IVA or Debt Manageent Plan? help please!

[Prosperity]

Hi, I need some help with deciding the best route for us, please.

Between my husband and I we have about £90,000 in loans and credit cards. We decided to sell our house to pay off as much as we can and the sale is going through as we speak. After the sale we will be left with about £75,000. Today was the very first day I heard about IVA and I really like the idea that we may be able to clear all bebt using IVA. The lady who called me to advise me on IVA was certain that using IVA will not spoil our credit score, but reading the forums it sounds that this is not the case.
She also mentioned that if the credit cards are more that 2 years old, she can have ALL the debt written off (and this will not afect our credit score). This really sounds too good to be true and I am starting to be a little worried about this company.

I found some information regarding Debt Management Plan, but it is unclear whether that will affect our credit score or not.
Our ideal situation would be to come to an arangement with our creditors to settle all bebd on the completion of our house for a reduced amount, without afecting our credit scoring. Is this how DMP works?
I am not worried about calling the creditors myself and negociating settlements with them. Is this what and DMP is? Are any guidelines anywhere that will help me negociate?

Many thanks!!

[Michael Peoples]

There are anumber of issues and you should speak to an IP urgently. Firstly, what is the split of debts between yourself and your husband i.e how much of the £90k is yours, his and joint. This makes a huge difference as the property is almost certainly jointly owned and therefore you have £37.5k each. It is possible that one of you has the bulk of debts and therefore is treated differently to the other.

Second of all your credit file will be affected if you enter an IVA regardless of whther the debts are 2years, 20 years or 2 weeks old. Your credit file will be impaired for 6 years but you do not become a total pariah for life.

Finally, it may be possible to reach agreement with creditors for full and final settlements without an IVA but given the level of debt this could be tricky and each creditor would have to be dealt with individually. This takes time, is not legally binding and can do as much damage[if not more] to your credit file than an IVA.

Get advice urgently before completion of the house sale as in an IVA creditors may allow resettlement costs and your debts are legally cleared.

[size5]

I splutter at the idiocy of the advice that you have been given.

Are you in a position to name and shame?

Regards.

[MelanieGiles]

Another post where pretty poor advice has been given - and Michael is right that you should speak directly to an insolvency practitioner and not a member of a sales team who does not appear to understand the implications of a formal insolvency procedure.

Ideally, direct settlements to creditors ought to be considered, but as Michael says you could end up chasing your tail to try and get everyone to agree to the same deal.

Out of the sale proceeds, you ought to consider what you need to retain for relocation cost, rental deposit and perhaps the purchase of new fixtures and fittings, before making monies available to creditors - and an insolvency practitioner can provide further guidance on this point.

[Prosperity]

WAW, FORUMS ARE FAST!!! I didnt expect so many replies so soon, thank you all

My husband owes about 30K on credit cards and 30K in loans. I have 30K on credit cards and 30K unsecured loan on top of a mortgage for a property in my name, which is rented. The house we are selling (our home) is only in my husbands name.

We really dont want to go the IVA route as we have allways been in business for ourselves and don't intend to work for somebody else again. For this reason we think it is important to have a clean credit record and would prefere to go down the route of negociating with creditors.

The genial advise detailed above was given by the company director at Hillton Associates Ltd who claimed that she had her old credit cards cleared herself and it did not affect her credit score.

[David Mond]

If you are in arrears with your credit cards then it will be on the record of credit agencies. I think you need to speak to a professional who can advise what you and your husband should do. This might be a DMP or IVA. Visit www.iva.com for reviews on different practitioners and speak to one or two. Your credit record will be affected with whatever route you take. Let us know how you get on. Good luck.

[kallis3]

I would most certainly avoid any company who advises you to have your debt written off - that is debt avoidance and is not to be condoned.

Any debt solution will screw your credit record for 6 years, even if you negotiate with your creditors. You can still work in business for yourselves though.

Do as David suggests, and ring one or two companies up - their advice is free.

[Michael Peoples]

You should certainly seek advice as if the property being sold belongs to your husband his creditors may expect the proceeds to be paid to them. You also have assets which would need to be addressed and a look at each of you individually is vital.

There is nothing to stop you operating a business while in an IVA although credit facilities are at best restricted.

[Prosperity]

I made some calls and got some advise today> One option we have is to sell our home and put all our debts together in an IVA and hopefully settle it all at once. The issue is that I have a house in my name, which is rented at present and it has a secured loan on it and another loan with the Northern Rock who provides the mortgage. That property is not worth even the mortgage I have on it any more and the tennant altmost pays the Northern Rock debt (mortgage and unsecured loan) but not the secured loan. I would have to turn the keys to northern rock and say I can't pay it any more, meaning it will be repossesed.
Does anyone know how long the IVA procedure will take? we are due to exchange contracts on our home tomorrow and complete in one month. Is it realistic to expect to settle everithing within two months or do we have to wait for that property to be reposesd, sold and so on?
many thanks,

[MelanieGiles]

If your investment property is not generating sufficient income to cover the secured creditor monthly payments (not including the Northern Rock unsecured loan which should be included into the IVA), then it is not a viable project and you may need to look at selling it or voluntary surrendering it if it is in negative equity.

I would have thought that an IVA proposal could be prepared for you within one month, however this will be dependent upon the quality of the information you are able to provide to the IP and the speed at which they can operate. You will not have to wait until the property is sold or repossessed.

Could you move into the rented out property as an alternative? Or are you going to live in rented accomodation yourselves?

[Prosperity]

Thank you Melanie.
we will move into rented acomodation and I would prefer to voluntary surender the rented property. we can't live there as we have a child and it is only a small one bedroom apartment, plus it is really far from where we are now and we would rather stay in the area here as we have familly who could help with child care.
If the case is prepared within one month, how long does it take for it to be settled? Our ideal option will be to settle with every creditor as our business does not provide a stedy income and I dont want to take on payments we may not be able to keep.

[MelanieGiles]

Once the IVA proposal is prepared and agreed by you, it is issued to the creditors and a meeting called generally within 17 days from that date. At the meeting the creditors have the change to vote in favour of or to reject your proposals - so you would know on that day whether the IVA had been accepted or not.

[Andrew Graveson]

Hi Prosperity,

Are payments on the debts up to date or have you fallen behind on them?

[Prosperity]

Hi Andrew,
So far all the payments are up to date.
Creditors would not expect something like this as they have been paid on time all the time.

[Andrew Graveson]

I think that's right Prosperity. I asked as where debts have gone unpaid for some time it can be more possible to negotiate settlements outside of a formal insolvency (either yourself or with some assistance).

This still could be possible but might be more tricky.