URGENT - confused about interest!

[rattbags]

Hi

I'm currently going through the process of entering into an IVA but am very confused with regard to interest on outstanding loans.

Basically, the IP has calculated the balance as being the full amount borrowed including all interest that would accrue to the end of the loan term (seven years from now), minus the payments I have made.

I don't know if this is right, as I thought that interest is stopped from the date of the arrangement (if accepted), so surely the remaining 7 years worth of interest wouldn't be included in the amount outstanding at todays date? Surely the figure should be the same as the figure you would get if you phoned up and asked for a 'settlement figure' at todays date? I've queried this with them - they've said they have the figures correct, but I just can't understand how this can be so if the creditor is not allowed to charge any further interest after the agreement date?

I'd be very grateful if someone could enlighten me on this before I sign my paperwork as I'm worrying myself sick over it!

Many thanks

[Skippy]

Hi Rattbags and welcome to the forum.

When I went into my IVA I was told to include the interest on the loans as this was the amount that the creditors could expect if the loan run it's course.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[Adam Davies]

Hi
Yes,with regard to personal loans it is the full amount plus all interest to the end of the agreement.It is only credit cards that do not include interest.
So your IP is correct
Regards


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

[rattbags]

Thanks very much for clearing that up. I'm trying to be so sure that I'm doing the right thing that I'm worrying over every detail!

Thanks x

[Adam Davies]

Hi
That is not uncommon when arranging an IVA.
Please post as many questions and concerns that you have,most of us are,or have been,in the same boat as you on this forum and will not judge you.We offer support and advice
Regards

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

[rattbags]

Thanks. Actually, since posting I've been reading a lot of the posts on this forum and am now even more worried! More than 50% of my debt is with HSBC, and my proposal has come back from the IP saying the offer will be 28p in the pound. I've read several posts saying that HSBC have a minimum that they will accept of 40p.

It may be helpful to spell my circumstances out...

Creditors:
Capital One - £2500
Egg Credit Card - £2000
Egg Loan - £15000
Grattan Catalogue - £200
HSBC Loan - £22200
HSBC Overdraft - £1000
Littlewoods Catalogue - £500

Total £43400. These are not the exact amounts I owe at present - the IP has bumped them all up saying that they need to make sure that any interest charged between now and the meeting are accounted for (they've added well over £1000).

When I had my initial consultation, we came to a disposable income figure of £303 a month which I was told would offer a return of nearly 40p in the pound. I therefore planned a very careful budget to ensure I could afford £303 a month - it was going to be extremely tight, but I felt I could manage it. When my proposal came through, the contribution had gone up to £350 a month, which will be very difficult to manage indeed, and the return has gone down to 28p in the pound, which from what I've read, HSBC are very unlikely to accept!

I really don't know where to go from here. I'm not in arrears with any of my payments as I have been taking more and more credit in order to keep up to date with repayments, but can no longer get any more credit. I can no longer meet my payments as they're currently nearly £1000 a month and I only bring in £1500!

If anyone can give me any reassurance as to whether I'm doing the right thing I'd be extremely grateful. I don't know what else to do!

Thanks so much

[Adam Davies]

Hi
Who is your IVA provider ?
You have a recipe for disaster in that HSBC do not accepy anything less than 40p dividend and your disposible income should be as you agree it,not your IP.
Are you a homeowner ?

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

[rattbags]

Hi Andy, and thanks for the advice.

My IP provider is Clear Start, and I'm not a homeowner. I've had another look at my budget - I had allowed for a cheap holiday every other year (my dad has property abroad so I can do it dead cheap!) and quite a bit for Christmas, birthdays, and other things that I could cut back further on. Reducing that stuff right down, I could take my contribution up to an absolute maximum of £440, but it would be tight. I think that would give me about 40p in the pound.

