IVA with Payplan - advice

Barry1108 · 27 January 2020 at 1:57PM

Hi,
I think I have finally decided to go down the IVA route and have spoken to Payplan about it.
I am around £80,000 in unmanageable debt due to my marriage breakdown and subsequently living on a single wage with all debts in my name.
I worked through my outgoings and I have approx £480 left to pay back per month which will restrict things for me obviously but am keen to make and implement a plan to relieve the stress its causing me.

I have some questions though which I am hoping someone here can answer for me:
An IVA lasts 5 years (I think) but what happens to my credit rating during this time?
Once I am out of the 5 years how easy is it to rebuild?
What would happen if I received any extra money during the IVA? I am due some compensation from an accident, not sure when or how much but would that automatically go to creditors?
Also, what is the general concensus on Payplan as a company to go through? They seen helpful so far but I am scared about the whole situation and dont want to make a bad decision.

Thank you in advance

sourcrates · 27 January 2020 at 2:14PM

Hi,

An IVA lasts a minimum of 5 years, but can be as long as 7.

Are you are homeowner ?

Because if you are you will be expected to either re-mortgage in years 5, or take out a secured loan to end your arrangement early, or perhaps have to make up to two years further monthly payments, depends on your circumstances.

Forget credit ratings/scores whatever you want to call that made up number, you will be insolvent, and your credit report will reflect that, once its gone from your file, after 6 years, if you mange credit again successfully, your credit history will improve.

There is a standard windfall clause in every IVA, it may have to be paid for the benefit of your creditors unfortunately.

Pay-plan are just an advice service, they will farm you out to there recommended IP to administer the IVA.

devon_guy · 27 January 2020 at 2:15PM

Hi,

I'm going through an IVA at the moment myself so will try and help.

1) Your credit rating will be shot during the 5 years and the fact you are on an IVA will show on your credit file for 6 years from the date its granted. You also can't take out credit over £500 during this time.

2) Can't say how easy it is to rebuild, you'll have to use things like credit cards with high APR etc to try and rebuild.

3) Any income you receive like any payments for compensation will have to be declared to your ISP. I can't remember how much they'll take you'd have to ask your company.

Can't help you with what payplan are like as I'm using a different company.

Good luck with your journey to becoming debt free!

Barry1108 · 27 January 2020 at 2:18PM

sourcrates wrote: »

Hi,

An IVA lasts a minimum of 5 years, but can be as long as 7.

Are you are homeowner ?

Because if you are you will be expected to either re-mortgage in years 5, or take out a secured loan to end your arrangement early, or perhaps have to make up to two years further monthly payments, depends on your circumstances.

I am a homeowner but I rent it out, it has no equity in it and Payplan havent mentioned anything about me having to sell it.

Barry1108 · 27 January 2020 at 2:24PM

devon_guy wrote: »

Hi,

I'm going through an IVA at the moment myself so will try and help.

1) Your credit rating will be shot during the 5 years and the fact you are on an IVA will show on your credit file for 6 years from the date its granted. You also can't take out credit over £500 during this time.

2) Can't say how easy it is to rebuild, you'll have to use things like credit cards with high APR etc to try and rebuild.

3) Any income you receive like any payments for compensation will have to be declared to your ISP. I can't remember how much they'll take you'd have to ask your company.

Can't help you with what payplan are like as I'm using a different company.

Good luck with your journey to becoming debt free!

Thanks for your reply, how are you finding the whole process?
And which company are you with? I am trying to work out the best way to do it.

devon_guy · 27 January 2020 at 2:45PM

I'm with IVAorg. They have been lovely and really helpful so far. They've made a tough process much easier to handle for me.

fatbelly · 27 January 2020 at 4:21PM

The rental property will be the reason they have recommended an IVA, as you stand to lose that in 3 years' time if you go bankrupt and the property has gained some equity.

Payplan do have in-house insolvency practitioners and on the face of it £480 per month does seem reasonable to cover 80k of debt.

However I always recommend talking to at least 2 IPs and see which you feel most comfortable with. Maybe use this guide:

https://debtcamel.co.uk/choose-iva-firm/

Barry1108 · 27 January 2020 at 6:06PM

fatbelly wrote: »

The rental property will be the reason they have recommended an IVA, as you stand to lose that in 3 years' time if you go bankrupt and the property has gained some equity.

Payplan do have in-house insolvency practitioners and on the face of it £480 per month does seem reasonable to cover 80k of debt.

However I always recommend talking to at least 2 IPs and see which you feel most comfortable with. Maybe use this guide:

https://debtcamel.co.uk/choose-iva-firm/

Just a question on this - would it be worth my while just selling the house to clear the mortgage and then go bankrupt. Is that a better solution?

fatbelly · 27 January 2020 at 7:26PM

Barry1108 wrote: »

Just a question on this - would it be worth my while just selling the house to clear the mortgage and then go bankrupt. Is that a better solution?

Hard to say. On the one hand the OR will only require your surplus income for 36 months in bankruptcy but on the other hand you lose the potential equity in the property.

PrettyKittyKat · 27 January 2020 at 8:43PM

If you do decide to do an IVA please make sure you mention the potential accident money to your IVA company and ask for it to be written into the proposal how it will be dealt with. You will need a rough guide of how much it will be (e.g approx £1000 or £10,000) and they will state how it will be dealt with. If it was for loss of earnings expect to pay 100% in. If it was for pain and suffering then you could propose it is kept to be used to manage additional costs due to ongoing issues from the accident (which obviously can therefore not be claimed for on your income and expenditure). There is the potential of a modification being added asking for this to be changed but you can cross that bridge when you come to it. This way you, the creditors and the IVA company are very clear in how to deal with it and there will be no confusion or 'moving of the goalposts' later in the agreement.

Barry1108 · 27 January 2020 at 10:06PM

PrettyKittyKat wrote: »

If you do decide to do an IVA please make sure you mention the potential accident money to your IVA company and ask for it to be written into the proposal how it will be dealt with. You will need a rough guide of how much it will be (e.g approx £1000 or £10,000) and they will state how it will be dealt with. If it was for loss of earnings expect to pay 100% in. If it was for pain and suffering then you could propose it is kept to be used to manage additional costs due to ongoing issues from the accident (which obviously can therefore not be claimed for on your income and expenditure). There is the potential of a modification being added asking for this to be changed but you can cross that bridge when you come to it. This way you, the creditors and the IVA company are very clear in how to deal with it and there will be no confusion or 'moving of the goalposts' later in the agreement.

Thanks for the advice, the payment is for suffering and I genuinely have no idea how much it will be or even when I will be offered it.

IVA with Payplan - advice

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