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    • Somerset La La La
    • By Somerset La La La 4th Jan 18, 8:49 PM
    • 544Posts
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    Somerset La La La
    Dubious IVA?
    • #1
    • 4th Jan 18, 8:49 PM
    Dubious IVA? 4th Jan 18 at 8:49 PM
    I've got a friend who had an IVA agreed in Summer 2016 - I've verified details through the insolvency register, as she's not sure on details/dates etc.

    She has very little assets (if any), and that was the same in 2016. Sadly it looks like she took little independent advise before entering the IVA. I'm very concerned she's gone to a profit making company that have potentially given her bad advise to rake in management fees?!

    For example when I looked at why she was declined for Capital One (she said her credit "wasn't good") it said Bankruptcy decline. She said she hadn't been bankrupt.... "well this says you have, or insolvent anyway". "No." What about IVA/Debt Payments... "Oh yea, well I pay £20 a week"!!!

    Got a few questions about IVA's in general, but also is there anything we can do about it if it's not best for her to carry on?
    • She has a CCJ dated 2 months after the IVA - can this be removed?
    • She has multiple credit accounts showing as defaulted with high balances - should these be £0 or only on IVA completion? If a bankruptcy order were granted, she'd be at £0 already
    • Bankruptcy IPA/IPO is for 3 years max, as her earnings are only £27k (including 7k benefits) would she really be paying more than £80 a month?!

    It's not quite £20 a week, but don't want to be too precise.

    Given the fact she's paying ~£80 per month, which I assume is a fairly standard 60 month one, that's another £3k she's going to pay, and her credit file is still going to be trashed if she can't get these defaults etc removed. Would she be better off breaking the IVA and just going bankrupt? In a year she'll be discharged, potentially not having an IPA/IPO anyway (so saving £3k or whatever) and *everything* will be written off.

    Her employment doesn't have a bankruptcy clause (I used to work with her). Council tenancy and leased car - although I guess the car lease could be affected by being bankrupt, but she needs it for work and it's not a ridiculous car.

    I'd send her to Stepchange but would they be able to advise on any IVA taken out and whether it was 'legit' or not?
    Last edited by Somerset La La La; 05-01-2018 at 7:25 AM. Reason: typo
Page 1
    • PrettyKittyKat
    • By PrettyKittyKat 8th Jan 18, 5:48 PM
    • 436 Posts
    • 421 Thanks
    PrettyKittyKat
    • #2
    • 8th Jan 18, 5:48 PM
    • #2
    • 8th Jan 18, 5:48 PM
    If the IVA is on the insolvency register then it is legit. Based upon circumstances you have said then bankruptcy may be best, however what is your friends view on this? Some people just don't want to go bankrupt regardless of whether people tell them it's the best thing they do want to try and repay what they can via an IVA.

    She needs to speak to the iva company regarding the ccj. They need to check that the debt is included in the iva, if it is then the ccj should be removed. If it is not then they need to get it included and remove the ccj.

    It is usualy for defaults and high balances to show when on an IVA. They will not show as settled until the iva completes. The defaults should be dated for he date of the iva or before, not after. However given that she is not able to get credit whilst on the iva as it will all get updated when she conpletes, then it probanly isn't worth the time and effort to correct now. It would be better to wait until the iva is nearing conpletion to challenge and have the default dates corrected.

    Her earnings are irrelevant, it is her disposable income that matters.

    Your friend doesn't sound too clued up on her finances/IVA. Maybe suggest calling her iva company together and discussing the situation with them and what is best for her. It would also be wise to check if she is up to date with her annual reviews and additional monies.
    • Fireflyaway
    • By Fireflyaway 8th Jan 18, 7:48 PM
    • 1,812 Posts
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    Fireflyaway
    • #3
    • 8th Jan 18, 7:48 PM
    • #3
    • 8th Jan 18, 7:48 PM
    Not meaning to be patronising but why was she trying to open a credit card when on an iva? Best not to borrow anymore.
    My understanding is a ccj can be removed but usually only if paid within 30 days of being registered.
    There is no reason why your friend can't negotiate directly with her creditors.
    I also agree that repayments are based on affordability not income. These days most debt collectors ask for income and expenditure because they have a duty of care not to make debtors get in more financial trouble.
    • Somerset La La La
    • By Somerset La La La 9th Jan 18, 8:27 PM
    • 544 Posts
    • 169 Thanks
    Somerset La La La
    • #4
    • 9th Jan 18, 8:27 PM
    • #4
    • 9th Jan 18, 8:27 PM
    Thanks both - she's not concerned with the 'stigma' of being bankrupt, and has kept her finances separate from her other half's to avoid bringing his credit down.

    Agree it's based on disposable income rather than income itself, but she doesn't have much - I presume IVA payments are calculated on a more relaxed "agreement" with the IVA company/creditors themselves - whereas a bankruptcy can be fairly harsh in terms of what's an allowable expense etc.

    Also turns out the lease car isn't leased in her name, it's in someone else's that she pays back - but I suppose bankruptcy is then opening a can of worms regarding whether that is allowable or not. A car certainly, because of her job, but a relatively new lease car in somebody else's name, possibly not! Although when the IVA was entered that wasn't the situation.

