It may be that it is affected as obviously they are named on your finance but I'm not 100% sure of that.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
The creditor is unlikely to accept an IVA if they can chase the guarantor instead for the money in full and not a percentage in the pound. You should speak to the creditor, anonymously if possible, and ask what the companies stance on IVA's are with guarantors and do they go after the guarantor for the full amount. You could also ask them if a Debt Management Plan was put forward would they allow it to continue with payments from yourself and not bother the guarantor at that stage?
There has been previous mention that if the guarantor pays the debt in full on your behalf your contributions into the IVA towards that debt could be claimed back by the guarantor as they are out of pocket not the creditor in that instance.
Seeking legal advice from one of the respectable companies on www.iva.com is a wise move and before deciding to do anything out of courtesy you should speak to your guarantor about the problems you are having and all the solutions you have available to you.
I disagree with that. They can get money via the iva, and payments in full from the guarantor so I don't think it would make any difference to whether it was accepted or not. You could argue that someone with a joint loan where the other person is still solvent stands less chance of being accepted. The principle is the same.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
The creditor are only owed the money once. Rather than accept the debt going into the IVA they would likely pursue the guarantor instead for the full amount plus interest and not just pence in the pound return.
If they tried to get money from the guarantor in full and then a percentage in the pound from the debtor that would be unethical as they are not a creditor that is losing out financially and would be unfair on the other creditors legally bound by the IVA. Indeed it would also be unfair on the guarantor who really should be able to claim their percentage in the pound from the IVA for that particular debt as they have had to settle the debt on the debtors behalf.
The only other way I could see it being incorporated in the IVA as well as chasing the guarantor would be if they reduce the liability owed by the Guarantor by the percent in the pound received from the IVA as and when they receive dividends from the supervisor.
I would still class it as the same as a joint loan where the creditor gets money from both parties until the debt is paid off in full. The same should apply to a loan with a guarantor.
I do agree though that the guarantor should put in some sort of clam to.the debtor to reclaim the money he has had to pay out.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
So my second alternative where they claim money from both but upon receipt of a dividend from the IVA reduce the guarantors liability is the one you think they'll go for. It would be logical as it means they pretty much get more money quickly plus reducing the liability of the guarantor albeit only a percentage.
Having had debt in my name for someone who died and got lumped with the debt from reading this I won't be a guarantor for anyone trust me.
Yes I think Jan is correct, the person going into the IVA will have their liability covered by the IVA but the creditor in question would chase the guarantor for full payment.The debt would reduce by the amount received from the IVA and from the guarantor.
If the guarantor pays each month in full it will not affect his or her credit rating
The creditor will be bound by the IVA decision unless they hold 25% of the total debt in which case they could decline the IVA and stop it in it's tracks
Back to the original question,the guarantors credit file will take a hit due to being linked financially with the debtor through the credit application.
If the guarantor makes the loan payments as he/she is required to do after the loanee defaults then I dont think the loan would go into an IVA.
However would the guarantor then become a creditor as the loanee would be due the loan money back to them??
Clear as mud!!
Paul
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
What happens if the guarantor stops paying as well? Bear in mind that all debts should be included in an iva. If it were left out then if the gurantor fails to pay, could the creditor then chase the original debtor again?
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
If the guarantor refuses to pay they could take him to court, if he can't afford to pay then they could also go into an iva with the creditor getting some pence in the pound back from him as well i would imagine so they get as much of their money back as possible.
By being a financial associate with someone who is in an IVA yes your credit file will be affected but his personal payment record would remain unsullied if the guarantor kept up with the full payments.
