www.iva.co.uk

Hi All,

Is it true that when putting an IVA together, the IP will strive to reduce the debt to be paid back?

I know that it is normal for the interest to be frozen but is it also normal to have the repayable debt reduced, or is this totally at the creditor's discretion?

Thanks ...

An IVA does not reduce your debt - it simply seeks to offer affordable repayments or the realisation of assets, or both, by way of satisfaction of those debts over an agreed time period. Creditors would be very unlikely to agree to reduce their debts.

As far as I am aware, what you repay to your creditors is dependent on the amount of disposable income you have. Some of the debt will be reduced, but it will differ from person to person.

Your creditors will be paid pro rata and your IP will work out the dividend they can expect to receive. In my case it is 31p in the pound.

I had this very same question today, and I wonder whether this is a common misconception due to the way IVA's are marketed by some providers?

I hope not, but who knows?

Regards.

Thanks Melanie,

So if, for example, at the start of my IVA I owed £40,000 and assuming the interest on this was frozen. Would it be reasonable to expect to pay about £666 per month over 60 months? (i.e. 40,000 divided by 60 months) ...

I am sure that adverse marketing does not help Size 5.

No bla - you firstly work out how much you can afford, let's say for the sake of argument £300, and then this is paid for 60 months giving a total fund of £18,000. After the costs of the arrangement which I would estimate at approximately £5,000 this would leave £13,000 to distribute to £40,000 of creditors - giving a dividend of 32p in the £ - or 32% of your overall debt.

Does this help to understand better?

Thanks again Melanie,

Funny how an answer to one question also serves to answer a whole bunch of others ...

I've noticed many respondents on this forum using this notation of "xp per pound" but never knew what they meant by it ... no doubt I would've asked about it at some point in the future ... but no need to now:-)

Thanks one and all ...