    In my view it's just very unfair that someone who doesn't mind going bankrupt (just wanted to stop the creditors - all of them!!), has no assets and isn't in a job which restricts BR was advised to go down the IVA route - that screams money making by the IVA firm to me?! Would it be StepChange regarding a review/challenge of it? While the IVA won't get overturned, if it was ruled that inappropriate advise was given, then appropriate penalties should be applied to the firm/adviser and probably compensation given to her.

    RE: Credit Card on IVA - improving her rating etc. Although she's not 'on top' of finances, gaming the system etc, you never know when you might need credit for whatever reason.

    What if he partner leaves her, how is she even going to get say internet (at a reasonable price) whilst in an IVA? Or pay monthly for car insurance without being completely conned. Mobile phones are another issue - although PAYG is often suggested, I've yet to see a high phone user who's not better off on a contract (SIM Only or full handset based)

    Agree she needs to tread very carefully if taking out credit, but IVA/Bankruptcy etc isn't a great situation to be in by any stretch of the imagination - that is enough to make sure I personally look after my finances better in future, I would assume it's similar for others. Any insolvency event should be a new start IMO - and what's different from starting that building process now as opposed to starting it in 3, 4 or 5 years time?
    • PrettyKittyKat
    • By PrettyKittyKat 9th Jan 18, 9:26 PM
    • 436 Posts
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    PrettyKittyKat
    • #5
    • 9th Jan 18, 9:26 PM
    • #5
    • 9th Jan 18, 9:26 PM
    Getting a credit card is a breach of the IVA. Also, when you are having to take an insolvency route due to debts that you can not pay, getting credit should NOT be a concern. The concern should be learning to manage your money and live within your means to prevent the same situation happening in future.

    Thousands of people are on IVA and have no trouble getting reasonable costing internet and mobile phone contracts. Although you certainly can't make decisions based upon the 'what if' in this situation, as similarly you could say 'what if she goes bankrupt but then looses her job and the only job offer she gets is for a job with a no bankruptcy clause' etc etc. An IP would also not see 'wanting to be able to get reasonable costing internet and mobile if her partner leaves her' as a justifiable reason to breach the IVA by having credit. Furthermore, presumably if she lives with her partner they pay 50% or more of the household income and expenditure,therefore if they did split she would have no disposable income anyway.

    The best thing to do is steer completely clear of getting any further credit, it doesn't help her and is breaches the IVA. if she does go bankrupt an OR also isn't going to look fondly upon a new debt dated post IVA commencement, it doesn't exactly show commitment to the insolvency and an attempt at effective money management.

    I did my insolvency training a few years ago now, but if I recall an OR usually allows someone to keep a car they need for work if it is worth less than £1,000. A car worth more has to be down graded and the extra money paid into the bankruptcy. If she situation is different now then your friend needs to update her IVA company and her income and expenditure will be different.... is it possible she had a higher DI when she started it?

    You friend can seek independent advice on her financial circs and decide whether or not they feel the IVA is still the right things for them. They can also call the IVA company and ask whether they think bankruptcy is a better option. Ultimately it is your friends decision. If she wants to go bankrupt... she can!
    • Somerset La La La
    • By Somerset La La La 14th Jan 18, 3:59 PM
    • 544 Posts
    • 169 Thanks
    Somerset La La La
    • #6
    • 14th Jan 18, 3:59 PM
    • #6
    • 14th Jan 18, 3:59 PM
    Very interesting, didn't realise you couldn't have further credit whilst in an IVA - and clearly she didn't either as she's asking me about it!!

    I do totally understand your points regarding her future conduct and getting credit is largely unnecessary in terms of a necessity. From talking to her it seems to be the fact that she thought IVA was a fresh start, but she's still getting declined, that's the main issue for her. Whereas obviously if she HAD gone bankrupt then by now she'd be able to get credit again and 'rebuild' - BUT the bankruptcy restrictions may well have been tougher, especially in relation to the car etc.

    Not sure on her income etc, I'll get her to try and talk to somebody like StepChange/CAB - reading reviews of this IVA company I'm not sure they're the best for advise (since their website even states IVA is best for someone with debts of over 12k, assets and/or in a job where you can't go BR, she certainly has neither of those!).

    I'm thinking on more of an 'mis-sold' point of view, similar to the PPI cases - for example she 100% does not have a proper understanding of what she entered into, or even the importance of it IMO, which then raises a red flag over the quality of advice - but complaining about this could trigger reviews of her IVA etc, and I'd assume her disposable income has improved if she's now able to pay for a decent car lease.

    In terms of starting from scratch from a BR - it is a much trickier situation, not least due to the fact she's almost 2 years into the IVA!

    Thank you both for your thoughts - I'll certainly clearly pass on that she shouldn't be even trying to get credit, the last thing she wants to do is have her IVA breached/failed!!
    • sourcrates
    • By sourcrates 14th Jan 18, 5:01 PM
    • 14,314 Posts
    • 13,519 Thanks
    sourcrates
    • #7
    • 14th Jan 18, 5:01 PM
    • #7
    • 14th Jan 18, 5:01 PM
    Sorry, this smells like a pair of rotten kippers to me.

