www.iva.co.uk

Several years ago my girlfriend managed to get herself into debt. 3 years go she arranged a payment plan with a company called consumer credit counselling, who negotiated a payment amount with her creditors, and she continues to pay this. However one creditor continues to add charges to the outstanding amount each month, which I didn’t believe was allowed. So my first question is, can they get away with doing this?

She recently moved in with me, and began paying an amount towards the living costs (basically half bills & food) however she is struggling to do this, meet her repayment maintain a reasonable standard of living. She doesn’t always for example have the money to even go out once a month, or get a takeaway on a weekend. Following payment of all her outgoings, she’s left with circa £300 a month, of which approximately £150 - £200 a month goes on fuel costs to get to work.

This is making her miserable, and short of constantly giving her money, I don’t know what to advise. We got talking the other night about bankruptcy and IVA’s, but not knowing enough about them, I wasn’t in a position to comment. She is in debt by approximately £13000, and her credit rating has already been affected to such an extent she has a card cash only account i.e. no debit or credit facilities. I’m worried for her, because it’s making her upset all the time. She’s learned her lesson, but sees no way out of this short of paying X amount of money per month for the rest of her life.

In this kind of example, do you think that something like an IVA or bankruptcy is the right way to go? She doesn’t have a home or car in her name (the car is in her mothers name, and she is paying for that also each month) and I don’t believe that her deciding to do something like that could affect my credit rating or property could it? I own a house (mortgaged not outright) and am also worried about the affect (if any) this could have on me.

I would appreciate your advice.

Thanks

Matthew

In a debt management plan creditors can add interest. As for an IVA im not sure if she is in enough debt to take one out, but an expert would be able to answer that better.

As for the car. my partner was in this position. the car is in her dads name and paid him the amount of finance each month. Unfortuanatly if an IVA was appropriate then she would have to list her mother as one of her creditors and she would be included in the proposals. This was the informayion i was told by 2 0r 3 seperate IP's

An IVA is only possible with debts of over £15000.
In a DMP, there is no real legal protection so creditors are free to keep charging interest if they choose.

Bankruptcy would put an end to it all but im not sure where she would stand with regards to the car (one of the teckies will answer that 1)

£15,000 minimum IVA debt level is not a limit cast in stone, however, if your debts are under £15,000 then a DMP will be more appropriate simply because most IVA providers require a minimum payment level of between £200-£300 to make an IVA viable, and even at £200 per month, you'd be paying £15,000 of debts off in just over 6 years if interest and charges were suspended. Nowadays creditors don't really want to approve an IVA where with just a little extra effort i.e. a year or two the debtor could pay off under a DMP.