TV advertising IVAs as "not costing you a penny" so decided to do something about it.

Well done, scoot. :T :T