IVAs....

[Bank_Basher]

Hi,

I'm fighting battles on numerous fronts: reclaiming bank charges off a number of banks (£1.3k from one and not sure about the other yet!) and also considering taking out an IVA with PayPlan.com.

 

The reason for considering an IVA is that although my partner and I have a relatively healthy monthly income (total approx 4.3k) our outgoings have hit an all time high with priority debts at about 3k per month and unsecured debt at 2k. We are not behind on any loan/credit card payments....yet! But after being hit with unlawful bank charge after charge and selling what we can...we're now in a situation where we're parachuting to another account and looking at IVAs and debt management in a bid to keep the house (which has some equity). I've completed the income/expenditure spreadsheet that the bankers association use and it works out how much each of our creditors will get if they accepted it (which is the problem!).

 

I've looked into these options and IVA seems to be the most suitable to get us out of debt faster and repair credit record....although cant help thinking it's more in the creditors interest than ours and its high risk (one step out of line and its time for bankruptcy). I dont like the idea of debt management as they're informal, potentially go on for years and your credit record is affected for 6 years after the plan has ended.

 

Also, if we're chasing some creditors for bank charges we're concerned that they may vote no to an IVA........but saying that they would be biting off their wolf-like noses to spite their hairy faces wouldnt they?!

 

Anyway, would really appreciate any advice or to hear of anybody's experiences with IVAs and/or PayPlan.

 

Best

BB

[MinnieMouser]

Hiya,

 

Well I hear Payplan mentioned quite a bit on here (and mostly under seemingly favourable circumstances) but my partner and I have deep suspicions about them.

 

We used them to handle a debt management reduced payment plan (their free service) & to cut a long story short they just made things worse.

 

They were hopeless at negotiating with our creditors to stop penalty charges and interest - we're not even sure they tried. They neglected to send out our income and expenditure budget to creditors on several occasions. We'd pay them in a lump sum at the start of the month via standing order but payments wouldn't reach our creditors until 2-3 weeks later on average. When one of our creditors took us to court they told us to accept the claim and file no defence - got us a lovely little ccj. Knowing what I know now that was the completely wrong advice and I doubt the district judge would have awarded them the ccj. For the two years we were with Payplan we paid £14000 towards our debts - however the interest and penalty charges racked up an additional £16000, so we were essentially 2k worse off.

 

Eventually we started dealing direct with the creditors and within a month we had the interest and penalty charges stopped. It was 3 months before Payplan even noticed that we'd stopped sending them money every month.

 

It's my opinion that Payplan and other debt management companies are self-interested and pro-creditors. Avoid 'em at all costs if you ask me. Use CCCS if you can or do it yourself using the tips and tricks on this forum.

 

MM

 

Ps - Are you sure an IVA is the best option? At least CCA the unsecured creditors to see if they could actually enforce the debt in the first place. Is remortgaging an option for the secured liabilities?

[Bank_Basher]

Hi MM,

Sorry to hear about your bad experiences with PayPlan - it's a real eye opener and concerning. Was it like a systemic problem within PayPlan (sounds like it if they dont know whether they've received a payment or not) or just the incompetence of one PayPlan rep?

If its systemic then perhaps I should look elsewhere.

 

Your experiences and advice support what I've heard before and that is for debt management plans its best to either deal with creditors yourselves or use some charity org like CCC or Citizen Advice.

 

Well MM, I really dont know if IVA is the best option...pondered for ages on this. We have monthly unsecured debt payments of £2k (50% of our income) with a mortgage of approx £900 and nursery costs of £640....when coupled with the rest our priority debts (excluding food) we end up exceeding overdraft limit and little cash for food. So we continually end up receiving more bank charges and have even less free cash the following month and so on. Its amazing that we havent plunged into arrears with our unsecured stuff....but that's about to change.

