Trying to avoid an IVA....

[simon.b]

I've been thinking about entering into an IVA (if agreed) and after speaking with Thomas Charles they advised the best thing is to move out (me and my gf currently live at home with my Mum) and then do it. This sounded great but my gf cannot afford to do it (she has no debt but doesn't want to get into any). So Thomas Charles think I'll end up paying around £600 a month into the IVA.

If I was to pay this over 60 months, that would equate to £36,000 which is more than my debt is (£31,000). Would it therefore be more adviseable to approach each of my creditors individually and and look to arrange a DMP? If I pay £512 a month and the interest is frozen, my debt would be clear in 5 years - making the appropriate percentage payments to each company e.g. I owe my bank 1/3 of my debt so pay them 1.3 of the £512 = £171? What would happen in the future if this payment proved too high as we've talked about moving into our own place in a year / 18 months if at all possible - is a DMP adjustable?

Also, I've heard that MBNA are quite strict - I owe them (via Virgin) £6600 which is 21% of my debt - I've had this for 14 months of which 12 of these were interest free and now I'm paying £120 interest a month with a min payt of £124 - ridiculous - what are the chances of them agreeing to a DMP?

I've also been thinking just to cancel my payments for a month or two and then do it as my car is on its last legs and I desperately need to replace it of which the minimum payts of £900 a month could do that for me - all advise would be gratefully received.

P.S. I know normally a DMP is for debts of £20k or below but it just seemed more logical to me - how will my credit rating be affected by taking a DMP rather than an IVA? Is there a big difference?

Thanks

Simon

[Adam Davies]

Hi
You could look at a DMP but the chances of getting all your creditors to suspend interest are slim.
Under a DMP you have no protection from your creditors so they can at any time take legal action.
With an IVA you will be paying most of the IP fees yourself and returning close to a 100 percent dividend but you will be protected from any legal action and all interest will stop.
Even though you will be paying 36k on debts of 31k you will be saving more than 5k on interest etc over 5 years.
Your credit rating will be impaired for six years under an IVA and you will be unable to take out any credit for the five year term of the IVA.
A DMP is less damaging to your credit record.
If you go down the IVA road and your IP states that you are to stop paying your creditors then you could use this period to change your car.
Hope this helps

Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[accgroup]

Hi Simon,

Andy is correct regarding the difficulties of an informal arrangement with your creditors. It is also worth noting that all information is held on your credit record for 6 years, not just bankruptcy or IVA details. This will include any default notices issued by your creditors and missed or reduced repayments.



AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[Adam Davies]

Hi
Speak to two or three companies and go with the one that you feel comfortable with.An IVA is a tough route but can change your life for the better.
Companies who post on this site are all bona fide and would be a good starting point for you.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[MelanieGiles]

Hi Simon

The key thing about making an IVA work, is

a) To really want to do it in the first place!
and
b) To be able to make regular monthly payments with ease,and not a struggle

I agree with the other experts that an IVA brings more certainty to your financial situation, but as you are not a property owner have you also considered whether bankruptcy proceedings are a better option?

You must avoid the "frying pan into the fire" approach, and ensure that you properly budget for all expenditure, including contingencies such as car maintenance, medical expenses and miscellaneous expenditure, as well as items which are known and paid regularly. And the support of your partner will also be vital through the IVA process.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Skippy]

Hi Simon, to be honest BR is nothing to worry about if you have no assets. I went BR in March and it was the best thing that I could have done in my circumstances. I was in an IVA and it failed as I couldn't afford the payments and I couldn't have a variation due to the modifications of my IVA.

Do you have a job where you are not allowed to be BR? My company only know about my BR because I told them. If you need to change bank accounts (I have been allowed to keep my bank account) just tell your payroll department that you have opened a new bank account.

I have been given an income payment agreement (IPA), but as I agreed to the payments my company have not been informed. If I hadn't (or if I fail to make the payments) I would have been given an income payments order (IPO) and my employer would have been informed as the payments are deducted at source.

