usin credit cards whilst in iva process

[anais743]

whilst in the process of putting together an iva can you:

1) Still use your credit card as normal (to get through the months the process takes) or is this frowned upon?

2) How close upto the IVA being proposed/agreed can you keep using it? eg when the CC companys get a sniff of what you are doing will they stop your card?

I am not asking this to take the mick out them but I genuinley used my cards each month because of my current situation to get by.

[MelanieGiles]

Hi there

Once you have decided to appoint a professional to repsresent you in an IVA process, you should most definately not use credit cards into the future

One of the things you must do rapidly is work out an income and expenditure account which shows the disposable income you will have available to offer to creditors. This should show that there is no need to use credit to supplement your expenditure, and if it does - then you are not a candidate for an IVA in any case on grounds of affordability.

[carlmcmullen]

Your IP is likely to disclose the date you first contacted them for help in the proposal.

If they can see transactions on the credit cards since this date then they are likely to reject your proposal so you must not use the cards.

I would normally suggest that you stop making payments to your creditors or maybe offer a token payment which should allow you enough money to live on - if it doesnt then you need to consider if an IVA is right fo you.

[anais743]

Hi

thanks for your advice but think maybe you mis read!

I have already worked out I&E and have about £350 disposable income left over without making credit payments.

However until an IVA is agreed/i place I draw on cards to pay for shopping.make other payments etc.

If I have an IVA agreed I would be able to live within my I&E and not use credit ever again!

[MelanieGiles]

Sorry - my advice stands. Credit cards must not be used after you have taken professional advice and regognised insolvency. To continue to do so would be to be taking money in the knowledge that you cannot pay it back.

If you have disposable income, why do you need to use the credit cards rather than cash? And be aware that creditors are unlikely to support an IVA if they see recent usage on the cards.

[carlmcmullen]

Why do you feel a need to continue to draw on credit cards until your IVA is in place ?

Has it been going on for a while ? Are you still paying them the full payment ? Have made a payment to your IVA provider aswell as your creditors ?

[Sensible77]

When I was in the process of applying for an IVA, my IP said that I must not use my credit cards, make token payments to them, (I paid £10 to each), and the difference between the token payment and the minimum payment can be used to live on and any remainder could also go towards the first IVA payment if I was succesful - which I was.

[anais743]

Hi.

I have no disposable income left over at the moment- only would have if I stopped paying my creditors. The £350 is the amount I have had worked out I would have available after examination of my finances for an iva.

At the moment im vert early in the IVA process and have only just had the initial telephone call.

I have definately used my card of late to pay for the monthly shopping as we had no other money once our bills were paidSurely other people are in the same situation as me?

will this go against me

[MelanieGiles]

Not necessarily, but if you have worked out that you have £350 spare and have stopped paying your credit cards from the time you first took advice, then we cannot see why you would need to use them. When are you next due to be paid?

[carlmcmullen]

If it is for shopping and you are very early like you say then maybe it will not go against.

But you seriously need to stop using them immediately.

[anais743]

Hi Melanie

I am reluctant to make just minimum payments as there are no guarantees that my IVA will be accepted and what situation will i be left in then? At this moment in time i am continuing to make the full minimum payments on my cards. I do not want to start receiving debt chasing letters until I have too and know that an IVA is in place and agreed. I have spoken with the CAB and my work union and they have advised that I must make payments until an IVA is agreed if I can afford too. I have 3 credit cards which are at their limit so have only used the cards to draw back the minimum payments once made.

I get paid monthly and am 2 weeks away from the next pay day.

[MelanieGiles]

If you can make the contractual payments until an IVA is in place then quite simply you don't need one and you will not creditor support.

I have very limited information about your case, so it is difficult to advise on the forum with such scant detail, but you really do need to follow the advice of the person you have chosen to represent you. I appreciate that it may seem strange to stop paying your creditors - but if you can pay then you are simply not insolvent and the credibility of your IVA is extremely questionable.

I cannot understand the advice given by the CAB and your union, and feel sure that there must be some misunderstanding along the way.

[anais743]

Thanks for the reply melanie

I am making my obligations at the moment by borrowing from one to pay the other. I am a serving police officer so must lawfully discharge any debit until an IVA is in place (and obvioulsy cant go bankrupt).I have had my I&E calculated by yourselves and paylan who have calculated that i have £350 to offer to my creditors although Im currently paying out £550 a month with minimum payments etc. I am now at the point where i cant make the miminum payments without borrowing from somewhere else so wouldnt say I was solvent.

[MelanieGiles]

I am aware that we have been advising you, but to be frank you cannot continue to "lawfully" discharge your debts until an IVA is in place because you cannot afford to do so without taking further credit which is unlawful.

I think that we should now discuss this on the telephone as the forum is not ideal to give specific case by case advice. I will get your telephone number tomorrow and give you a call.

I have dealt with many police clients in my career, and do understand the constraits you are in, but feel that there is some misinterpretation of the advice you are being given by both sides.

[anais743]

ok melanie. I think Tina is calling me back tomorrow anyway? thanks for taking the time to answer my posts.