My wife and I are trying to get an iva but we have a car on hp

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stephen234
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by stephen234 » Sat Jul 22, 2017 9:27 am
Hi my wife and I are trying to get an iva but as we have a car on hp we've been told that when it finishes then the amount that we pay will have to go to the iva which we've no problem doing
Our disposable income at the moment is about 240 pounds a month and when the car is paid off in about 2 years time there will be an extra 216 pounds
We have been told by the company that we are using that it would mean that we would be paying in more into the iva than we owe ????
And it may not be possible to get an iva because of this or we would loose the extra that was paid in
My question is surely if we can pay the debts off completely before the iva is finished then all the better and the iva is stopped ? Thank you for any advice.
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Foggy
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by Foggy » Sat Jul 22, 2017 9:35 am
During an IVA you always owe the full original debt, plus fees and possible statutory interest. Anything unpaid at the end is written off. If you hit the full amount, fees and interest before the end of the term the IVA will finish early.

Although, on the face of it, you will be paying more than the original debt, you would be paying far less to be debt free than if you simply carried on paying the debts as they stand. This is because statutory interest (which could be excluded if the creditors agreed -- mine was) is at 8% p.a simple, whereas the contractual interest on your debts is likely to be far more as well as being compound. The reality is that, without the IVA you are unlikely to ever be debt free, forever paying interest. The other advantage of the IVA is that the creditors cannot take any enforcement action against you, so you have an element of peace of mind.

I would suggest having a word with a couple more advisors as the advice you are currently getting seems a little off key.
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kallis3
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by kallis3 » Sat Jul 22, 2017 10:39 am
Foggy is correct. Always speak to a couple of companies before making a decision and read paperwork carefully!
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stephen234
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by stephen234 » Sat Jul 22, 2017 11:45 am
Thanks yes we will look at getting more advise just want to get this sorted
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Lisa Thomas
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by Lisa Thomas » Mon Jul 24, 2017 8:28 am
If you will be able to pay your creditors off in full then perhaps you ca avoid an IVA, stave creditors off for 2 years (saving on IVA costs)s and use a Debt Management Plan in the meantime instead?
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Michael Peoples
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by Michael Peoples » Mon Jul 24, 2017 9:22 am
The IVA company may be giving you the correct advice and not just selling you an IVA. If you are repaying more than you owe over the term some creditors will reject an IVA anyway and often a DMP can be a better and cheaper option for you. Some firms will try and make every case into an IVA whether it is the correct advice or not.
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stephen234
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by stephen234 » Mon Jul 24, 2017 9:39 am
Thanks not heard of a dmp we've about 16000 of debt between us and can afford about 250 a month then when the cars paid off in 2 years we should have another 217 pounds a month all being well any help will be great full we just need this sorted asap
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Foggy
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by Foggy » Mon Jul 24, 2017 9:46 am
On that sort of debt I would be inclined to try for a Debt Management Plan first -- it leaves less of a scar on your records and, if your provider gets all creditors to agree to freeze interest would be paid off faster than an IVA.
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Michael Peoples
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by Michael Peoples » Mon Jul 24, 2017 1:01 pm
You could possibly look at consolidation too. If you cleared the car HP and the unsecured you would have £467 per month which might be enough. This would leave your credit file in much better shape yet you would be paying back roughly the same amount of money. Insolvency should be avoided where possible as it can create problems of its own.
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