Credit card complications

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david711
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by david711 » Wed Nov 29, 2017 8:56 pm
Hello, i was wondering if someone can help with this. A friend is currently dealing with an IVA (i don't know the details of who the company is handling things) but on completion of a review, they have advised her that on the basis of her income increasing 400.00 per month, she should be able to afford more than what she is paying out. In her first application with an agent on completing the IVA Financial Statement, she advised him that her mother had taken a credit card out to help her pay other bills. My friend makes the credit card payments, however the card is in her mother's name. On the first occasion, she had been told not to worry - the payments she made toward the credit card could be included, but included in other elements, ie added to household expenditure, etc.

however now on her second review, she is being told the credit card payments cannot be taken into consideration due to the fact that it is a creditor - however would i be right in thinking that in fact as the credit card is not in my friend's name, essentially this is NOT her debt?
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david711
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by david711 » Wed Nov 29, 2017 9:19 pm
Sorry i got some of the information incorrect first time so to clarify;

My friend had been told that the credit card could not be taken into consideration as it was not in her name (fair enough) however when completing the first review one of tje advisors explained that he would add in additional expenditure in other areas to make up for the money being paid off the card.

The IP are now disputing this and saying my friend would have to prove this was the case. It basically appears as though they are trying to move the goalposts.
My opinion of an IVA was that the IP was there to help people struggling financially not add to the burden.
The LP is Vangard
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Foggy
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by Foggy » Wed Nov 29, 2017 9:23 pm
david711 wrote:
Hello, i was wondering if someone can help with this. A friend is currently dealing with an IVA (i don't know the details of who the company is handling things) but on completion of a review, they have advised her that on the basis of her income increasing 400.00 per month, she should be able to afford more than what she is paying out. In her first application with an agent on completing the IVA Financial Statement, she advised him that her mother had taken a credit card out to help her pay other bills. My friend makes the credit card payments, however the card is in her mother's name. On the first occasion, she had been told not to worry - the payments she made toward the credit card could be included, but included in other elements, ie added to household expenditure, etc.

however now on her second review, she is being told the credit card payments cannot be taken into consideration due to the fact that it is a creditor - however would i be right in thinking that in fact as the credit card is not in my friend's name, essentially this is NOT her debt?


You are correct in that, essentially, the credit card debt is not hers, but is her mother's debt --- so -- the mother has to repay the debt -- it cannot be allowed in expenses. The firm were trying to assist by juggling allowable expenses, which is a "thin ice" manouvre.

An increase in net income of £400 will result in an increase in the IVA repayment of £200 per month --- assuming the usual clauses the increase should take effect from the month following the review and not be back dated.

The IP is not there to "help" the debtor, but to supervise the arrangement by ensuring both sides adhere to the agreed terms.
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david711
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by david711 » Wed Nov 29, 2017 9:35 pm
Thanks, just seems that the rise in cost of living wasn't taken into consideration; following the 'review' from what i understand my friend was told that there was no way the card payments would have been able to have been distributed in other areas; so for example the agent she spooe to first time around said that because she couldn't include the card, he would add on an extra £50 to household items, £50 to shopping etc, now she is being told this is not something they do; so is it the case she has been mis-advised first time around then?
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by Foggy » Thu Nov 30, 2017 8:00 am
david711 wrote:
Thanks, just seems that the rise in cost of living wasn't taken into consideration; following the 'review' from what i understand my friend was told that there was no way the card payments would have been able to have been distributed in other areas; so for example the agent she spooe to first time around said that because she couldn't include the card, he would add on an extra £50 to household items, £50 to shopping etc, now she is being told this is not something they do; so is it the case she has been mis-advised first time around then?



This is not something that should be done, but, as long as the resulting figures are within the guidelines many do actually do it in an effort to aid the debtor live more comfortably --- too tight on the allowances often leads to failure of the arrangement before it has even properly started ! Indeed many debtors themselves "massage" the figures a little, if they are honest about it!

It was an ill advised course of action in an attempt to mitigate something the debtor should not have done in the first place, i.e taken on more debt, albeit in a third party name (they might not owe the credit card company, but they were repaying the mum).

It might be possible to negotiate a payment break for a few months and use the payments to repay the balance on mum's card, but this will be at the discretion of the IP -- and bandying accusations of mis-advice around will not help in this endeavour. Kid gloves are needed -- the acquisition of more than £500 of new debt in an IVA could be grounds for it to be failed. Tread carefully.
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david711
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by david711 » Thu Nov 30, 2017 8:09 am
Thanks for your reply. Its not something i thought should have been done, which is why i asked.
My friend has asked for the call records to be pulled from last year because they are disputing what actually apparently what happened.
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Lisa Thomas
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by Lisa Thomas » Thu Nov 30, 2017 12:52 pm
Make sure Mum is included as a creditor and puts in a claim.
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david711
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by david711 » Thu Nov 30, 2017 1:13 pm
On the first occasion though the advisor my friend spoke to said no to worry, they would cover the card payments on other areas and make it up that way, something they arent willing to do which isn't very consistent.

