I recieved an E-mail today telling us we can finish early for good behaviour

[andrewf]

I recieved an E-mail today telling us we can finish the IVA early for good behaviour, (IVA was with mel, now creditfix)

Ok, bit of reading on here (thanks foggy, to name one of a few people postng links, and thoughts)

So the people helping me to be debt free are trying to sell me a loan.... hmmmmm.

been looking at the pro's and con's, and unknowns. As we are very keen to move house, so we can be near our family and better schools, maybe this is a good option for us.

Current unknowns,
1) we have property, currently ~0% equity? what happens with this?
2) can we over pay the loan and pay it off sooner?
3) The IVA will be marked as complete, but remains on the credit record for 6 years. (or is it on there forever anyway?)

Pro's of getting a loan, we think are:-
1) work and earn as much as we can, we can keep it all..
2) inherit / win money, we keep it all.
3) no more stressful annual reviews trying to get us to pay more more more more.
4) fixed repayments, with freedom to get credit building credit cards and the likes now rather than later.
5) eliminating the delay of waiting for a completion certificate, by completing half way through.

Against:-
1) pay a fixed payment for a longer period.

We may be looking at this a bit to simply, but please feel free to contribute to the pro's and con's that we might have overlooked. As for us needing more income together with a the flexibility to move house, it kind of seems like a no brainer.

I had no idea that an IVA could be paid off early, instead of the high APR with Perinta, could i pay and end my IVA early through a loan from a friend or family, to the same effect?

[watzki]

You can get a "gift" from friends or family to put forward a full and final offer but on the understanding the gift is for this purpose and will be withdrawn if not accepted.
If you can get the money this way this is the route I would take

[Michael Peoples]

You can actually borrow from family and repay it interest free provided the offer is acceptable to creditors. If you can do this it makes a lot more sense than borrowing at 30%.

In addition if you borrow money from Perinta it is likely to show on your credit file until repaid which will affect your borrowing ability until cleared. In addition, an underwriter could see the loan and recognise it as a loan to clear an IVA even after the IVA has gone off your credit file so there are serious downsides to these type of products.

If you can get a loan from family or friends definitely consider this option and these offers are usually accepted.

[Foggy]

I would definitely prefer the loan / gift from friends and family over the high interest and binding industry loan ... every time !

[Lisa Thomas]

How long do you have left on your IVA and how much is due to be paid?

[kallis3]

I too would prefer a loan/gift from family and friends - the idea of an IVA was to get you out of debt, not give you more!

[andrewf]

Oh right, I was under the impression that, if we received additional money , it would be swallowed by the iva, and not influence the monthly repayments.

Unfortunately I don't think I have any family or friends that have money to give/loan me, I was more just wondering if it was possible.

Michael that's a negative I had not considered.

I am still curious if any other negatives I might be overlooking.

[andrewf]

Lisa, we are entering the 4th year, and currently pay just under £150 per month.

I don't think the term will extend by a year due to property equity.

[Michael Peoples]

There is another downside to consider. If you miss an IVA payment [or a repayment to a family member or friend] it would not show on your credit file whereas if you miss a loan repayment it could show for a further six years. This is a big risk to take when you have only less than half the IVA payments to make and could be committing yourself to a new loan agreement of double that period.

I can see why these products can appear attractive but make sure they are right for you.

[Foggy]

These products can be viewed as an "easy" way out of an onerous IVA arrangement. However, to be fair, if the IVA was correctly advised, the client fully aware of his or her responsibilities and the payments set fairly with workable allowances for expenses, all of which being attributable to the dilligence of the IP, the arrangement should not be so overbearing as to need to consider a loan to get out of debt!

[andrewf]

Michael, thanks for your input, and I take on board what you say about the difference in consequence between missing a iva payment compaired to a loan payment.

The fixed worry free amount, and the freedom to increase the household income is still making this an attractive option.

In principle, anyway, still got to see what this loan is and terms of it.

[Michael Peoples]

It may be beneficial to you Andrew so give it a good hard look before you make your decision.

[Lisa Thomas]

If you have two years to go by my calculations that's £3.6k to pay. Personally I would stick to the IVA unless you have a third party willing to gift you say £3k in F&F, which it sounds like you do not.

[andrewf]

Foggy, unfortunately my (our) linked iva is what it is.

At the time it was set up there was only 2 options iva or bankruptcy.

Due to a very low p per £ amount our budget was IS, very much squeezed. We have just about managed so far, but we don't regret coming down this road.

When setting up the iva our income was rock bottom with my wife being out of work.

The trouble is now, if we increase income via myself getting a second job and my wife returning to work, the iva repayment will increase by pritty much the same amount. So what's the point, we would both prefer to spend this time with our young kids.

Getting debt to pay of debt is how we got in this mess in the first place. And yes it seems madness being offered a loan by the iva firm.

I just keep telling myself.

When something seems to good to be true..........it probably is..

[Lisa Thomas]

If you decide to go down the loan route please let us know how you get on.