Considering IVA, advice appreciated

[Exit35]

Hi all.

I have been juggling my debts for a number of years now while also being financially responsible for my mother after she had a nervous breakdown and lost her home. As a result I had to look for a house and my mother and brother moved in with me, we rent and the home is in my name and my brothers but I am the main bread winner, for want of a better word. My mother cannot work and her benefits were stopped when she couldn’t face a tribunal regarding her mental health.

I am now at the point where I am paying more in interest than what is being paid off the cards and I am stuck in the cycle of dipping into the cards during the month.

My debts are around 16k over 7 credit facilities and I earn around £1400 net, my brother pays me £400 a month. Once everything is paid (including debts) I have around £60 left for the month. From what I can tell it looks like a DRO is not an option, if I only paid essentials, I would have around £300 left, so it looks like it could be an IVA but I have not yet spoken to anyone and I have a few questions.

1.       I am considering speaking to Step change tomorrow and I live in the north east, would they be considered reliable? Do they refer me to an IP and if so would they also be based in the north east? I was also looking at iva.org. I guess it would be nice for some pointers on who is the best people to speak to that have my interests at heart?

2.       Would it be too early to open a basic bank account? I get paid monthly and most of my DD’s come out the first of the month so I guess if I were to go ahead with an IVA it could be early march.

3.       Is there a link where I can view the industry standards for monthly allowances, like clothing, etc? Would a £300 a month food allowance for 3 adults be too much? Also those allowances, how would I be expected to keep them? I mean if I have a £30 clothing allowance can I withdraw that and put it in a jar to save up and then buy clothes? Or can I transfer it to a pre-paid debit card? Are pre-paid debit cards useful for people going through IVA?

4.       My brother only works part time and has been doing his best to pay towards the household bills and then some. If an IVA is successful would they need access to my brothers payslips? He was only named on the tenancy as I thought it might help with housing benefit when we were getting back on our feet.  Will they demand he pay a certain percentage to the bills? He has been paying more than is reasonable as he has been trying to help me, so one of the big reasons I was considering an IVA was so that he could reduce his payments and have more for himself as I will not need as much help if my Debt is rolled into an IVA.

5.       Finally our washing machine looks to be on its last legs and I might have to pick another one up using credit, even if it’s second hand, how would a purchase/purchases like this be viewed when not long after I am considering applying for an IVA? Would I be expected to get a refund on purchase where possible?  Are purchases within weeks of applying for an IVA seen in a negative light?

Sorry for all the questions, I hope my post is somewhat legible.

Any other help or tips would be great, I have read through a few forum posts and FAQ’s surrounding IVA and alternatives but it is a lot to take in, especially with the worry of going through this on top but I can absolutely see the benefits if it is right for me.

Thanks for reading and I appreciate any advice someone can give.

[Foggy]

I will address the points as numbered, for ease of reference:

1) Stepchange run a fair IVA, although, in the past they have been known to pass cases on to other firms. This used to be Grant Thornton. I do not know if they still do this with GT's new incarnation, Aperture. They do operate nationwide. I would be inclined to look at the smaller, more personal firms, like, well, the number at the top of the page here, or Lisa Thomas, who posts here from Neville and Co. Cambridge McDuffy also have a very good reputation, but there are many more out there.

2) It would be a good idea to get the new account up and running while your credit score looks better ( that will crash when in the IVA). Avoid First Direct and HSBC. Many of us use the Co-operative Cashminder account.

3) There is no easy to find link as the industry wants you to state what you actually spend and will advise if it is above the guidelines. BeatMyDebt used to have a budget calculator which advises when a guideline was being exceeded. Food, toiletries and clean allowance in 2015 was £222 max per single adult, £354 for a couple and £138 for each additional adult ( these have not gone up much since then !). Popping allowances in a series of jars is a common method

4) Each adult will be expected to contribute their fair share towards the bills, in relation to their relative incomes. But this can be discussed with the IP and negotiated.

5) A credit purchase, once you have decided that you are insolvent will not be looked on well and that creditor may object, though unlikely that they will look at that much detail. Many of us lived on credit until the bitter end. But keep it reasonable.

[kallis3]

Don't forget things like dental, prescription charges (I recommend a prepayment certificate if you need lots of medicine - I had one throughout my IVA), meals for work, haircuts.

[Lisa Thomas]

It sounds as if you have done your research but please ensure that you explore all insolvency options.

If you are not a sole trader, not a Director of a Limited Company and not a home owner then Bankruptcy sounds like it might be a better option for you on the face of it.

My brief video summarising Bankruptcy is here:

https://youtu.be/mAkQsVSCnqo

[Exit35]

Thank you very much for the responses Foggy and Kellis, you have helped clarify some things for me.

It sounds as if you have done your research but please ensure that you explore all insolvency options.

If you are not a sole trader, not a Director of a Limited Company and not a home owner then Bankruptcy sounds like it might be a better option for you on the face of it.

My brief video summarising Bankruptcy is here:

https://youtu.be/mAkQsVSCnqo

Thank you very much Lisa, I will check out the video you linked.

As I heard bankruptcy is a last resort I have mainly looked in to DRO and IVA's. I am not any of the things you mentioned so maybe I should consider bankruptcy? Is this something that any IVA practitioner should include in their discussions?

Do you take clients from North East or would you recommend I find someone closer to home?

Thanks again.

[Lisa Thomas]

I'd be happy to chat to you.

I'm about to leave for the day but am around tomorrow.

[Foggy]

Bankruptcy is no longer the 'measure of last resort' it used to be, if entered into by the debtor , as opposed to having it foisted on them by the creditor. As long as you have no assets or a career which prohibits bankruptcy.

You might end up with three years of payments, similar to those in an IVA. But, more than likely, will be discharged after a year, so will not have the burden of ongoing scrutiny nor, indeed, the ever present threat of the arrangement being failed due to some unfortunate circumstance.

[Exit35]

I'd be happy to chat to you.

I'm about to leave for the day but am around tomorrow.

Thanks again Lisa, hopefully I can catch you this afternoon? 2pm onwards would be perfect.

[Exit35]

Bankruptcy is no longer the 'measure of last resort' it used to be, if entered into by the debtor , as opposed to having it foisted on them by the creditor. As long as you have no assets or a career which prohibits bankruptcy.

You might end up with three years of payments, similar to those in an IVA. But, more than likely, will be discharged after a year, so will not have the burden of ongoing scrutiny nor, indeed, the ever present threat of the arrangement being failed due to some unfortunate circumstance.

Sounds like I may need to consider this too. Thanks again foggy, I'll discuss this this afternoin whoever I speak to.

[Lisa Thomas]

I'm tied up until 2.30 today but feel free to call me afterwards.

[Exit35]

I'm tied up until 2.30 today but feel free to call me afterwards.

Will do thanks.

[kallis3]

Did you manage to speak to Lisa?

[Lisa Thomas]

Yes we have spoken, thanks Kallis.