Is an IVA too good to be true?

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mia
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by mia » Fri Jul 27, 2018 1:07 pm
Hi, I've just been talking to one of The Consultancy People through IVAhelp.org.uk. I was actually holding on the line to get through to Business Debt Line (I'm self employed but my debts are personal) that I was directed to via Stepchange who I was directed to by Barclays.
What the guy said sounded great. Just to pay one reduced monthly fee to all my creditors for 5 years and then to have the rest of the debt wiped. It sounded too good to be true! Can you offer me any assurance or advice about this option please?
FormerlyST1100
Posts: 297
by FormerlyST1100 » Fri Jul 27, 2018 1:27 pm
Try and talk to more then just the one and also discuss other options DMP, Bankruptcy etc.

None of the solutions are easy, most on here, like myself, have gone through or going through IVA's.

Your credit rating is shot for 6 year from the start of the IVA and you are not allowed to take more credit (some will allow £500 for untilities, emergencies etc)

You are expected to live within expediture allowances agreed with your IP and any PPI or other windfalls are expected to be paid into your IVA.

Whatever you decide to do then good luck.
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Foggy
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by Foggy » Fri Jul 27, 2018 2:02 pm
Life in an IVA is not easy --- no credit at all, credit rating shot for 6 years, living to a fixed budget with someone breathing down your financial neck for 5 years ... if you are a homeowner that can be extended. All payrises and overtime payments are to be shared with the IVA and windfalls ( lottery wins, inheritances and some insurance payments) are all the IVA's. Holidays will be the camping variety and Chritmas's and birthdays have to be VERY carefully budgetted for .. no allowance for these.

So, no, they are not too good to be true ... they are hard work! If the firm you are talking to make it sound like a walk in the park, speak to another firm --- they won't be brutal, but they shouldn't be talking unicorn pooh either.

Have a read here: https://www.iva.co.uk/what-is-an-iva and here: https://www.iva.co.uk/guide-pros-and-cons
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Ryan
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by Ryan » Fri Jul 27, 2018 2:08 pm
Hi Mia,

As has been said already it's certainly not a walk in the park - it can also have very long term implications as some Lenders will never lend on Mortgages for instance if you have previously been in an IVA.

Regards
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Foggy
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by Foggy » Fri Jul 27, 2018 2:12 pm
I might add, despite the drawbacks, it is an excellent solution to drowning debt ... but has to be gone into with eyes wide open. So many of the problems we see on here are down to poor communication and unrealistic expectations (on both sides!).
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MerlinL14
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by MerlinL14 » Fri Jul 27, 2018 2:18 pm
It is a solution that is too good to be true as the truth is it isn't that easy. As has already been said, you need to be committed for the term, 5 or 6 years, you will have to change your whole life style, how you eat, where you shop what you need over what you want. It is doable, lots of us are the proof of that, but not a cake walk. Talk to several companies don't just rely on one set of 'magical solution' discussions.
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abbiesmum2003
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by abbiesmum2003 » Fri Jul 27, 2018 6:06 pm
Yes and no.
Compared to living in debt bouncing money from one credit card to another and juggling payments and dreading the post its a relief.
It puts you back in control and feel the relief from being protected from creditor actuon. HOWEVER...
Its blinking hard! Yes the one monthly payment which serves all creditors is better and yes what you dont pay off is wiped at the end but the journey is hard work.
Your finances are looked at and reviewed annually if not more depending on circumstances.
Any additional income can be claimed if you 'win' anything over £500-such as inheritance, lottery etc. Any overtime or payrise a proportion of it will go to iva.
You will have to live within a budget which if set out well from the start is generous but not all providers set it up well so be sure you cover EVERY outgoing-opticians, dental, hairdressers etc.
At the end if you own a home, you will have to see if you can release equity by means of a remortgage/secured loan.
It is hard. it makes you live within your means as you cannot get credit. Certain things like car insurance may not be easy to get especially if pay monthly (although weve not had a problem).
It does 'sound' too good to be true and thats how companies sell it to people who are vulnerable or desperate for a debt solution.
It can be hard work and shouldnt be entered into lightly but youve found the forum so have a read of posts to get an idea of situations.
Speak to several iva companies as you will be tied in for the duration.
I must admit it has been the best thing we have done and glad we did it. We have regained control on our finances. We have learnt to live on a budget and plan ahead. We have survived 5 christmases with 3 children. We have survived birthdays, school trips and unexpected events. Its not been easy and weve had to watch the pennies (literally) at certain times but its taught us a lesson and helped the children learn they have to work and earn money before they get stuff and we have to save for big things.
By no means too good to be true but has certainly got us back on our feet.
You have to enter an iva expecting to pay back as much as you can not just the minimum they suggest at the outset. Youll always owe the full amount of debt plus fees interedt etc. You cant enter one expecting to pay off as little as possible because youll be resentful when certain assets are claimed by iva. We always said we borrowed X amount so aimed to pay back as much as we could. We have lost ppi and an inheritance but we have also got our financial future back on track and not been having sleepless nights due to debts.
Sorry for long post. Hope it makes sense and helps.
Good luck whatever you decide.
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