Personal Loans

[Sanchez]

I have read a lot about the IVA but am a little confused about how personal loans are factored into one.
Are there any reasons why a personal loan wouldn't be accepted in an IVA or are they always accepted ?
If they are always accepted what would stop someone taking a large personal loan out with their bank then applying for an IVA to wipe out this debt ?
Could someone clarify any aspects to do with personal loans please !!

[Lisa2009]

Personal loand have to be unsecured.
Not all IVA's are accepted.
If a large personal loan that is very new, the said creditor would probably vote to refuse the IVA. It would only be accepted if 75% of voting creditors vote to accept.
An IVA can only be taken out if there are at least 3 creditors not just one.

[Viki.W]

Hey sanchez, welcome to the forum. If someone was to take out a loan knowing that they were going to go for an IVA then I'm pretty sure that would be classed as fraud. If circumstances changed and that was out of that person's hands, then that's a bit different but usually you would have had to have paid back at least 3 months payments and some creditors would want to see that you have been repaying the loan for a year.

[kallis3]

I agree with Mrs S and Viki. You should not take out a loan knowing that you have no intentions of paying it back. That would be fraud.

As Viki says, a lot of companies now want to see that you have made some effort to pay it back.

[Sanchez]

I am only enquiring as someone i know has added and added to a personal loan and they appear to have no problem paying their monthly installment .
They are now talking about an IVA to clear most of their debts , the last time they added to the loan was less than 8 months ago.
Now maybe its just me but i think it takes the p*ss if you can do what they are attempting to do !!

[Sarah]

Hi

I think the probelm they will have is the age of the debt as i think i am correct in saying that a lot of companies wont approve an IVA unless the debt is over a certain age (around 12 months) I may be wrong but i am sure i have seen that somewhere

x

[MelanieGiles]

If a lump sum is being offered to creditors from the client themselves, they will have to show where that money is coming from. If it is from further unsecured borrowings, which will ultimately have to be disclosed under the IVA process, then the money ought to be returned back to the originating lender.

[Kazz]

Mmm, interesting one, taking out a loan, and then entering into an IVA, near enough straight away, could be looked upon as fraud.
Some companies wont accept an IVA with a loan that has been taken out within the previous year, different banks etc have different guidelines, but most use the 3 months payments at least.

[luluj]

This behaviour makes me angry - theres those of us in an honest IVA situation and others looking to abuse the situation - at least we can hold our heads high and pay our creditors back what we can over time - I never entered into our credit arrangement with the intention of not re-paying - personally I can't understand those that do - it is morally wrong !

[Skippy]

I agree Lulu, I don't know how people can borrow money with the intention of not repaying it. I know I borrowed a lot of money, but I fully intended to repay it, and my consolidation loans were supposed to make that easier - how wrong could I be!

[kallis3]

I agree as well. I always intended paying back my debts, and was mortified when I realised I had dug myself a very deep hole and had no ladder!

Consolidation loans - we had a huge one secured on the house - paid off the credit cards yet again, but were we sensible and cut them up?Noooooooo! We kept them for emergencies only. Isn't it funny how a holiday in Florida becomes an emergency?

[David Mond]

Mrs Skint gave the correct advice - anyone who thinks that they can take out a loan for the purposes of going into an IVA shortly thereafter would probably fall foul of the due dilligence that all IP's putting forward an IVA have to do to check on the debtor and the veracity of how the debts came into existence.

[Sanchez]

So if you applied for an IVA with the main debt being a constantly added to personal bank loan which you have kept up your repayments on , would the bank accept that and reduce your debt even though they are receiving their repayments every month ?
Also , how do they work out how much you can put into the pot for repayment during an IVA ?
Does it include every aspect of the household income such as wages , overtime , tax credits and child benefits?

[kallis3]

I think there would be problems with a loan which has constantly been added to. I imagine an IP would look into it as you have to explain how you have run up the debts and what you have spent the money on.

The bank may not look too kindly on it, even if you have kept up the repayments,but of course that is a matter for them.

Your IVA contribution is worked out on your disposable income after all priority payments (like mortgage etc) have been paid.

It includes all of your income. Overtime is usually worked out by you being able to keep the first 10% and then 50% of the remainder.

[size5]

Each case must be treated on its own merits and without a lot more info, which you probably wouldn't want to divulge on a public forum, then a definitive answer cannot be given.

The "topping up" of loans is quite a common scenario of course and in itself would not necessarily debar an IVA proposal. The circumstances of it and the history of it is something that would obviously be looked into though.

The repayment on any proposed IVA is worked by looking at a proper budget with a professional, and once all income and expenditure is accounted for reasonably then you have a figure that can be looked at for a possible IVA.

Accordingly, you may wish to discuss your options with a professional, and a good place to start is to visit www.iva.com and have a good look around, talk to 2 or 3 providers and then make your own decision from there.

Regards.