IVA is already getting me down

[blueman7]

I am 6 months into an IVA & it is already getting me down. They request wage slips every 3 months and expect me to make lump sum payments of 50% of overtime/bonus during these periods, failing the lump sum they expect an increase in monthly payments, I will basically end up paying as much if not more that what I was paying monthly prioir to the IVA being granted, £400+.
I am soon to take a drop in income so increasing my monthly payment is not something I am prepared to do.
What will happen if I do not comply to the IVA demands of paying this extra 50%?
If I breach the IVA, are BR proceedings automatic as I feel this is a better option for me.
I feel I was poorly advised from the outset by the company who put me onto the IVA, they were looking for their own financial gain as I had to pay them 1000.00 whilst the IVA was being administered. I have no asssets & am currently living at home as I can't afford to move out, surely the 'debt help' company should have advised banckruptcy.

Sorry to moan, comments/help would be appreciated

[Adam Davies]

Hi
Sorry to hear that you are having difficulties already.I presume that you were in a DMP before but you must realise that an IVA is better for you because all interest is frozen and you have a definate end date,unlike a DMP that can seem neverending.
If your income is to go down then you will need to speak with your IP as soon as possible.
With regard to paying over 50 percent of your overtime this is fairly standard procedure and should have been explained to you at the start.
If your IVA fails then you are basically back to where you started and can opt for bankruptcy[it,s unlikely that your creditors will fund this] or go back onto a DMP.
Why not have a good conversation with your IP and discuss your situation and concerns.
Good Luck

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

Hi blueman

It certainly appears that little thought was put into the IVA in the first place, as the requirement to submit wageslips every three months is commonplace, as is the need to pay over 50% of any increased expenditure.

If you have only been in your IVA for six months, I think it is doubtful that your IP will petition for your bankruptcy, so you will be back to where you started when the IVA is eventually concluded on grounds of non-payment.

Did you know about the potential drop in income when you took out the IVA?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[swardy73]

Hi Blueman,

Sorry to hear your worries regarding IVA, but I am in more or less same boat.
I was 34k in debt in March 2006 (mainly my own stupid fault of living beyond my means, I admit!).
After trying to consolidate with my Bank whom I had been with for 17 years, but who refused me(after I chased them for an answer for 4 days mind!), an IVA company came to me and told me they could ‘fly in’ and save me! I was so grateful, and vulnerable, and naïve at the time, but after meeting them, I agreed to an IVA as it seemed so much better than the debts I was paying back at time.
My IVA started at £351, but 14 months on, it is now £419 per month (due to payrise). I actually phoned the IVA back in October 2006 to tell them what the payrise was, and I was told it was so little, it wouldn’t effect my IVA, until in January 2007, after sending in my payslips, I was informed it had gone up, and I also owed 3 months back pay!! When I informed them what was said in October, I was just told this was just what the person thought but wasn't fact! That’s fine then.
Now, I come out with £1000 per month after tax, and I moved back to my mum’s at start of IVA. When I was filling in my outgoings, I was told not to put down more than £200 per month on rent as it is only my mum, and should be able to help out! My mum is actually a widow who works part time and struggles for money, so I try to pay £240 per month. I was told to put down £150 per month for Food/Housekeeping. I pay for all my own food which is approx £100 per month, and apparently socialising come under this category, so that leaves me £50 per month to socialise (now I know that I have made financial mistakes and cannot expect to have an IVA and go out constantly, but £50 over 4 weeks - sometimes 5 weeks, is virtually impossible)
I also, and I know this is my fault, but in the panic in setting up the IVA, I forgot that I had 2 store cards, and so I never put these down as my creditors, so I am paying back £45 (minimum payment) per month for these!
All in all, I am now owing about £550 to family (mainly my mum) because I am finding it impossible to pay for everything, and I have now found out that my mum has extended her credit card amount (which she cannot afford to pay back!) and I feel so bad!
I have seen 2 financial experts in last week and I have been told that Bankruptcy was easily my best option instead of IVA because I have no assets (no house and car worth £500), but I feel like this wasn’t made apparent to me at the start. I was told IVA was right for me (but then again, why would an IVA company tell me to take bankruptcy as they would then not receive any admin costs or fees - they cannot be impartial).
I was in hospital yesterday with heart problems, and I have to have some surgery shortly, and this has made up my mind for me regarding my financial situation. I am going to speak to my IP and ask for them to petition for my bankruptcy, and if they refuse, I will let the IVA fail and do it myself!
I have tried to make it work, but I am still in more or less same situation as before. You only live once and the situation is not life or death, so I am going to do what is right for me.
Blueman, make sure you do what is right for you. Good Luck.
p.s. Fantastic Forum. I love reading all the helpful advice and comments. Especially love Skippy’s story.

[s.b]

Sorry to hear about your troubles. When you read about IVAs they are made out to be so easy and you get most of your debt written off which is actually nothing like reality. Unfortunately the 50% of overtime and bonuses are standard and I had the same problem with a pay rise I had as I was going to pay off more than my iva but luckily got this resolved and could end it early. Just make sure you talk to your ip - they can be reasonable! IVA's are not easy but at least there is light at the end of the tunnel and you're not just paying interest on cards which could drag on for double the amount of time

[blueman7]

Thanks very much to the people who posted a responce to my concerns, I really do appreciate it & it does help clarify things somewhat and see the bigger picture.

