Decision time

[sunkendrailer]

Hi all.
OK - so I've narrowed my preferred IVA options down to either Payplan or Melanie Giles now and have completed a Statement of Affairs.
Payplan recontacted me today and re-jigged my disposable income to about £450 - which is still a little higher than Melanie.
I know ultimately, the final decision is down to me which way I go. The only sure thing is I know I cannot maintain payments at the current level without defaulting, so time is now of the essence.
My monthly payments for this month are going out over the next few days - but after that I'm hoping to set up my new account.
My question is this. Can I realistically get all my salary paid into my new account next month and therefore default on my agreements. How do I offer token payments to some of them.
I've been advised that as Lloyds is one of my creditors, they will just take the money from my account anyway - even if that sends me further into overdraft.
That's fine, I can cope with that, but what about all the other creditors that are NOT Lloyds? Can I just offer them token payments. Is it necessary to, or can I just cancel my Direct Debits and let the first default notices come any way?
As I've never missed any payments, we're at an early stage, and I guess the default notices are just standard. I believe I am nowhere near threats of action - and by the time I am - an IVA if approved would negate all that?
Am I right?
This is the most stressful week of my life because I just want to make the right decision and move on.

[kallis3]

Hi,

You can't just offer token payments to some of your creditors - it's all or nothing I'm afraid.

Cancel your direct debits now so that you can build up some contingency. If your new account is up and running, then you should be fine next month. It doesn't take long to swap over whatever priority DD's you need to do.

Most banks will continue to take payments from your old account, HSBC did the same with me and also added charges. Nothing to worry about as it all gets added to the IVA.

Don't worry about default notices, you're not likely to get threats of legal action just yet, and if you are accepted you needn't worry about anything like that.

You will, however, get phone calls and letters and the calls can be quite intimidating. If you manage any of your accounts online, I would suggest going into them and either removing contact numbers, or just making some up.

[upthekaiser]

Your right there kallis, we have been making token payments for the last couple of months whilst our paperwork is getting sorted but as we are behind with our payments we are still being hounded from many 0800 & 0845 numbers from 8am till 9pm. One of our creditors Capital one have explained that we will be called until we are in credit so its making me think twice now about making token payments anymore and turn the phones off. Really gets you down in the end but hope to get our life back on track and pay these people back the money we owe once our IVA is accepted.

[Til]

I made the mistake of trying to keep stretching to make token payments in the 2 months prior to our IVA being accepted - naivety I suppose - and whilst at the time I felt as though I had to do it I now realise we entered the IVA with no contigency money at all and it was very hard. I think the fear of not paying your bills when you have never missed one tipped me into trying to keep up some token payments - however we still got all the nasty calls and letters since we hadn't paid enough and in the process left ourselves on the breadline so had I my time over again I would simply miss a month or two's payments to all - after all the credit rating is shot once in IVA anyway so I feel we would have been better not paying - however I would always follow the advice of your IP - they know what's best for each case )

[sunkendrailer]

Hi,

You can't just offer token payments to some of your creditors - it's all or nothing I'm afraid.

Cancel your direct debits now so that you can build up some contingency. If your new account is up and running, then you should be fine next month. It doesn't take long to swap over whatever priority DD's you need to do.

Most banks will continue to take payments from your old account, HSBC did the same with me and also added charges. Nothing to worry about as it all gets added to the IVA.

Don't worry about default notices, you're not likely to get threats of legal action just yet, and if you are accepted you needn't worry about anything like that.

You will, however, get phone calls and letters and the calls can be quite intimidating. If you manage any of your accounts online, I would suggest going into them and either removing contact numbers, or just making some up.

Hi again.
I know you can't make token payments to some and not others - but what I was getting at was Lloyds TSB (to whom I have two loans) is the bank I have my current account with.
Trouble is, I've been told, even if I try and cancel those direct debits, Lloyds will still try and take the full payments as long as my overdraft limit allows (which it will!).
So I will try and cancel the direct debits as you say, but Payplan advised me that Lloyds will still try and take the payments - thus increasing my overdraft, but reducing my loan balances.
I will not bother making token gestures to the others until I get default notices.
I think by the time I'm two months behind my IVA should be going ahead anyway, so hopefully things will stop.

Cheers

[kallis3]

You have to make token payments to all of them. You should not prefer one creditor over another, even at the start.

Lloyds will take the payments, as do most of them.

You need to decide which company to use. I use Payplan and am quite happy, but Melanie does come highly recommended.

