IVA or bankruptcy

[luke251]

Me and my wife are looking at entering an IVA to clear our debts, from the information received from PayPlan it seems like the best option for us instead of bankruptcy. We have never missed a payment towards our debt but money is a lot tighter now then it was when we first got into debt. I just wanted to know what people's general consensus is regarding IVAs, do the pros definitely outway the cons, are we likely to face any issues? Any information would be great!

[Foggy]

On the whole they work well if approached in the right frame of mind. I would suggest a good look around the forum to see what others have "run up against" and what has gone well for them, to get a "feel" for IVAs. When you get your draft proposal, read it carefully and make sure that you understand it and your responsibilities inside out and upside down --- feel free to come back and ask any questions that spring to mind. Also, be realistic when doing your Income and Expenditure --- these agreed allowances will not change a lot during the next 5 years, though prices will, of course, just go up -- so do not cut your cloth too tight !

[Lisa Thomas]

It's too difficult to say whether an IVA is the best option for you, without more information I'm afraid.

My short video sums up pros and cons of all options as a starting point - there are then more videos where I talk about each procedure in more detail.

https://youtu.be/TgalT1vhn6M

It really depends on your assets (i.e whether you own a property with material equity in it), your disposable income, the number of unsecured creditors you have and the level of debt.

[abbiesmum2003]

Excellent advice from Foggy.
We entered our IVA in 2013 and successfully completed it in Oct 2018.
You must know what you are signing up for and as advised set realistic allowances for your spending.
Make sure you understand all the clauses amd what is expected if you. 5-6 years is a long time and a lot can change/happen which will affect IVA.
Read the posts on forum to see what sort of things can crop up and how they are dealt with.
We were struggling and juggling money. Dreading the post amd the phone calls. Working hard but nothing to show for it.
5 years later we have money in the bank (not much but no overdraft or missed bills etc).
We know our budget and what goes out when. We have learnt.
You must enter an IVA fully informed in right frame of mind and plan to repay as much as you can not just what proposal estimates. You will lose PPI, Inheritance, windfalls over £500 and a proportion of overtime. Be sure you include all possible expenditure and be realistic about things like shopping petrol etc.
I am so glad we did our IVA. Huge weight off our shoulders and has set us up for a brighter financial future. Also taught our childrenabout budgetting and saving or doing things which dont cost.
Best of luck and never be afraid tonask. Lots of expwrience and knowledge on this forum. Has been a saviour for us.

[luke251]

Thanks for the information guys, we are in a rented property through a housing association so shouldn't need to change properties while in the IVA, I have been doing quite a bit of research and a lot of people seem to be in a similar position to us in regards to the amount of debt owed (ours is just under £13,000 over 4/5 creditors), we don't have any equity and it is only my income that we are living off. I have spoken to some debt management companies and discussed budgets with them and what we can realistically afford.

The main thing my wife and I want to do is get out of the viscous circle we are in living off credit, although we have not missed any payments yet we are constantly having to juggle money around to cover bills, which isn't what we want, we want to be able to have money in the bank, to be able to treat our children and not have to worry about how we will afford necessities.

I have read about the windfall payments etc but we don't really have any extra money that will be coming in, maybe extra benefits if we have another child but that's it, my company doesn't offer overtime so I don't think we would need to worry about that.

Thanks for the information, you are all extremely helpful!

[abbiesmum2003]

Windfalls include inheritance so any unfortunate losses during the years any inheritance will go. We lost a £kkkk!!! Not what we wantes or the family member would have wanted but we also had thousands eritten off on completion which we would have never managed without iva.
Another child will affect your IVA as more mouths to feed and clothe! We had a baby during iva so it is do-able and adjust budget accordingly.
Forum is fantasticgroup. We never confessed to family members so it gave me somewhere I could talk amd not be judged.
Best of luck

[luke251]

Thank you abbiesmum2003, you have been incredibly insightful. If we do come into any money it will be a shame to lose it to an IVA but if we got an inheritance then at this rate we would end up putting it towards our debts anyway. I think the IVA is the way to go for us, and fingers crossed it is! This forum does seem like a great place to talk to others in a similar situation as like you we would never mention this to our family.

[kallis3]

Have you thought about doing a DRO at all?

[Lisa Thomas]

A Debt Relief Order or Bankruptcy sound as if they will be a better option for you than an IVA but would need more information to verify.

[luke251]

Have you thought about doing a DRO at all?

We have had a look but unfortunately we have more than the required surplus income each month to put towards the debt so we have been told we aren't eligible for a DRO.

[Lisa Thomas]

Hi

I'm sorry - i'm not sure what you mean by 'they require more of a surplus'. Who is 'they' please?

Are you perhaps referring to a Debt Management Plan, rather than a Debt relief Order?

You do not make any payments in a Debt Relief Order, all of the debt is written off.

In Bankruptcy you make payments for 3 years but only what you can afford, if anything.

[kallis3]

A DRO requires £50 a month or less after your normal bills have been paid.

[luke251]

Hi

I'm sorry - i'm not sure what you mean by 'they require more of a surplus'. Who is 'they' please?

Are you perhaps referring to a Debt Management Plan, rather than a Debt relief Order?

You do not make any payments in a Debt Relief Order, all of the debt is written off.

In Bankruptcy you make payments for 3 years but only what you can afford, if anything.

Hi Lisa,

I have been speaking to PayPlan they have said that after working out my budget they don't think I would be able to get a DRO due to the amount of money I have left after my budget. I know I don't make any payments if entering into a DRO but even based on the information I have found online it states I would need to have less than £50 left over after paying out all the necessities in order to be considered. If I could get a DRO this does sound like a better option especially if all debt is written off after a year. I may have to see if there is anyone else who can help me enter a DRO.

[Lisa Thomas]

Thank you for clarifying - so you do not fir the criteria for a DRO in which case it sounds as if Bankruptcy may well be the best option for you.