Also can i just ask, these guidelines give n out by IPs in terms out what a person is allowed to spend, are these rules which must be abided by, or merely guidlines?

My friend has to pay for glasses and contact lenses as she does not qualify for free eye care, however the IP have told her this exceeds the allowed amount and must be reduced.
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Foggy
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by Foggy » Thu Nov 30, 2017 1:18 pm
The guidelines are merely that -- guidelines. Not carved in stone. Expenditure above these does have to be evidenced and justified. At the end of the day the creditors use these guidelines and can simply reject or reduce any they do not agree with. The allowance for glasses and dentistry is around £14 per adult per month.
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Foggy
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by Foggy » Thu Nov 30, 2017 1:21 pm
Lisa Thomas wrote:
Make sure Mum is included as a creditor and puts in a claim.



My understanding is that this is new debt, Lisa. The poster's friend is already in an IVA and this card was taken out by her mum to circumvent the block that the IVA imposes on new credit.
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david711
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by david711 » Thu Nov 30, 2017 1:30 pm
Generally are they able to enforce these? I'm just interested as i work on the other side of finance.

I work for a financial difficulties department with a finance organisation, and when completing a financial statement if it exceeds guidelines we have we never enforce them or tell people they have to live within means - and i work for a creditor, i understand IP is working to get the best deal for both parties, but it seems there is a lack of clarity and consistency. When my friend was asked to provide proof of what the costs were, it was shown on the her bank statements, but she was still told 'no'. Seems strange they ask for a financial statement but if it exceeds their own guidelines they dont or wont acknowledge the changes. From what i understand its the creditors who set these guidelines so therefore how can it be rejected outright by the IP?
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david711
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by david711 » Thu Nov 30, 2017 1:35 pm
Sorry just to clarify the issue with the card, it is not a new debt the card was taken out before the IVA was agreed; so when my friend went to complete this, she was told at the time it couldn't be included in the payments, however in order to find a way around it, they added the card payments into other things, so for example say my friend's card monthly repayments were 400, the person she spoke to first time around said ok, we will add an extra 50.00 to other areas in expenditure.

The IVA company knew all about the card in the first place
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Foggy
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by Foggy » Thu Nov 30, 2017 2:20 pm
david711 wrote:
Generally are they able to enforce these? I'm just interested as i work on the other side of finance.

I work for a financial difficulties department with a finance organisation, and when completing a financial statement if it exceeds guidelines we have we never enforce them or tell people they have to live within means - and i work for a creditor, i understand IP is working to get the best deal for both parties, but it seems there is a lack of clarity and consistency. When my friend was asked to provide proof of what the costs were, it was shown on the her bank statements, but she was still told 'no'. Seems strange they ask for a financial statement but if it exceeds their own guidelines they dont or wont acknowledge the changes. From what i understand its the creditors who set these guidelines so therefore how can it be rejected outright by the IP?


The creditors, in a round about way, enforce adherence to the guideline figures by rejecting any they feel are unjustifiably in excess. Most IP's know from experience what will and what will not get through and will not propose anything they feel will be rejected -- remember they do not get paid any fees until the IVA is accepted and, so, will be reluctant to propose something that will, effectively lose them money -- at the end of the day they are still a business which needs to make money.

I agree that there is a lack of clarity and consistency, largely due to the amount of discretion an IP is afforded. However, due to the enormous variation in individuals circumstances, there is no "one size fits all" arrangement and it is this flexability which makes an IVA more attractive as a debt solution to many debtors -- bit of a two edged sword really.
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by Foggy » Thu Nov 30, 2017 2:24 pm
david711 wrote:
Sorry just to clarify the issue with the card, it is not a new debt the card was taken out before the IVA was agreed; so when my friend went to complete this, she was told at the time it couldn't be included in the payments, however in order to find a way around it, they added the card payments into other things, so for example say my friend's card monthly repayments were 400, the person she spoke to first time around said ok, we will add an extra 50.00 to other areas in expenditure.

The IVA company knew all about the card in the first place



Apologies -- grasped the wrong end of that particular stick ! However, my remarks about trying to assist by massaging the figures stands. To be blunt, once the figures had been agreed by the first advisor it would have been simpler if your friend simply stuck to them -- a household shopping bill, if within guidelines, rarely needs evidence -- shopping is shopping and varies week on week -- I have never seen an IP ask for receipts --- it would have probably gone unnoticed.
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david711
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by david711 » Thu Nov 30, 2017 3:51 pm
Thanks again, much appreciated
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