 

Our first solution was to remortgage (even though we're only in first year of 5 yeard fixed) to consolidate debt and free up some monthly cash.....but in January we had an informal chat with our branch and when they saw how much unsecured debt we had they advised us not to go through with application as it would probably be rejected and affect our credit rating.

 

Soooo this had me looking at debt management and IVAs. For debt management, I received a schedule off CCC but with their plan it would have taken 12 years to pay it all off and our credit record would be affected for 18 years. Also its informal and the creditors could change their mind at any time.

 

The income/expenditure plan calculated by PayPlan for an IVA seems realistic (paying creditors £1k less a month) but there are so many questions (will they vote for it? how reasonable are creditors? will we be able to remortgage with an IVA during the fourth year? are we getting screwed by the creditors more so than if we went bankrupt or were on debt management? are we or the creditors getting screwed by Insolvency Practitioners with charges of between £8-10k)

 

BB

[sequenci]

 

It's my opinion that Payplan and other debt management companies are self-interested and pro-creditors. Avoid 'em at all costs if you ask me. Use CCCS if you can or do it yourself using the tips and tricks on this forum.

 

 

CCCS and Payplan work in VERY close unity. To slag one off and recommend the other is a little bit odd as they use near identical methods to help debtors. I deal with both firms on a daily basis and they are both very good although I will add that some of my clients have had problems with both cccs and payplan but usually it is the creditors themselves that are to blame, especially people such as MBNA, AMEX and the vast majority of the sub-prime lenders.

[MinnieMouser]

I'm only recommending CCCS based upon the user experiences that I've read on this site. Also, it's not a case of whether or not both Payplan and CCCS use near identical methods to assist debtors (or should that really read creditors?) - it's a matter of whether or not they can fulfill that requirement based upon their commercial competence, representative ability and client obligations. In my experience, Payplan proved that they were incompetent on a truly magnificent scale and, further, could not even deliver rudimentary administrative process. They clearly demonstrated this on a regular basis so I don't really think I'm slagging them off.

 

Like Sequenci said, it's usually the creditors that are to blame for causing problems & I would sincerely hope that our experiences with Payplan were something of a rarity. I suspect that is not the case though.

 

MM

[sunshine star]

Hiya,

 

MM

 

Ps - Are you sure an IVA is the best option? At least CCA the unsecured creditors to see if they could actually enforce the debt in the first place. Is remortgaging an option for the secured liabilities?

 

Just struggling with two credit cards myself at the moment - sorry to hijack the thread - but can you be more specific about a CCA please? If a CCA cannot be provided (even though you used the facility recently) the company cannot enforce the debt? they wont just walk away from 17k though will they?

[Bank_Basher]

Many thanks for info posted so far - its really helpful.

 

Sorry to sound ignorant, but what does CCA stand for?

 

BB

[sunshine star]

consumer credit agreement? - either way it's the form you sign with all the terms and conditions of the credit provison.

[gizmo111]

The income/expenditure plan calculated by PayPlan for an IVA seems realistic (paying creditors £1k less a month) but there are so many questions (will they vote for it? how reasonable are creditors? will we be able to remortgage with an IVA during the fourth year? are we getting screwed by the creditors more so than if we went bankrupt or were on debt management? are we or the creditors getting screwed by Insolvency Practitioners with charges of between £8-10k)

 

Havea read here - some answers to your questions http://www.consumeractiongroup.co.uk/forum/general-debt/56970-insolvency-dealing-debt.html

[Bank_Basher]

Thanks Gizmo - link very useful.

 

Just thinking about alternative options to an IVA that would be less restrictive. This month will be the first time we will be unable to make the full contractual monthly payments to many of our creditors, so I'll be writing to them this week offering a token payment, abstractly stating the reasons why and that we intend to resume normal payments the following month. This would give us time to explore the debt consolidation route in a bit more detail.

 

We thought about this in January when we could see the problem coming and at that time the Nationwide assistant didnt think we'd get a remortgage due to the level of unsecured debt we have. However, since we didnt go through the process, based on her advice, we dont actually know. Perhaps we should have gone for it or tried another lender.