[MelanieGiles]

If the bank do this - which I agree is likely - it does not make a jot of difference to your application. Think of it as the bank's own method of "robbing Peter to pay Paul"!

[sunkendrailer]

If the bank do this - which I agree is likely - it does not make a jot of difference to your application. Think of it as the bank's own method of "robbing Peter to pay Paul"!

Thanks Melanie. I think my overdraft will max out at the next monthly repayments (May 1st) if Lloyds TSB take my payments to my loans as normal.
However, assuming I get a move on with my IVA application, by 1st June when the next lot of payments are due - we wouldn't be very far away from the IVA being approved (if I'm successful). Would that be a fair comment?

[MelanieGiles]

I would say that timescale is very realistic - providing you make a decision about which firm you are going to use and then get them the information they will need as soon as possible.

[sunkendrailer]

I would say that timescale is very realistic - providing you make a decision about which firm you are going to use and then get them the information they will need as soon as possible.

I'm 99% sure I'm going to side with you Melanie. I sent my Statement of Affairs to Tina this evening and I know I need to get this going rapidly now.
I'm getting very close to maximum overdrafts - and by that point I'm at a stage where the defaults will start coming.
I've been living on credit for the last few months - rent to dad, fuel, food etc. Enoughs enough and time I started living on what is rightfully my own money!....I will be speaking to Tina tomorrow evening and then I will make an informed judgement on which way to go.
Thanks for all your advice so far - you've been amazing.

[MelanieGiles]

Don't be 99% sure - make sure you are at least 150% sure about your decision before you step into it. An IVA runs over a long period of time, and you have to be absolutely certain that you are making the right choice.

I am glad that Payplan managed to come up with a more realistic budget for you. Was this on the back of knowing that you have taken advice elsewhere, perchance?

[sunkendrailer]

Don't be 99% sure - make sure you are at least 150% sure about your decision before you step into it. An IVA runs over a long period of time, and you have to be absolutely certain that you are making the right choice.

I am glad that Payplan managed to come up with a more realistic budget for you. Was this on the back of knowing that you have taken advice elsewhere, perchance?

Yes it was I think. They've not allowed for things like hobbies, laundry and was particularly low on fuel!....
What I meant was I'm 99% sure I'm going to use you rather than Payplan.
I'm 100% certain I need to apply for an IVA. To me, BR is not an option and I really can't see a DMP, which will last for 10-15 years being an option either.
Do creditors generally accept IVA's over DMP's when it's likely a DMP would last for so long?
I'm just worried that I wouldn't be approved, although Tina said my case is very straightforward and you wouldn't put me forward if you didn't think it would succeed.
I know an IVA is over a long period of time, but bearing in mind I've been paying off loans every year of my life since the age of 18 (16 years now), another 5 years is nothing in comparison.
Bearing in mind I've never missed a payment and (touch wood) have never lost my job (touching wood again), I believe another 5 years, while obviously a big commitment, is no more of a commitment than the last 16 years.
One thing Payplan do say they offer is insurance against things like redundancy/sickness. I think they call it "Protect my payments".
Do you offer anything similar or know of any options that are available.

[MelanieGiles]

I knew what you meant, and that is why I counselled that you should be at least 150% sure before appointing an IP to act for you!

Yes - creditors will generally accept an IVA if the payment period in a DMP would be unreaslistically long. Even the people you owe money to recognise that you have to move on with your life at some stage.

You can get insurance to cover your IVA if you like and if creditors will sanction the payment premium. I don't tend to recommend it, as I very rarely see IVAs failing due to accidents, sickness or redundancy. In these instances we work to our clients own specific requirements, and I have a break rate of less than 5% over the full course of the IVA against an industry average of between 30-40%.

[sunkendrailer]

Thanks Melanie.
I would go with your advice then. Obviously you can never say never, but I'd like to think my job is pretty stable. Have been there for ten years - and have never been out of work.
I understand there are options of payment holidays if there are every any real hardship months anyway?
Just one final question - and I don't want to sound morbid here. But should the worst thing happen to me (god hopes not), would an IVA "die".....I'm just thinking worst possible scenario and whether my dad would be lumped with it.....he knows nothing about this and until I have it all set up and into it for a while - I'd rather he didn't. It would scare him to bits.

[MelanieGiles]

Your death would bring an end to the IVA, and any remaining debts would fall to be dealt with as priority payments from your estate. There would be no come back on members of your family.