    So many things don't add up about this, are you 100% positive your friend has an IVA ?

    How much debt does she have ?

    You are correct, an IVA is usually only suitable for debts well over the £30,000 mark, although there is no official minimum, you can`t do one for free, there is always a fee involved, and insolvency fee`s can be quite high, and i`m afraid that a lot of these arrangements do get mis-sold.

    An IVA is one step down from Bankruptcy, so its quite a big deal, you are not allowed to take on further credit over £500, without your IP`s permission (never granted).

    Having such a low monthly payment suggests a very small amount of debt indeed, it does sound like she is blissfully unaware of what she has signed up to.
    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 are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • Somerset La La La
    • By Somerset La La La 14th Jan 18, 5:15 PM
    • 544 Posts
    • 169 Thanks
    Somerset La La La
    • #8
    • 14th Jan 18, 5:15 PM
    • #8
    • 14th Jan 18, 5:15 PM
    Yep, it's on her Clearscore credit file as "VOLUNTARY AGREEMENT" and I've checked the IIR (from my own experience of being on it myself!!) and she's definitely on there, correct address and DOB as

    Court Voluntary Liquidation Cases
    Type Individual Voluntary Arrangement
    Number (Information Not Available)
    Status Current

    From what I can see via her Equifax credit file she has approx £3k currently outstanding (most of it has been sold on to Lowell), plus on an arrangement to pay with her water bill (on Experian) - obviously it would've been higher when she started the IVA, but not much higher!

    I have just broken the news regarding the no credit to her... "you agreed to it when you signed up for your IVA".... "Did I?".

    I'm assuming she was sent documentation etc, but that's my concern too - she clearly doesn't understand the consequences of the IVA and/or buried her head in the sand and thought the IVA was the 'fresh start' - when in reality Bankruptcy would have probably been better of the two options, but ultimately with just a few creditors and such a low value, arrangements with each creditor would've probably worked - had she gone to StepChange etc and/or been given proper advice!

    I've tried to get her to get documentation which should list what's actually going to each creditor? I imagine it's something silly like 10% of each payment she makes - but not sure what recourse she has. Any significant compensation could potentially settle the IVA early.
    • sourcrates
    • By sourcrates 14th Jan 18, 5:29 PM
    • 14,314 Posts
    • 13,519 Thanks
    sourcrates
    • #9
    • 14th Jan 18, 5:29 PM
    • #9
    • 14th Jan 18, 5:29 PM
    There is a complaints procedure to follow if you have a complaint about your IP.

    I am not too sure if compensation would be payable, it could be she would have to launch her own mis-selling action against the company that sold her the IVA.

    From what you have said a debt management plan may of been more suitable for her.
    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 are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • Happy Kitties
    • By Happy Kitties 14th Jan 18, 10:54 PM
    • 525 Posts
    • 4,100 Thanks
    Happy Kitties
    The problem for your friend is if she had of gone down the bankruptcy route, even at the end of it any defaults would still stay on her credit file for 6 years. If she did manage to obtain credit it would be one with a high interest rate and if she is burying her head in the sand/not managing her money well now, this would just lead to further problems.

    I have just come out of an IVA, I did it with payplan.Although I can't comment on your friend's circumstances, I found that they were really brilliant with helping if you had a change in circumstances. At one point they did reduce my payments for a year
    I also had no problems with my phone contract within my IVA, I just made sure it was paid every month without fail
    Last edited by Happy Kitties; 14-01-2018 at 10:58 PM. Reason: addition to post
    2017 birthday savings shopping frugally = 481.15:money. 2018 birthday savings so far=359.51
    • PrettyKittyKat
    • By PrettyKittyKat 15th Jan 18, 9:36 PM
    • 436 Posts
    • 421 Thanks
    PrettyKittyKat
    I am guessing your friend has not got her paperwork carefully filed away for you to view.

    In that case, as her to call her IVA company and request
    - A copy of the IVA proposal (What was put to creditors)
    - A copy of the chairmans report (What was agreed including any modifications agreed, these can something be very important)
    - A copy of any annual reports (I am guessing she has had two by now? Possibly 1 if the 2nd anniversary has only just passed or is due now)

    She can just tell her IVA company that she has lost the original copies and would like to keep her records up to date. They have no reason to refuse sending copies.

    These documents will confirm what the original I&E was, what the current one they hold is (your friend is required to keep this up to date) and the pence in the £ expected to be distrbuted to creditors by the end.

    I seriously doubt you have any claim of a missell. It is lilepy the company discussed all options, maybe sent leaflets on them, allowed her time tk think about it (an IVA proposal can not be discussed evidenced and written in one call!) plus your friend is sent and has to sign the proposal to say she agreed before it can be issued to creditors. Your best vourse of action would be doing the above and making sure that your friend can successfully complete her IVA. The 'fresh start' with an IVA is from 6 years from the start date, not the second it is accepted! Your friend seems quite uninformed regarding credit and budgeting so I think sitting down and going through things clearly with her would realy benefit her.

    I wiuld be happy to help privately if you wanted.
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