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  • FIRST POST
    • harbourmaster
    • By harbourmaster 4th May 19, 1:16 PM
    • 4Posts
    • 0Thanks
    harbourmaster
    Sinking, is an IVA suitable?
    • #1
    • 4th May 19, 1:16 PM
    Sinking, is an IVA suitable? 4th May 19 at 1:16 PM
    I am in a real mess, close to 70k of debt on credit cards with a min repayment of approx. 1300 between them all.

    Being out of work due to severe disability, bereavements and some poor choices has led to this disappointing situation I am faced with.

    I have read about IVA's and feel it might be offer a solution to become debt free in a fixed number of years.

    Here's my line of thought...

    Equity Clause
    This is a major worry and if I entered an IVA agreement today, in year 5 I would have a house worth 265k with an approx. mortgage of 170k remaining over 25 years.

    I have read that some IP calculate the equity differently than other, which is a concern.

    As I understand it, it's; 85% of total value = 225,250 - 170,000 mortgage = 55,250 / 2 (joint mortgage) = 27,625.

    I've heard stories of IPs putting people in contact with their brokers, who can usually secure a remortgage or secured loan at unfavourable rates.

    Ideally, if unsuccessful, I would want to pay a further year or if push came to shove, perhaps look at getting a loan to cover the equity rather than adding it onto my mortgage.

    Can I state this at the start of an agreement, and will the debt management company clearly outline what's expected by year 5?

    Remortgaging

    I am on a 2-year fixed deal which ends next year.

    Do I agree an IVA now and hope my current mortgage provider will offer a competitive rate or wait until it's up and lock in for 5/7 years?

    Other debt free solutions
    I've spent the money so I am more than happy to pay back what I owe.

    However, at the minute that's looking impossible.

    Is there an agreement I can make with my creditors to pay a reduce fee or arrange to pay what I owe them over say a 6 year period, thus not needing an IVA and the uncertainty of the 'equity clause' towards the end?

    Repayment
    An IVA will be listed on my credit file for 6 years approx. and I've read it can take a further year to get to a decent level to obtain, for example, a remortgage with a different provider.

    If I defaulted on all my credit card providers, could I negotiate a deal whereby I pay them over 'x' amount of years without the fear that bailiffs will come knocking?

    Is this something they entertain?

    Credit File
    If I defaulted on my cards and set up an arrangement to pay, I assume the default will drop off in 6 years regardless of if the debt has been fully repaid?

    I've read it can take a further 6 years to clear?

    Secondly, I understand the debt can be sold on, is there any protection from a bailiff demanding full repayment?

    Apologies for the long post but I am keen to explore a few options before I contact some debt management companies next week....

    Thanks
    HM
Page 1
    • sourcrates
    • By sourcrates 4th May 19, 4:06 PM
    • 17,427 Posts
    • 16,430 Thanks
    sourcrates
    • #2
    • 4th May 19, 4:06 PM
    • #2
    • 4th May 19, 4:06 PM
    Hi,


    I take it selling the house, repaying the debt, and starting again is not an option for you ?


    IVA

    Unsure on the equity clause, its very difficult to remortage whilst in an IVA, most of the time, a further year of payments is the norm.


    Bailiffs

    Forget about bailiffs, a long legal process must be completed, and you must have failed to pay anything, before a bailiff can become involved, so put that right out of your mind.


    Other Options

    Debt Management Plan (DMP for short)


    An informal, unregulated gentlemens agreement between you and your creditors, you work out from your budget how much disposable income you have to repay your debts with, this is then offered either on an equal or pro rata basis, to your creditors.


    You can also ask for interest and charges to stop, they are not oblighed to do so, but most will when asked.


    Where should i go for help ?

    Forget using debt mangement companies, these are private companies who charge fee`s for their services, always take advice from the free debt organisations listed in my signiture.


    All IVA`s incur fee`s, they are paid along with your monthly payments, but there are no rules on how much can be charged, so if an IVA is going to be your choice, choose a company wisley, preferably one recomended by National Debtline or Stepchange.


    DMP

    All debt management companies will charge you to set up and administer a DMP, the debt charities do them at no cost whatsoever to you, and the service is exactly the same, if not better, never pay for a DMP.


    Sold On Accounts

    Debts are bought and sold all the time, makes no difference to you, you just change who you pay your monthly payment too, as i said, i don`t know where you have got the idea of bailiffs from, we are talking debt collectors here, not bailiffs, big difference, but neither has the power of entry to a private house for consumer credit debt.


    Hope this helps.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".

    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views expressed are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    • foxy-stoat
    • By foxy-stoat 7th May 19, 9:29 AM
    • 4,456 Posts
    • 2,613 Thanks
    foxy-stoat
    • #3
    • 7th May 19, 9:29 AM
    • #3
    • 7th May 19, 9:29 AM
    You need to post up a Statement of Affairs to see what you have at the moment, assets, money in your property, car(s), other stuff.

    How long did it take you to amass that amount of unsecured debt and what have you spent it on? Have you got anything you can sell to reduce the debt?
    Are you going to return to work?
    Have you checked and reclaimed PPI and paid that off the debts?
    Moving forward what is your income to live and pay for your mortgage?

    Pointless paying 1300 on a debt that you probably wont end up clearing - at zero interest it will take you 4.5 years - with credit card interest you can double that time.

    Stop paying unsecured debt - speak to a debt charity and go from there.

    Forget about protecting your credit file - it will be trash, if not already, and you wont be taking on any more new debts - you will be able to remortgage with your current lender, if you ask for customer retention fix rate deal they probably wont even run a credit check.
    • fatbelly
    • By fatbelly 7th May 19, 12:25 PM
    • 13,871 Posts
    • 10,913 Thanks
    fatbelly
    • #4
    • 7th May 19, 12:25 PM
    • #4
    • 7th May 19, 12:25 PM
    That's all very good advice above. The statement of affairs calculator is here

    http://www.stoozing.com/calculator/soa.php

    We can't advise whether an IVA is suitable or not as we don't know enough about you. I suspect your 'being out of work' is historical but it's not clear and we don't know how much surplus income you might have if you are now back at work.
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