I feel as if I am in a similar situation to sawrdy73, let us know how you get on...
I was only made aware that I had to submit wageslips at the very last minute before the creditors meeting, I understood that the IVA was reviewed each year which is fair enough but I cannot understand how they can expect an increase in their payments from one month to the next when my wage fluctuates like it does. When the wage goes up they will expect an increased monthly payment, when the wage goes down, I doubt they'll tolerate a decreased mothly payment.

Andydavie assumes that I was on a DMP prioir to the IVA, this is not the case, if I had been advised by the company I paid for advice to go such a thing, then maybe I wouldn't have opted for the IVA.
I admit I was naive & read an advert for 'Spectrum Financial Solutions' & requested help from them. A man with a sharp suit came round and did a few calculations, told me how much I would be paying with an IVA and I was caught with a hook and reeled in. I ceased paying my creditors with immediate effect on their advice.
After a few months just prior to the creditors meeting, I was told I could expect to pay at least 50% more per month to what was originally quoted by the 'spectrum' man and expect to pay 50% any extra's, this is despite the same documentation being used for the estimates as to what was used for during the administration. my circumstanes had not changed.
By this time I had ceased payments to all creditors concerned for at least 3 months, so I didn't realy have any other option that to go for the IVA.
My gripe is not realy with the IVA system. It is more to do with the people and companies who sell them to vulnerable people without fully explaining the ramifications. Is there any kind of regulator to monitor these companies who hard sell IVAs withoout fully explaining all alternatives?

[chris_]

The IP's own regulatory body is your first port of call with regards problems with the setting up of your IVA, but I have to point out that the regulatory bodies are only interested in making sure that IVA's are set up according to the law by the IP, and are not at all interested in individual cases of the debtors.

Since April this year the financial ombudsman can get involved in IVA's, BUT only for issues that occur since that date - NOT BEFORE.

The only other thing you can do if you feel you have been badly advised is to go to court yourself, but if you have no money then you need legal aid - and try getting that for IVA issues. If you can get a solicitor to take up your case you will find that you had better have a 100% cast iron, guaranteed chance of winning - so forget it.

Yes I am talking from personal experience and investigation - the regulatory bodies are only interested in making sure their members set up the IVA's legally and fill in the paperwork properly - they will not judge on individual cases whatsoever.

Despite the industry being heavily regulated in theory, in practice the person in the IVA has nobody to turn to at all. (Pre April 2007 anyway)

Chris.

[blueman7]

Thanks Chris
So I've been sold down the river basically.
What gets me thinking is that I get the demands off the IVA company & on the very same day I get a seperate letter from a 'company' who will help release me my equity to finish the IVA early.
I don't have any equity...
Why do I get a letter of this nature? is it from the company under a different guise? are they all in it together?
Makes me think whether they're all a bunch of shysters.

[MelanieGiles]

Blueman

Just to clarify that your IP ought to be setting good months off against poor months. He cannot justify taking 50% uplifts in good months, and not setting an appopriate allowance for the months when you do not earn your targeted figures.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[davewardy]

Hi Blueman,

Sorry to hear your worries regarding IVA, but I am in more or less same boat.
I was 34k in debt in March 2006 (mainly my own stupid fault of living beyond my means, I admit!).
After trying to consolidate with my Bank whom I had been with for 17 years, but who refused me(after I chased them for an answer for 4 days mind!), an IVA company came to me and told me they could ‘fly in’ and save me! I was so grateful, and vulnerable, and naïve at the time, but after meeting them, I agreed to an IVA as it seemed so much better than the debts I was paying back at time.
My IVA started at £351, but 14 months on, it is now £419 per month (due to payrise). I actually phoned the IVA back in October 2006 to tell them what the payrise was, and I was told it was so little, it wouldn’t effect my IVA, until in January 2007, after sending in my payslips, I was informed it had gone up, and I also owed 3 months back pay!! When I informed them what was said in October, I was just told this was just what the person thought but wasn't fact! That’s fine then.
Now, I come out with £1000 per month after tax, and I moved back to my mum’s at start of IVA. When I was filling in my outgoings, I was told not to put down more than £200 per month on rent as it is only my mum, and should be able to help out! My mum is actually a widow who works part time and struggles for money, so I try to pay £240 per month. I was told to put down £150 per month for Food/Housekeeping. I pay for all my own food which is approx £100 per month, and apparently socialising come under this category, so that leaves me £50 per month to socialise (now I know that I have made financial mistakes and cannot expect to have an IVA and go out constantly, but £50 over 4 weeks - sometimes 5 weeks, is virtually impossible)
I also, and I know this is my fault, but in the panic in setting up the IVA, I forgot that I had 2 store cards, and so I never put these down as my creditors, so I am paying back £45 (minimum payment) per month for these!
All in all, I am now owing about £550 to family (mainly my mum) because I am finding it impossible to pay for everything, and I have now found out that my mum has extended her credit card amount (which she cannot afford to pay back!) and I feel so bad!
I have seen 2 financial experts in last week and I have been told that Bankruptcy was easily my best option instead of IVA because I have no assets (no house and car worth £500), but I feel like this wasn’t made apparent to me at the start. I was told IVA was right for me (but then again, why would an IVA company tell me to take bankruptcy as they would then not receive any admin costs or fees - they cannot be impartial).
I was in hospital yesterday with heart problems, and I have to have some surgery shortly, and this has made up my mind for me regarding my financial situation. I am going to speak to my IP and ask for them to petition for my bankruptcy, and if they refuse, I will let the IVA fail and do it myself!
I have tried to make it work, but I am still in more or less same situation as before. You only live once and the situation is not life or death, so I am going to do what is right for me.
Blueman, make sure you do what is right for you. Good Luck.
p.s. Fantastic Forum. I love reading all the helpful advice and comments. Especially love Skippy’s story.

