Totally confused now, back to square one :(

[Foggy]

Hi mummy. OK -- you are in the IVA now, having, I assume, accepted the extension over the phone ( albeit in trying circumstances). You have a few options ... let it fail and start again or go for bankruptcy or a DMP, tough it out for the 6 years, or wait until the situation changes and try for a variation on hardship grounds.

If you tough it out for the 6 years you will pay back 100% of the debt ( which is a great thing) plus fees ( not so great, but an agreed part of the proposal). BUT .. you will have saved thousands in frozen interest and charges.

If you let it fail the creditors will lump on interest and charges with a vengeance. No matter if you choose BR -- but the car will be at risk, depending upon the figures of value vs. loan. You are likely to have to make payments for three years. If you choose a DMP the outstanding balance will be more than the outstanding amounts frozen by your IVA and creditors are very unpredictable over interest (we just had a poster mention that, over their time in a DMP, they paid in just over £5k and over £4k of that was swallowed up by MBNA in interest and charges!!) Incidentally, a DMP will be likely to do as much damage as an IVA to your credit file --- all those defaults will remain for 6 years AFTER the end (if you ever get there). In an IVA the defaults go 6 years from the beginning --- in your case at the end of the IVA.

All of this should have be gone through with you by your firm right at the beginning .... who are you with ?

[mummy2elliekate]

Hi Lem, we are with The Debt People which are part of the Money Plus group.
They said that bonus wouldn't be classed as a windfall and it's in my terms that we pay 50% into the IVA of any amount that is above 10% of our monthly earnings. This I am fine with but I feel that our 5 year proposal would have been much stronger with these figures being noted.

By my calculations, in a 6 year IVA, we'd be paying back 100% of what we owe plus fees of nearly £4000. If we'd have been accepted for a consolidation loan with low interest we would have probably been better off. Shame we don't have any way of raising money for an F&F, or any rich relatives to lend us the money
I have gone from seeing an IVA as a positive to a negative, in our situation at least. Now it's looking like just a glorified payment plan but with a big fat red line through our credit scores for 6 years on top and hefty fees!
As for the HP, I do feel we have been left in the lurch with it. When we went through our proposal I asked if we could save our bonus towards the balloon payment, we were told that this wasn't a good idea as we werent allowed to save money and that we would be better off refinancing. That's all well and good but we wouldn't be able to get a loan or borrow the money from anywhere to finance this. I can only hope Honda will let us pay the HP off for an extra 18 months or so to clear off the monies owed, and that's assuming they don't stick interest on it. We could hand the car back but it will have gone over the agreed mileage by then so we will still owe them a chunk of money and we'd be without a car or deposit for a new one. We won't have answers until the HP ends I guess but we can't be without a car as we'd have to give up our jobs and that bonus money and disposable income wouldn't be available anymore! So a failed IVA would be on the cards and I'm not willing to pay money into this for the next few years for nothing.
I have a feeling we should have just applied for bankruptcy as looking back now we'd have been better off, but no, I wanted to do the right thing and work towards being debt free in the right way. I'm not even thinking about christmas and birthdays as there won't be any in our house for a long time. My little girl is 2 now but will be 8 by the time this IVA has finished and I can only hope it doesn't affect her life as I would never forgive myself for going ahead with this otherwise. 6 years is a long time to put your life on hold as every penny of disposable income is going into the IVA and our budget is stretched to its limits, one big bill and we're in trouble. As it stands no debt will be written off. I felt I was in a better position before I applied for the IVA as at least I had a choice, now it seems I do not as I assume we are now legally bound into this as of the 7th March. I appreciate my circumstance is not a usual one with the bonus issue. I will try anything I can to get a F&F payment together, it make take a few years but I want get out of this situation as soon as possible!

[Foggy]

The Debt People are correct, in my opinion, in treating the bonus under the 10% 50/50 rule, being allied to your earned income. A windfall is generally unearned ( lottery wins, inheritances and the like). If you can save your share of these they will amount to a chunk to make a F&F offer further down the line.