The other way your company may find out it it you are given an NT tax coding. When you are made BR HMRC change your tax code so that you pay no tax for the tax year in which you are made BR, but I won't get one as I was made BR on 29th March and the new tax year began on 5th April, which didn't give HMRC the time to implement the NT code. However, the NT tax coding will only be implemented from the date HMRC get around to issuing the new code! So you could be made BR in June, but not be issued with a new code until September. Sadly you don't get to keep the money, it has to be paid into into the IPA!

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/

[Skippy]

Yes, you can still have a bank account but there are only a couple of banks who will allow undischarged bankrupts to open a bank account - Co-operative Bank and Nationwide. I had an account with Lloyds TSB and as I didn't owe them any money I was allowed to keep it open. I don't think that Natwest would allow you to have an account as I have heard of them closing people's accounts when they found out about their BR.

How much you pay depends on your level of disposable income. After all my outgoings (which are much more generous than in my IVA) I was left with £310 surplus and I will be paying £186 into my IPA. Debt Dummy posted a list of IPA figures on the sister bankruptcy site.

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/

[Skippy]

Here is the list of IPA payments (I couldn't find DD's original thread):

This is a table of IPA percentages that you can expect to pay on any surplus income:

1st Column=SURPLUS INCOME
2nd Column=AMOUNT TO BE PAID
3rd Column=% OF DISPOSABLE INCOME


50 Nil
60 Nil
70 Nil
80 Nil
90 Nil
100 50 50
110 55 50
120 60 50
130 65 50
140 70 50
150 75 50
160 80 50
170 85 50
180 90 50
190 95 50
200 100 50
210 105 50
220 110 50
230 115 50
240 120 50
250 150 60
260 156 60
270 162 60
280 168 60
290 174 60
300 180 60
310 186 60
320 192 60
330 198 60
340 204 60
350 231 66
360 238 66
370 244 66
380 251 66
390 257 66
400 264 66
410 271 66
420 277 66
430 284 66
440 290 66
450 297 66
460 304 66
470 310 66
480 317 66
490 323 66
500 350 70
510 357 70
520 364 70
530 371 70
540 378 70
550 385 70
560 392 70
570 399 70
580 406 70
590 413 70
600 420 70


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/

[MelanieGiles]

Depends upon how you feel about repaying your creditors really? They will get very little returned to them under bankruptcy proceedings, as the costs are very high.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[alan1951]

Hi Simon,

Some expert may come along and contradict me, but I believe that both an IVA and BR are recorded on your credit rating for 6 years.

Alan

[Skippy]

You're right Alan, an IVA and BR are both on your credit rating for 6 years. If you go BR and are asked at any time in the future whether you have been BR you must answer yes - this can be 15 years down the line.

Regarding payments, an IVA is for 5 years and an IPA (or IPO) is for 3 years.

As Melanie says it does depend on how much you want to repay your creditors.

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/

[alan1951]

If you want a little disposable income then BR would be your best option I think and you only pay for 3 years max. In an IVA you are expected to give all your surplus income to your creditors.

Alan

[Oliver]

Alan is correct the most you are likely to have to pay in Bankruptcy is for 3 years.

Both an IVA and Bankruptcy have a similar effect on your credit file, I don't really feel that one is better than the other unless you work in a profession whereby you can't go bankrupt.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[Oliver]

Absolutely, it sounds to me like Bankruptcy is a perfectly viable option for you.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[MAY2006]

Hi Simon
Just reading through your posts, you don't have to wait six years post IVA to get a mortgage. I am 12 months post IVA and in the middle of re-mortgaging. My IVA was complete in 12 months because it was final settlement type.
You would need to use a broker as they would have access to lenders who will loan to those with adverse credit. If you check through this site there will be postings from a guy at All Mortgage Products.
I believe that you can get a mortgage if you are in an IVA providing you do not reduce your payments to creditors to fund it and if you can prove its cheaper than renting.