Called yesterday to get a settlement figure and have sent proof of funds so I have to call today to pay a final payment and then I should be clear again.
If anyone is interested, this is my experience and my "belief" in terms of my IVA
- Started at £760 a month with a predicted return to creditors of about 45p in the £
- Circumstances changed quite quickly and payments increased to £1769 per month with a predicted return to creditors of 99p in the £
- I missed 2 or 3 months in the middle when I was made redundant
- A month short of 5 years and my ex bought me out of our house so I have a figure of about £6900 to pay which will see me at 100p in the £ plus fees
If you're thinking about an IVA and have seen the headlines about writing off your debts, don't believe them. Nothing is written off when you enter an IVA.
Example. You owe £10000 to a number of creditors. You enter an IVA and your debt is now £10000 PLUS fees to the IVA company of around 15% of your monthly payment. If they, for example, agree a monthly payment of £100 per month for 60 months then AT THE START, that's £85 per month going back to the creditors and £15 per month going to the IVA company. That means your creditors are getting back £5100 leaving a gap of £4900. That £4900 is NOT written off at the start. You owe that until the end and then the creditors will decide whether it's written off. If you have equity in your house and can't realise that then you're likely to be in for another year. At the end of 6 years, you'll have paid another £1020 to your creditors meaning that there is still £3880 left of the debt which the creditors will probably write off but you still owe it until the end anyway.
I'm going to leave out statutory interest because that wasn't charged on my IVA.
But if your circumstances change it gets murky.
Let's say you get a windfall of £10000 at the point where you've paid back £5000. Great! Give them £100 to cover the difference in payments and you're good to go? Nope. You need to pay back enough to cover the £10000 debt plus any fees.
So, from the moment you start, the ONLY figure that matters is the original debt plus fees. Fees can also be added for things like variations. I don't know the exact rules. But I do know that I was charged £400 and £500 for variations. So add those on too if you need to change anything. But for the most part, focus on the original debt because that's actually what the creditors and the IVA company want you to achieve. It's in the interests of the creditors and the IVA company for you to succeed in your IVA BUT you will be taken right to the wire. Creditors want to maximise their return. It's in the IVA company's interest to maximise their fees. It's a situation where YOU pay for a service but YOUR interests are only served for the benefit of the others.
People will tell you to shop around and find the IVA company you think you can work with. First, don't believe the guy who tells you he can get your monthly payments down lower than all the others. The formula to work out your payments is based on your income and expenditure so it'll probably be the same across the board unless the fees are less, maybe a few quid here and there if he thinks he can get you the upper amount of the guides for your expenses rather than in the middle. But every £ he saves you on your monthly payment reduces his income so I'll let you decide how motivated he's likely to be.
There's a good chance your IVA will be shifted on to another company at some point. So who you choose at the start might have a great record of customer service. Then, 6 months in, you could just be sold on to the worst company out there. You have no control over this so all the research you did at the start will be wasted.
I'm not saying that there's anything wrong with the truth of an IVA (maybe apart from variation fees). You got into £10000 of debt. You have some responsibility for paying it back. But you do need to be aware of the truth. It will be there in the documents you sign. Those pages and pages of documents that you're asked to sign when you're being driven crazy by calls from debtors, letters that you're too scared to open, knocks on the door that you don't want to answer, etc. But I'd bet good money that most people will skip to the back page, sign, and heave a big sigh of relief.
So, just to summarise:
- You owe £10k before you start, you owe £10k plus fees on day one and £10k plus fees minus payments on the day before your 5th anniversary.
- Your choice of IVA company doesn't make a difference
- An IVA is NOT a silver bullet to writing debts off
- An IVA IS good if you want to change your attitude and relationship with money
- An IVA is a painful process that gives you immediate relief at the start and you'll probably be glad you did at the end. The middle 4 years and 10 months is the hard bit.
Good luck! And keep checking in here. The info above is based on my experience and not much knowledge. There are people here that will correct anything I've got wrong, I'm sure. Listen to them