Don’t know how to start but would just like some general help! I have debts at around £40K and earn £24K a year, living with my parents. How does the IVA work out how much you can pay each month? Would they allow for rent paid to my parents? Would I have to inform my parents? How long does it normally take to set up the IVA? Any recommendations on which company is best to use? Thanks x
Hello and welcome, you have made a good start already by admitting to yourself that you may have a problem.
The IVA works by allowing all reasonable living expenses, including rent to parents (as long as it is within reason) transport costs, general living expenses including phone, clothing and general everyday living. What is left can be used as payment to your creditors. If the debt can be cleared within say 7 years, assuming interest and charges frozen, then an informal route such as a debt management plan may be more suitable, if not then an IVA may be an option for you, as well as bankruptcy of course. You would not have to tell your parents if you didn't want to, but creditors do generally ask you to back up with proof how much you give your parents in board if it is an IVA that you are looking at.
A good place to start to get help would be to visit www.iva.com have a look round and take time to speak to 2 or 3 professionals so that you have a good idea of ALL the options and then you can make your own mind up from there.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
An IVA is worked out on the amount of disposable income you have after paying your priority debts, rent, food, utilities etc. You don't have to inform your parents, but if you are about to start experiencing problems with paying your debtors, you will receive letters and phone calls which may make it difficult to hide from them. Would they not be supportive of you?
An IVA can take up to three months to set up. You need to speak to an Insolvency Practitioner who will go through all your options (DMP, IVA or Bankruptcy) with you and sort out the best way forward.
If you visit www.iva.com, you will find reviews for a lot of companies on there. Melanie Giles, who posts on here and whose information can be found under the experts heading, comes highly recommended.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
It will be shot for 6 years from the start of it and you will then have to rebulid it. But any of the 3 methods of sorting debts out will have an adverse effect on your credit rating
Your credit rating will be bad once you cannot pay your creditors any more, this will remain on your file for at least 6 years (depending on how long a DMP lasts for).
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
The main differences are that an IVA is a very formal route whilst a DMP is an informal route. As such, an IVA, subject to creditor approval, will freeze all interest and charges permanently and creditor hassle will stop, although you will still get some regardless in the initial stages. A DMP isn't subject to creditor voting but they will obviously still expect you to do what you can to honour your debts. There is no cast iron guarantee that creditors will freeze interest in a DMP but to be fair they generally will do so, subject to regular payments of course. It doesn't legally stop creditor hassle like an IVA does, but again they generally do back off once they can see that you are what you say you are, again by regular payments.
Hope this helps.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
If you think that a DMP is a better option that the security afforded by an IVA, then it is a great idea to start off with a DMP in the knowledge that if your creditors do not play ball and accept the offer you then have good grounds for seeking an IVA.
Do different companies charge different rates? How can i work out myself how much i need to live on - do they provide you with a questionnaire or something? I am not sure what would be best an IVA or DMP
It is inevitable that each company will have different costs, and all you can do is ask the question, but in the end the creditors will not accept an IVA proposal if they feel the fees are too high so it therefore follows that it is not in anyones interest to charge extortionate fees, some difference between firms, however, is to be expected.
As for affordability, that should be gone through thoroughly at the time of enquiry to make sure any proposal is affordable but I would encourage to make your own list of absolutely everything you can think of. As I have said previously, that small pet insurance policy or the odd trip to the Co-Op in the middle of the week for bread, milk and odd bits as well as the big weekly or fortnightly shop is all to easy to overlook and it is very important that you avoid the temptation to overstretch yourself simply to get the help you need. If something in the budget that is done for you does not look right then query it.
You should also then be sent everything in writing and I would encourage you to go over it again and again with a fine toothcomb and make any necessary adjustments before you send it back.
Hope this helps.
Regards.
Last edited by size5 on Fri Oct 03, 2008 10:30 am, edited 1 time in total.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
Thanks that does help a lot and something I was going to query was an allowance for my pet. My insurance for him is £42 per month then I have vet bills to pay which I normally pay on my credit card them claim back from the insurance company. I think I would have to ask if the vets can claim directly back from the insurance as I wouldn’t have a credit card……… Would they IVA allow for dog food? X
Pets are very important for many different reasons, so if you have a dog that needs feeding then, as long as it doesn't exist on fillet steak and truffles, reasonable allowances can be made for that expenditure. Be aware that your creditors may query a £42 per month policy and may ask you to shop around for something a little cheaper but my view on this is that if you pay it then it should be allowed for within your expenditure, again within reason.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
That’s again for your feedback! The policy is the best on the market as they pay for all treatment etc and always renew each year no matter what the conditions are so am sure if I say that it should be ok?
