www.iva.co.uk

I am just about to go through the process of starting an IVA, however there is a small outside chance that i can achive a settlemnt of my debts on my own but i feel that i would like to get the IVA roling before i fall foul of my creditors.

If the company that i use make a proposal to the creditors and i change my mind and find my own solution will i have problems with my credit file. and rating?

Hi,

Once you are in an IVA, then the only way you can get out of it is to let it fail. The IVA will remain on your credit file for 6 years.

You can propose a full and final settlement as an IVA, or you can try and sort out a settlement with your creditors yourself.

Any IVA will remain on your file for 6 years.

In essence your credit file would be damaged for 6 years from the date of any missed payments, defaults etc. An IVA would default all your debts and even paying them in full would not repair the damge to your credit rating. You need to discuss this with your IP who will be able to advise further.

You should not consider an IVA if you are only doing it half heartedly or to buy time to them deal with your creditors directly. If this is your plan, then a DMP would probably be more suitable.

In Essence and in brief i owe 35k mainly made up of high interest credit cards. I am paying 1500 a month and slowly sinking, i can afford to pay £1000 per month i have an annual bonus which is equivlant to £5000 after tax per year which i am more than happy to put to my debt.

Therfore in theory i can pay 15k+ a year and should be able to settle an IVA within 3 years paying off all my debt. I just really need to freeze the interest and lower the payments slightly

I have looked at re-financing but because the debt is significantly above 25K i have faild 2 laon applications and fear my credit files is damaged at least for 6 months!

am i better going through a DMP?

Many thanks.

On the face of it, yes, but do take time to speak to 2 or 3 specialists who will be happy to make sure that you do not overstretch yourself. The last thing you should do is overcommit yourself on a debt solution.

Regards.

A DMP does sound like a suitable option but it would damage your credit file. It may be worth trying to transfer any high interest credit card balances to low or interest free terms. Use your bonus to clear the most expensive remaining credit and possibly consolidate the remainder over a longer term with an option to overpay. It may be worth speaking to your bank manager for advice before you do decide the way forward.

And "snowballing" might also be an option - where you seek to pay off higher interest credit sources at a quicker rate, thereby leaving more money to deal with the lower chargers later on. It is popular in the US and worth looking into.