I was looking at a large amount of debt to creditors PAYE etc. and with little assets compared after seeing a friend going through a five year struggle with IVA, I decided to take the bankruptcy route, like most things scary from the outside, and not as bad as you think once you have taken the plunge. The best thing is learning to live without credit like my parents used to. "If you haven't got it, you can't have it". If you have no equity smaller than your debts, "let it go" I say and go through the bankruptcy.

With the sub prime lending market taking the knocks its taken today and the threat of interests rates there will be a lot more people going through the bankruptcy courts in the not too distant future.

Good luck

[keh]

Hi Blueman and welcome

I have now in the last 3 years increased my payments by about 15% due to overtime and pay rise, when i done my last Income/Expenditure my outgoings were more than my incoming but with O/T varying from week to week i done my forecast based on a weekly rather than monthly so my IP could see more clearly what i earn. If you get paid weekly then try to work out your Income/Expenditure on a weekly basis and see where you are from there.
I pay all my bills now weekly and know that at the end of the day what i got left (about £35) is mine to last me through the week though not a lot it is enough, so roll on end of IVA when I can have a nice holiday and some spare cash.
It is hard but done right it will work out so please keep reading and keep the faith

Keith

The long and winding road will straighten out eventually....keep the faith

[swardy73]

Hi davewardy,

I wish i had gone down the bankruptcy route in March 2006 when i started my IVA but i took no advice off anyone else. Only now when i wonder why i still owe money each month to friends and family, do i realise my outgoing list are just not correct to what i actually pay out (and i mean rent, food/housekeeping etc and NOT social things like going out). I am going to speak to my IP shortly and explain, but i do feel the bankruptcy route is my only realistic way out. I saw an 'expert' last week who said he could sort out everything (i.e filling in forms, taking me to court, going through the phone call i will get after bankruptcy etc) for £1000, but reading through the forum, i dont think there is a need for me to pay out again, as it seems straight forward. I have signed up on the insolvency service website and looked through the forms which seem straight forward enough. I just need to print them off and complete them.
I will speak to my IP first. Can anyone let me know how normal it is for my IP to petition for my bankruptcy after i have made 14 payments of my IVA when i explain my situation. Will they try and reduce my payments (realistically, they would need to be reduced from £419 to about £275 per month for me to afford them which i dont think they would do!) or will they tell me i would need to file for bankruptcy myself, and if so, are they helpful in returning any paperwork (i.e. bank statements etc) or do they normally become 'unhelpful' as they will no longer receiving their fees?
I would be able to pay the bankruptcy fee (i believe about £485) from my next 'IVA' payment. How quick does it normally go through?
Sorry for all the questions, but i want to make sure i dont forget or leave anything out that may come back and bite me!
Thanks a lot.

[MelanieGiles]

First of all IP's do not become unhelpful as they are no longer receiving their fees - well good ones don't anyway. Tell your IP your difficulties, and ask for their advice as to whether they feel a variation of your arrangement is viable - also whether they are empowered to petition for your bankruptcy in the event of IVA failure.

And please don't pay out £1,000 for an "expert" to help fill out your bankruptcy forms. This a very simple process, and you can seek advice free of charge on this forum if you run into any difficulties.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[swardy73]

Thanks very much Melanie for quick response.
So glad i 'stumbled' upon the forum as it has been a fantastic help to myself.

Cheers

[blueman7]

Hi
I may have seemed a little arrogent with the postings that I have made, but I am just basically worried.
I got some backdated pay a few months back which I used to pay back freinds & family, money that I owed, that money has basically gone.
I know when I submit my payslips, I am going to have to pay that back. I don't have the money though, I can't increase my monthly payments either as I know I am going on a decreased wage shortly.
I thought about doctoring wage slips & all sorts, but one of my mates talked me out of it & said phone them & just be honest, I will do, but I just don't know what to expect & I'm scared they will be hard on me.
I haven't defaulted on my payments and am prepared to continue to pay me dues, but, I cannot afford to pay anymore than what I am paying at the mo.
Any Advice?