Wondering if anyone has done an IVA? advice?

[jacky21130]

Hi,
we are struggling with debts.. they are getting worse as bank charges are sinking us further down!! (dont worry on the road to getting some back!) but we owe loads... has anyone done one of these 5 year IVA get out of debt things? just wondering if it was recommended and if your likely to get accepted if your like us and rent privately and not a property owner with a morgage?


thanks
Jack

[kokomar]

Unfortunately this forum's search engine won't recognise "IVA" as a search term but if you're patient enough you'll find a few people in the same boat on here.

Here are some pointers from my totally biased opinion! We applied for an IVA earlier this year and had a truly dreadful experience.

1. Whichever company you choose they are not in business to help you get out of debt (no matter how caring they sound on the phone or what their advertising says) they are in business to make money.

2. "We don't charge you a penny!" watch and learn. example. you owe £50,000. You can afford to pay £500 pcm for 5 years giving a total paid of £30,000 or 60% of the original debt. You are informed that the IVA companies fees are taken from this money with the remainder being paid pro rata to your creditors. You are not informed (unless you push very very hard) how much these fees are. Want a surprise ... in our case the fees would have been nearly £20k over the term of the IVA, nearly £4k per year. This is why so many applications fail either before a proposal is put to the creditors or through less than 75% of your creditors agreeing. After all the creditors will in this example only receive £10k, a return of 20% of the original debt.

3. Your creditors already have a figure in mind. e.g. Marks & Spencer 80% or have a "zero tolerance" policy towards IVAs, from what I've read Lloyds will vote no just on principle whatever you offer them.

4. You're right they far prefer homeowners preferably those with some equity(we aren't but some friends of mine are, they have an IVA at the mo but are trying to raise the funds to buy themselves out of it. There are specialist companies that do this too!)

Sorry this all sounds so negative but please please be wary. No matter what anyone tells you continue to pay as much as you can (our biggest mistake), anyway here are some ideas you may or may not have already tried.

1. Stop doing anything that's costing you money and isn't absolutely necessary, my personal favourite was when we were asked how many gym memberships we were currently paying! We were already down to the basics: food, shelter, heat etc.

2. Check all your agreements for PPI policies, can you claim? If yes ring up and claim, if no, why is this being added to your accounts (if it is) ring up and cancel and research thoroughly to see if you have a case for mis-selling (ref Citizens Advice Bureau super complaint handed to the OFT). If you are nervous about being uninsured take out single policy with a third party at a fraction of the cost before you cancel the PPI.

3. Compile a spreadsheet of all your incomings and outgoings, include EVERYTHING. Also on this sheet include a list of your creditors, current balances and (minimum) repayments (and term if applicable). Get ready to fax or post it. Whilst doing this make a file up in section so that if necessary (not likely) you can prove your figures.

4. Phone up your creditors one by one. Do not wait for them to phone you. Use the collections numbers NOT the bog standard call centre numbers. Take the name of the person you are speaking to and a note of the date. Explain that you are having difficulties meeting all the minimum repayments to your creditors and tell them that you've heard that in some circumstances they have reduced or frozen interest and allowed for reduced minimum monthly payments (1% is quite common) for a fixed period of time (3-6 months but this can be extended if they agree). You might have to push for this but keep niggling away at them. They will want to see incomings and outgoings ie the spreadsheet you just worked so hard on.

This will buy you some time during which you can calmly look through all your options, IVA, consolidation, bankruptcy etc.

Don't be scared of the B word, do your research, as you are not a homeowner this could be a way forward for you. Look out for Zooman's posts on this he is particularly authoritative.

Another note for you to think about. If you are in an IVA and you get a nice healthy lump sum from reclaiming unlawful bank charges, mis-sold PPI, inheritance etc. you must inform the insolvency practitioner as they will more than likely want the dosh to pay towards your debts, as well as the payments you've agreed to. It's know as a windfall clause.

Hope this helps, I'm not an expert and speak purely from personal experience. Any more questions just holler. Good luck Koko

[e28bigalbexley]

Hi jackie
im no expert on this but try the Citizens Advice Bureau its free.
Also i think there is a place called Consumer Credit Counseling Service also free
They are both very good at helping you get your funds in order. There is as Cocomar rightly said plenty of imfo on this site .Try things like the forum headed DCA's and Baliffs, or use the search button with Independant Voluntary Agreement, or bankrupcy it will throw sumthing up.

If your really having problems PM a site helper you will find them listed in pink at the bottom of the main pages.(platinum account holders)

Good luck Al.

[martinpar]

Yes those are good suggestions.

I have to take issue over the claim that all insolvency practitioners aren't interested in your problems, just the money. I arranged an IVA some years ago. It eventually failed due to my situation getting worse, and I was made bankrupt but the bulk of my monthly payments up till then did go to my creditors. I stayed friends with the person who arranged it for me and he has helped me out on numerous occasions with financial problems at no charge. They charge an up front fee which could be as high as 2,000 but there are other possibilities, such as an informal arrangement with creditors. The only problem with that is that they can change their mind whenever they like, although they'd have to justify it I suppose. For many people, bankruptcy is the best solution, particularly if you have no major assets like property. It still costs money of course, which always seems a bit odd to me.

[hellieb]

HI

I'm a debt counsellor and would honestly advise that an IVA is better for individuals that rent their property rather than own it.

During the 4th year of an IVA the Insolvency practitioner has the right to ask you to try and realise any equity you may have in property, up to 85% of it's value - so if your house is worth £100k and your mortgage is £60k they can ask you to take a further £25k mortgage which will probably pay off your IVA but you'll be left with a far larger mortgage payment afterwards!

Also, as far as fees go - even the companies that say they dont charge you any fees actually build their fees into the IVA as mentioned inthe first reply on here. From experience you are looking at a minimum of £7500 in fees over the 5 year term of the IVA.

IVA's are all about percentages, and if your Insolvency practitioner can persuade your creditors that they will get more back through an IVA than through Bankruptcy then the creditors will almost always agree to it. There are some exceptions - M&S say 80% return, Paragon always say no etc etc.

You should really look at your options in more details before going for something which sounds too good to be true! The first reply to this post was absolutely correct, contact your creditors before they contact you, dont accept what they say, argue until you reach a payment amount that you can afford - and remember -point out that they will get nothing if you go bankrupt, it always has the desired affect.

I'll gladly give you a hand if you want to get in touch

Hellie