I REALLY don't want to go bankrupt, so I can't see that I have any alternative? I think my head's going to explode

[MelanieGiles]

Hi there

Firstly, your IP should be independently taking time to verify the exact account balances with all creditors prior to preparing your proposals. Guessing at what the balances might be, could spell success or failure for you, and at the end of the day this is what we get paid to do. Not all loan companies calculate their balances in the manner you describe, and some actually do discount future interest.

I am also concerned as to why your IP believes an offer of 28p will be acceptable to HSBC, at the same time you are saying that your income and expenditure is not correct.

Please bear in mind that you are entering into something that is going to stay with you for the next five years. If you cannot meet the standard dividend criteria, then you really do need to consider whether an IVA is the right solution for you, and you may wish to take a second opinion on this. Have you actually met anyone from your IP company.

If you decide to go ahead with the IVA in its current format, please let us know on the forum the result and the dividend that was eventually accepted.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[rattbags]

Thanks very much for your input Melanie. I will be calling Clear Start tomorrow to discuss this - these queries have only come to light since reading through this forum!

I'll let you all know how I get on.

Cheers

[rattbags]

Oh gosh, I thought of another question overnight... laying awake worrying about it all! Just before I decided to investigate entering into an IVA, I obtained a Barclaycard. I got this for a very specific reason, in that I often have to travel for work and have to pay travel expenses, hotel bills etc. up front and then claim back from my employer. As I've been struggling so much I decided the easiest way to do this was to obtain a dedicated credit card to use purely for this purpose. I leave it with a friend who will only give it to me when I have a work trip, and can have my expenses cheque paid directly to Barclaycard - there is no outstanding balance on the card. What I need to know is that if I enter into the IVA, will I have to surrender this card? If so, I'm going to have to find some money to put away for these circumstances and that's not going to be easy! I don't want to risk being in breach of T&C's so advice would be appreciated!
Thanks very much again!

[MelanieGiles]

Hi there

Of course it will depend upon the attitude of the IP you have chosen to represent you, but if you were my client I would allow you to retain this for business use only on the basis that it would be fully disclosed to your creditors and that you would pay off the balance at the end of each month once your expenses had been received.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Rainbow]

Hi
A thought sprung to mind reading your posts and I would like to suggest that you contact some other I.P's you could start with the ones on this forum - I know Melanie and her team come highly recommended......Just a thought
Rainbow

Every Cloud has a silver lining. At the end of the Rainbow is a Pot of Gold - Or Hope!

[iva.com]

Hi rattbags,

I'm sorry to read that your proposal has changed from what you agreed and that it appears to have been badly drafted.

If you do decide to ask for the opinions of other IPs you might find www.IVA.com useful. We publish a list of IVA firms and IPs together with client reviews of their services.

Please do let us know how everything goes.

Kind regards,
Terry Balfour
IVA.com

IVA.com - The IVA Comparison Site
100s of reviews, All IPs and IVA firms rated.

Use our IVA firm comparison tool to find best IVA firm for you:
http://www.iva.com/iva_comparison_1.asp

[rattbags]

Oh god, I don't know what on earth to do now. I've spoken to my caseworker about this at length, and she insists that the IP is aware of HSBC's 40p minimum thing, and that HSBC hold 53.5% of my debt, but still feels that my 28p offer is acceptable. Just doesn't make sense to me, but as they work on a no win no fee basis I can't understand why they'd put such an offer through if they didn't think it had a chance of being accepted.

Even if I decide to go to another IP, I cannot afford the payments required to make a 40p dividend, so if this proposal is not accepted (which from the advice on here it looks like it has no chance!) then I am going to have to go bankrupt.

So... preparing myself for that possibility/inevitability I wonder if someone could answer a few more questions for me.

If I were bankrupt, would I still be able to have a basic bank account with a cash card which I could pay my wages into, and have DD's, Standing orders etc. going out of?

Is there any way of finding out which newspapers in my area the news would be published in?

Would my employer and landlord need to be told? And if so, how could this affect my tenancy agreement?

Is there anything else I need to be aware of with regard to bankruptcy that anyone can think of?

I so appreciate all your help - this is enough to turn you to drink!

x