[Foggy]

If the fees come out at £4000 I would say you have a bargain!

Generally, these days, fees equate to around 15% of payments, plus nominees fees (around £1500 - 2000 for an individual proposal, say £2500 for an interlocking pair).

So, the ball park would be (if you paid back the £21k) around £6.5 k

[mummy2elliekate]

Hi Foggy, thanks for that post, you've given me clarification on a couple of things
The car would be worth less than nothing in bankruptcy terms (I think?) as it is in negative equity, by about £700. This was noted by our IP in our proposal should the creditors have tried to push for BR. I think the only option is to stick it out. I'm just still gutted over the 6 year thing as I just don't know what we'll do if we have to move or if we can't refinance the car. I want to count my payments down and see an end in site, that was the point of the IVA over a DMP as like you say we could be paying interest forever. Now I can't see an end in site, only a few big hurdles along the way the that we may or may not get over, as who's to say they won't extend it to a longer term if we have to have a variation meeting due to decrease in income etc. My other half (in a joint IVA with me) has got an interview for a higher paid job within our company next week (we also work for the same company doing the same job to make things even more confusing lol) but as great as that sounds it may be pointless as despite the promotion and higher workload, I'm assuming any extra money would have to be put into the IVA. My head isn't screwed on properly today due to lack of sleep last night so I'm so sorry if I sound like I'm throwing my toys out of the pram. I guess I sort of am a bit but I have concerns that won't let my mind rest and I feel very alone, and can't stop looking at this flipping 14p in the £ on our proposal! Thank goodness for this forum as it's the only place I can vent my worries/anger/frustrations etc sorry xx

[lem]

If its written into your proposal that bonuses you get to keep half, then great and my advice would be to save that money towards financing the balloon payment on your car when it becomes due, your ip is totally wrong to say you are not allowed savings, what rubbish! Anything you can legitimately save from overtime bonuses etc is yours to do with as you wish and advising you it's better to refinance when you are in an iva is again very poor advice when they should know refinancing is not an option, especially when they have included the payments you are currently paying towards your car to increase your iva payments in the last year, how do they expect you to fund the refinancing then?.

What you are going to find is that inevitably your iva will probably be even further prolonged beyond the 6 years, if Honda allow you to continue payments, then you aren't going to be in a position to afford the increase in your iva payments in year 5 onwards unless you have an increase in salary that will offset it so you will most likely have your iva extended unless your ip can persuade your creditors to accept the change in circumstances (which in many cases they will do I might add!), if not then you will have to hand the car back and most likely have to take a payment break to fund a new car or perhaps take a high interest loan from someone like money barn to lease one of their cars, which again inevitably will mean going to your creditors to ask for the increase in payments to be reversed to allow funding for this or extend the period of the iva to cover the payment break. Now obviously all this is ifs and buts and no one lows what the future holds for your iva, but this is why I get so mad when an iva company just says 'refinance your car' but don't make any allowances for your to pay this nor explain how this will be achieved when your credit score is 0, which is why I say save your bonuses and anything else you can!

Please don't think I am being wholly negative about an iva as ours is going fine and in many ways it was the best thing we did, by the way our son is now 10 and was 7 when we started the process, our daughter is now 14 and I notice a huge difference in how our son values money compared to my daughter, he wasn't really aware of the cost of things and before we started our iva but being in an iva he is now at an age where he really appreciates things, knows the value of money etc because he has no recollection really of what it was like before whereas my daughter does feel a bit hard done to as she has so many memories of when things were flush and money was no object so being in an iva will install great financial values in your child xx

[mummy2elliekate]

Ahhh thanks Foggy, I wasn't sure if the fees were relative to the amount you owe or to the amount you pay into the pot. But still, after 6 years the creditors would see a massive return, even after 5 years they would get a big amount back. This damn bonus!