 

Do you think the token payments we intend to make this month will affect our chances of getting a remortgage or secured loan?

 

BB

[gizmo111]

Do you think the token payments we intend to make this month will affect our chances of getting a remortgage or secured loan?

 

 

Possibly - but the danger here is putting unsecured loans into secured.

How much equity have you got in the house and how much unsecured debt?

[Bank_Basher]

Well its not good, perhaps £40k equity and the unsecured debt is....£112k!:o

 

Most of it would be cleared by 2010 as the monthly payments are so high (hence we're struggling) but could knock some out with the £40k to gain some breathing space each month...assuming resulting mortgage payment isnt above £950...although like you say its turning unsecured to secured and hence stretching the debt over 15-20 years (with more interest).

 

Not sure what other options I have....debt management? sell up and move to small house (prefer not to)? IVA? Lottery!

 

BB

[gizmo111]

Maybe a full and final of some sort using the equity.

If you let me have details of how much you owe and to who and a income and expenditure sheet then I will have a look and see if I can get any ideas.

[Bank_Basher]

Thanks Gizmo111, income/expenditure sheet attached (all anonymous of course)...really value any ideas to solve this one.

 

Best

BB

 

ps forgot to mention, our current payments on unsecured debt are as follows:

 

AA Loan 320.68FirstDirect Loan 195.07Nationwide Loan 178.21Student Loan66.64Lombard Direct Loan145.76NR Loan 130.02NR Loan 62.24Cahoot Loan 95.85NR Loan 177.86Cahoot Loan 96.73DFS Loan80.97Lloyds TSB Credit Card139Alliance&Leicester Cred Card160HSBC Credit Card175HSBC Flexi Loan52.02

Total 2076.05

[Bank_Basher]

Note that the spreadsheet is that used by British Bankers Assoc. and enabling macros makes it slightly easier to view.

 

Thanks again.

 

BB

[Bank_Basher]

We've just thought of one possible solution:

 

1. Issue letters and token payments for this month

2. Remortgage house for £190k with LTV 95% - allow £148k for paying off current lender and solicitor etc. Interest only mortgage rather than repayment mortgage for short term

3. Use the £39.9k to pay off all credit cards, AA, Lombard Direct and Hitachi Capital freeing up £1,023 per month

4. Ride off into the sunset without restrictions of an IVA!

 

Its late but money probs are better than Pro Plus and money never sleeps! Seriously, though its an idea but the trick will be finding the right mortgage lender (given the token payments this month and likely stain on credit file).

 

Anyway, thanks for listening.

 

Best

BB

[gizmo111]

Hi,

 

Can you post what the actual repayments should be?

[sequenci]

3. Use the £39.9k to pay off all credit cards, AA, Lombard Direct and Hitachi Capital freeing up £1,023 per month

 

you could use a lump sum to offer full & final settlements.

 

an IVA would freeze further interest and charges, a remortgage would end up with you paying THOUSANDS extra back.

 

without knowing your precise incomings and outgoings i couldn't tell you what to do, I will state that an IVA is only suitable for about 5% of the clients I speak to.

[Bank_Basher]

I've attached a document containing contractual monthly payments and outstanding balances (my estimate given loan amount and number of payments made so far).

 

Re: precise income/expenditure (excluding unsecured debt) is in the spreadsheet attachment.

 

Many thanks, really appreciate any advice.

 

BB

BB_UnsecuredDebtPayments_Monthly.doc

[sequenci]

I've attached a document containing contractual monthly payments and outstanding balances (my estimate given loan amount and number of payments made so far).

 

Re: precise income/expenditure (excluding unsecured debt) is in the spreadsheet attachment.

 

Many thanks, really appreciate any advice.

 

BB

 

have a go at filling in a personal budget and let us know what your surplus income is.

 

National Debtline England & Wales | Personal Budget Sheet

 

also check pms in a sec