Done the maths for an IVA including Student Loan

[Royleycarr]

Hello,

I posted on here the other day under a seperate question and the issue of Student Loans came up. There are cons with both including it in your debt total and with leaving it out.

Apparently the SLC have a tendancy to refuse IVA arrangements and, since they make up apx 50% of the total debt, they ultimately make or break the arrangement. Problem is, even though the SLC debt is not the one causing me problems (due to the nature of how it is paid back), I have read of case examples where the creditors do not accept leaving this debt out of the total. To be fair, I can see where they are coming from. Their attitude is going to be, "Why can you arrange to pay them back in full, but not us?"

So, facing this Catch 22 I can only really include the SLC in my total and hope that the pence in the pound represents an attractive enough offer to them to say yes. The good news is I am in a secure position workwise, pay is on a stepped progression so is quite predictable and I am in a secure situation accomodation wise. After doing the maths, I have estimated that my pence in the pound paid back would be in the region of 48p - 52p (quite high compared to what I have seen people on forums saying has been accepted in their cases)

Realistically, unless I fall into a high-flying job, the amount that the SLC would get back from me in the 34 remaining years of working life would be, at best, something like £5500. My IVA arrangements with them guarantee them slightly more, and within the next 5 years rather than the 34. What I want to know, from other people's experiences is: Are these the kind of considerations that the SLC take into account when deciding a yes or no? Would the comparitively high p/£ of apx 50p stand me in better stead with the SLC than, say, if I was only able to offer the average figure of between 25-40p?

Incidentally, I still believe that an IVA is a better option for me than DMP or BR. BR is a definite no-no for genuine personal reasons, and the DMP does not offer the security of being legally-binding and, more importantly, more private. I'd hate to enter a DMP and then start getting the letters/phonecalls further down the line, which would cause a lot of family upset due to my unique situation.

thank you in advance

M

[mole]

Hi M, good to see you are facing up to your debts and looking at the options available. I am not sure if you can leave any debt out of your IVA arrangement. If you did, this would need to satisfied fully as per the original credit agreement and you would not be allowed to recognise this payment in your Income and Expenditure used to work out your Disposable Income and hence your IVA payment.

Do you have a 4rd party who could pick up your SL payments?

[Royleycarr]

The SLC is unusual in that there is no requirement to begin repayments until you are earning £15,000+. Once you cross that threshold, you begin making payments, but it is done on a PAYE basis (For example, somebody earning £17,000 would have £15 deducted from their salary a month in the same way that tax and NI are deducted). This would affect the net pay. Even if I go through the stepped progressions in my current role, I would not expect to reach £17,000 for a good 7 or 8 years, so I am not worried about the student loan payments making or breaking me (and I could still easily afford them even whilst in an IVA).

I think the problem is that if you go down the IVA road, you have to include the student loan as part of your total debt or have the express approval of all other creditors that you will leave it out of the total- and it's that which I think they object to.

[mole]

Sounds like you have done as much as you can alone. It is now time to seek some professional advice. There are a number of good IPs and companies that post on here, they will give free impartial advice on your options and frame an IVA proposal for you if that is the right course of action.

Suggest you speak to a couple of companies (reviews on www.iva.com) and go with the one that you feel comfortable with.

[Adam Davies]

Hi
How much debt do you have without the Student Loan ? and how much disposible income do you have ?
Regards

[Royleycarr]

I have approximately £315 disposable once I have taken out monthly expenses, etc.

The debt without the student loan is apx £17000 but a lot of it is at a high rate of interest, which means that an IVA would still be better value in the long term

[Adam Davies]

Hi
I think that your creditors will prefer the Student loan paid as normal and the remaining debt dealt with via DMP.
Have you taken professional advice ?
Regards

[MelanieGiles]

I cannot see the SLC accepting an IVA offer on the basis you have presented. Try a DMP if repaying your creditors is important to you, or consider bankruptcy as an alternative - bearing in mind that this will not relieve you of the student loan.

[rhondda]

just out of curisity,why are student loans exempt of iva/bankrupty

[Adam Davies]

Hi
They are not, at the momen exempt from an IVA but do survive bankruptcy.
Not sure why this is, hopefully Mel can explain why student loans survive bankruptcy
Regards

[MelanieGiles]

It is due to government legislation.

[02B_free]

The SLC voted no to my proposal but since the SL is only about 12% of the debt and everyone else who voted voted yes it went through. I only added them just before the proposal went in, I didn't think before hand that they could be included as the loan was deferred. I would have been happy to leave it out to pay itback when I was earning more, but Payplan advised me to put it in. One less thing to worry about I suppose.

[MelanieGiles]

Good advice from Payplan - they should not get preferential treatment over the other creditors.