[Foggy]

Don't apologise, Mummy, the forum is a place to rant too ... most of us have done it ... and will do again

If the promotion comes with a raise then only 50% of the net increase will be payable, so you will still be a bit better off. Some IP's do interpret this differently, but the theory is that, if you get a raise during the review year, the whole increase is yours until the next review, when the extra will be taken into account from then on --- this is how I have always interpreted it, and, fortunately, both of my IP's have agreed with that line of thinking. Some will take the increase right away ( but only 50%) but the correct procedure will be laid down in your proposal.

[Foggy]

LOL -- we are a conversation apart here (like the Two Ronnies Mastermind sketch). This 6 year thing ..... it was generally the case that NRAM ( Northern Rock) asked for 6 years as a matter of course (which could be extended to 7 if equity came into play). Some creditors cottoned on to this and will ask for this extension these days --- but the nominee should only agree to this if the creditor requesting it carries enough voting weight to scupper the whole IVA.

You should shortly be getting a copy of the Chairman's report, which will detail all the amendements, who proposed them and what their vote was. It will also detail any changes made to the fee structure.

[lem]

Regarding your car in bankruptcy they would still seize it whether it is in negative equity or not and would generally give you around £1000 to buy a car then it would free up your payments towards an ipa instead of towards a car

Also check your iva paperwork, generally any pay rises you only have to pay in 50% of the pay rise and get to keep the other 50 % so if your partner gets that promotion you will have a little bit extra to keep xx

[lem]

Foggy beat me to it lol !

[Foggy]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lem

Foggy beat me to it lol !

Makes a change, Lem. I am normally much slower on the draw [:)] If I was an Old West gunslinger, I wouldn't have had to use many bullets in my short career [B)]

[mummy2elliekate]

Thanks so much Lem. That makes total sense and it's great to see that it's not had any big effect on your children. Our families are all working class and when I grew up I had what I needed and my mum (single parent) worked extra hours to buy us little treats. But I can't even really do this for my daughter now as any extra hours I work will just be more money in the pot so to speak. I have never been good with money which is what got me into this problem in the first place!
We are even considering saving the other half of our bonus towards a F&F or to use this for the balloon payment for th car HP.
Also just to clarify, our HP expires in 2 and a half years but in our proposal it states that it ends in 4 years (see my other forum post) and I think this was done to allow us to around 18 months to pay of refinance payments - again, assuming we'd be able to!

[ClareSilver]

That's what tends to happn with a balloon payment. If your HP payments were say £200 per month and you had 18 months to pay (total £3600), plus a balloon of £4,000. Your IVA company will calculate how long it will take you to repay the balloon based on your HP payments. IE: £4000/20 = 20 further months so you lower payment will last for 38 months and the remaining term of the IVA will be your normal monthly payment plus what your HP payment was.

[mummy2elliekate]

Haha, you two are great, thanks for the information. I do also appreciate that because our bonus isn't included as a guaranteed payment, if we don't receive as much in the future or change jobs to one where we don't get bonus, then it wouldn't affect our proposal. It's unlikely that this will happen but who knows. Having that security is nice but I'm still frustrated that this has caused our term to be extended.
Also thanks for clarifying about the car in bankruptcy. That would never have been our preferred route but it's good to know just in case things don't work out in the IVA. We have a contingency plan in place for the refinancing, my partners mum will probably agree to take a £4000 loan out in her name and we'd just pay her the amount we usually pay towards our HP until this is paid up. The reason I say probably is that we haven't actually asked her yet and wouldn't unless we really had to, but before we went down the IVA route she offered to take a 0% credit card out for us to do a balance transfer to, and instead of paying them we'd pay her what we could afford. We were making minimum payments across about 11 different accounts and this was just covering interest so our debts were going up rather than down. The only reason we didn't take her up on the offer was that she only saw one card statement to the tune of around £6,000 and she doesn't know we are actually in £21,000 worth of debt! So it wouldn't have even touched the sides (so to speak lol). I'd rather nobody know the amount of debt we are in if I can help it. So that is our 'plan' for the HP but we will be saving as much of our half of the bonus as possible for either this or a F&F, or even just as an emergency pot.