IVA for beginners

beebee87 · 30 January 2018 at 4:42PM

Hey

I haven’t used these forums for a long time but remember getting some amazing advice, hoping for a nudge in the right direction.

I’ve heard of IVA’s and never thought that would ever be something I/we would need to consider.

Long story short, me and my husband have debts that total 65k. Don’t want to start going into the why’s etc as nobody needs a sob story!

It’s got to a point where paying out £1700 a month in debt is just too much. We’ve looked into consolidating the lot but don’t think we could get a loan to cover so much.

I spoke to a couple of charities this morning who have advised that an IVA would be a suitable step. Our payments would go down to around £600 a month which is achievable and more realistic.

Ultimately we want to get out of this situation and start sleeping at night.

I don’t really have a question, more that I want advice if we are doing the right thing before comitting to such a huge thing.

Any advice would be really appreciated.

Thanks D

PrettyKittyKat · 30 January 2018 at 6:55PM

Are you a homeowner?
Are either of your jobs impacted by an IVA or bankruptcy?
Do you foresee a change in circumstanced in the next 5 years (either for the better or worse) such as planning to have children, job unsecure, retirement etc?

National_Debtline · 30 January 2018 at 7:03PM

Hi beebee87,

It is difficult to say if this is the right decision for you and your partner without knowing more (i.e whether or not you are homeowners, and seeing your SOA). However, I can offer you some guidance on what an IVA involves.

So, an IVA is a form of insolvency and is a 5-6 year repayment plan. If you make all of your payments successfully then at the end of that time any remaining debt is written off. All interest, charges and credit action is frozen during an IVA. It is quite a restrictive option and is subject to a 12 month review. If your circumstances improve the payments may increase, but they are unlikely to decrease (much if at all) even if things get worse. If you cannot maintain the payments the IVA may fail and there is a risk you can be declared bankrupt, which can risk your assets.

If you are a homeowner then you can be asked to take out a secured loan in the 4th or 5th year of the IVA known as an equity release clause. The idea is that this will secured loan is taken out to end the IVA early, however, not many people qualify for a secured loan in this situation because of the damage to your credit file, and that is why the IVA is typically extended.

If you have no assets, then bankruptcy may be more suitable than an IVA. If you have assets and your situation is a bit unsettled then a DMP may be the more suitable. Good luck,

Laura
@natdebtline

beebee87 · 30 January 2018 at 7:14PM

Hi

Thanks for your replies.

So we do have our own home, we haven’t built up enough equity in that to help with the debts. That was our original plan.

I was told today that should anything change in the future (children etc) this would be reviewed and taken into account with our incomings and outgoings.
I have asked for this to be double checked.
Although as it stands, if our circumstances were to change in such a way in the coming months, we would definitely not be able to afford £1700+ on the current repayments?

This is by no means an easy option for us, my husband is very resistant to going into an IVA for the stigma that is attached. I’m much more realistic and realise we cannot carry on as we are.

I guess I’m more concerned that I haven’t thought about, or taken time to research anymore ‘what if’ scenarios.

A brief overview based on the budgeting sheet today - our incoming joint is around £3800 a month.
As it stands they have worked out we could afford £650 a month for the IVA and yet we are paying £1700 as it stands.

I’m so fed up with the sleepless nights and the worry of how we will cope, I need to get back on track and actually enjoying the days off I work so hard for. Thanks again for your comments

fatbelly · 30 January 2018 at 7:36PM

It sounds to me like an IVA is a sensible option.

Bankruptcy would be taking a gamble on how much equity there might be in the house in3 years. I wouldn't risk it.

£650 should be more than enough for a 60k IVA. You should start doing your research into Insolvency Practitioners. Don't just go with the first one you hear about. I wish I could recommend one but I can't.

z1a · 30 January 2018 at 7:46PM

When I did an instant IVA, creditors accepted a one off lump sum payment of about 30% which I could raise with a remortgage.
Is that option open to you?

Bear in mind if you could remortgage up to 100% of debt, they will want it.
We managed to get a value of pretty much what we needed and no more.

beebee87 · 30 January 2018 at 8:25PM

fatbelly wrote: »

It sounds to me like an IVA is a sensible option.

Bankruptcy would be taking a gamble on how much equity there might be in the house in3 years. I wouldn't risk it.

£650 should be more than enough for a 60k IVA. You should start doing your research into Insolvency Practitioners. Don't just go with the first one you hear about. I wish I could recommend one but I can't.

Thank you so much.

I came in here maybe 5-7 years ago and you were the one who offered me great advice then.
I wish you could too. We’ve been in touch with Payplan...

sourcrates · 30 January 2018 at 9:06PM

beebee87 wrote: »

Thank you so much.

I came in here maybe 5-7 years ago and you were the one who offered me great advice then.
I wish you could too. We’ve been in touch with Payplan...

Basically if you have a home to protect, then an IVA is advisable over Bankrupcy.
There is no stigma, no one will know, unless they check you out on the insolvency register, and let’s face it, who would normally do that ?

I chose “debt free direct” and would recommend them, all IP’s will charge you for an IVA, this gets included with your monthly payments, they were vey fair with me, and apart from the yearly review, I never really heard from them at all, make sure you decline all sales calls as all IP’s will try to sell you stuff like insurances etc.

Get as much info as possible before you decide.

Smiley80 · 30 January 2018 at 10:29PM

Can I please ask whether you have started the process and which IP did you choose?
I am in a very similar situation and am just facing up to the fact that I need to do this now.

ToxtethO'Grady · 30 January 2018 at 10:54PM

Hi there

From information you've given I would advise that an IVA is the best option, £650pcm would amount to £46.8K over a 6 year IVA and the rest would be written off. That's if your budget leaves that amount available over that period.

Your IP can reduce the payments by 15% each month without getting your creditors say so, do either of you receive bonuses or overtime? 10% is disregarded and then the rest is split 50/50 into your IVA. So they are flexible so it's not set in stone you pay £650 for the term of the IVA.

An IVA also stops any legal action as you're in a legally binding agreement with your creditors, on a DMP they could still take court action.

Speak to other free debt advice agencies and IPs see what the consensus is and compares how much other IPs charge.

PrettyKittyKat · 31 January 2018 at 7:30PM

Yes a change in circumstances is reviewed, and it is possible to do what is called a variation to go back to creditors and change the payments (usually with an extension of 6 or 12 months to keep the p in the £ as close to the original agreed one as possible) if a 15% reduction is still not affordable or a modification prevents this. However creditors do not have to agree to a variation, although if it is reasonable most do.

However, you would be surprise dhow many people say 5 months into an IVA will ring up and say, 'oh I'm pregnant and don't intend to go back to work so I have no disposable income' or 'I've now retired and have no disposable income'. If whatever happens means you have no disposable income it greatly limits the IPs options. If you are a significant way into your IVA the p in the £ may be high enough to propose a full and final, otherwise it isn't viable. Things can happen unexpectedly, and of course you can't predict these, however if you know of anything that IS going to happen that will affect your affordability then you MUST discuss this with the IP now.

IVA for beginners

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