IVA good idea?

Maxyspeakman · 15 February 2018 at 10:36PM

I applied online for debt help with a company called brighter future solutions, I have around £20,000 with Loans & credit cards I'm paying around £500 a month. I was told by the advisor I can write off a high percentage of my debt, they were very In depth and went through everything with a fine tooth comb.

They lowered my payments to £120 a month but because I've got a property with a lot equity in it they said the term would be over 6 years, I'm a little bit worried that the creditors will take further action is this possible once the agreement has been set up?

Ive had a few missed payments and I'm really struggling, is it genuine can I really write off most of the debt I'm worried it's a scam! Seems to good to be true.

sourcrates · 16 February 2018 at 12:30AM

Hi,

An IVA can be a good choice for some people.

But the only debt solution that is guaranteed to write off your debts over 20k is bankrupcy.

As with everything, its all down to your personal circumstances, having some debt written off in an IVA is far from a gimme.

Take advice from a reputable source such as stepchange or National Debtline, they will give you impartial advice, as they are not trying to sell you something, unlike the debt management company you mention above.

Did they also mention you would have to re~mortgage in year 5 ?

Or face another 12 months of payments.

Google IVA and do some research yourself, once agreed its a legally binding agreement between you and your creditors, the fact you didnt know that tells me the DMC did not explain it that well.

Maxyspeakman · 16 February 2018 at 3:53PM

Thank you for the response,

I spoke to them again because I spoke to them while i was at work, This time I spent an hour on the phone this time, they did explain all about the remortgaging which with not being an expert if I'm in iva mortgage lenders are most unlikely to remortgage anyway which I get.

To be honest they've been very open upfront with me, I asked them how they get paid. They said they get a referral from the insolvency practitioner's but that's only if it gets accepted by the ip, because I wondered why they didn't want any fees upfront.

I had a chat with one of my mates aswell who was a financial advisor and he said that most ip's will take roughly the same contributions out of the payments they all make money out of it whether it's a charity or private company. I'm not bothered as long as my payments are lowered and it gets accepted by the ip.

I'm happy with theses guys like I said they've been honest open and upfront with me which I appreciate.

National_Debtline · 16 February 2018 at 6:00PM

Hi maxyspeakman,

Maxyspeakman wrote: »

I applied online for debt help with a company called brighter future solutions, I have around £20,000 with Loans & credit cards I'm paying around £500 a month. I was told by the advisor I can write off a high percentage of my debt, they were very In depth and went through everything with a fine tooth comb.

They lowered my payments to £120 a month but because I've got a property with a lot equity in it they said the term would be over 6 years, I'm a little bit worried that the creditors will take further action is this possible once the agreement has been set up?

IVA's are a genuine option but if you have a property with a lot of equity you need to be extra careful. Firstly, I would advise you against bankruptcy in this situation as you would risk losing your home and an IVA may be unsuitable if your equity is more than your debt level, because you are not actually insolvent. Try speaking to an independent advice service as Sourcrates said. Whilst this company may be fine, they may also only have one product to sell, so if they are not independent, you just need to be careful.

In a nutshell, an IVA is a form of insolvency and is normally done over 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 (was this explained?) 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, including your home.

As 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 (as they said) because of the damage to your credit file, and that is why the IVA is typically extended.

I hope none of this has come as a surprise, but please make sure you get some extra advice before signing on the doted line.

Laura
@natdebtline

fatbelly · 17 February 2018 at 9:12AM

The other option in your circumstances is a debt management plan at £120 per month. That would take 14 years but is a more informal solution.

An IVA could be the best option but you do have to understand what you are signing up to. For example, did they explain that there will be a restriction placed on your property at the Land Registry?

I'm meeting a lot of people who have been pushed into these things

DannyPearce90 · 10 January 2019 at 8:23PM

IVA's are definitely not scams, although sometimes you have to read very carefully through the insolvency proposal. As National Debt Line advise your home may be at risk if you can not keep up with the repayments of your IVA.

Personally speaking, if £120 is manageable then I see this as a fantastic solution to your debt problems.

If it was me, I wouldn't go with the first IVA company that gives you a price. Generally, IVA's start from £120 with companies like Credit Fix (of which the above mentioned company is an introducer).

Like anything you should take a holistic view whilst picking the right company for yourself.

I have attached some links to useful pages for you, and good luck!

https://www.moneyadviceservice.org.uk/en
https://www.gov.uk/government/publications/review-of-the-money-advice-service
https://www.ivaonline.co.uk/iva-companies.html
https://www.iva-advice.co/iva-companies.html

IVA good idea?

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