Second Year Review - Ouch!

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JustPlainStupid
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by JustPlainStupid » Thu Jul 27, 2017 6:57 pm
Just had my second year review.

Because I've increased my income by 700 a month and reduced my outgoings significantly, the IVA manager is proposing an increase in my payments from £780 per month to £1595.

I get about the interest and fees, etc, but that means that I'll be paying back 80k on an original debt of 55k.

Edit: Actually, I'll have paid back £95280 on a £55k original debt - I forgot to add the 2 years I've already paid

Can I negotiate on this?

Cheers
Andy
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Foggy
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by Foggy » Thu Jul 27, 2017 7:29 pm
On a £55k debt I would expect you to have to pay around £87500 (debt, fees and statutory interest), so when you hit this figure the IVA will end early. If it ends a year early that would knock about £4k interest off the figure. You could ask the creditors to forgive the interest element (or it might already be excluded) which would knock around £20k off of that !

You can challenge the increase, but you have to convince them of your math versus theirs. But it is always worth checking their calculations.
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JustPlainStupid
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by JustPlainStupid » Thu Jul 27, 2017 7:40 pm
Thanks, Foggy. I've already dropped the IVA manager an e-mail. I don't think I'm unique, but I guess it's possibly unusual for someone to find themselves with an increase in surplus of £1600 a month. This was my fear.

On top, they've messed up my salary from last year and say they want £500 within the next 14 days. I was made redundant and they've got my redundancy pay down as additional income. If they'd got it right, they'd actually owe me £200 as I managed to keep up all my payments bar one for the 3 months I was out of work. But I don't suppose they'll move the goal posts to favour me!

Cheers
Andy
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Michael Peoples
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by Michael Peoples » Fri Jul 28, 2017 8:06 am
You should double check the figures. Your payments should only increase by half of any additional surplus income after allowing for increased costs of living. Your uplift sounds a bit severe.
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Lisa Thomas
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by Lisa Thomas » Fri Jul 28, 2017 10:50 am
I agree with Michael - check their maths and your terms as I would expect the standard 10/50/50 clause to kick in...
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JustPlainStupid
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by JustPlainStupid » Sat Jul 29, 2017 6:10 am
Thanks guys.

Unfortunately, their maths is probably about right.

    I was renting a house which was £1400 a month - we've now moved back into my partner's house where the mortgage is £250 a month
    We were on a key for electric and gas which was £200 a month - I swapped to a normal meter and the payments are now £103 a month
    I was leasing a car for £233 a month - I bought a car for £1500
    Made some other savings as well with the move - water, council tax, etc.
    I got a job in London, which I really didn't want to do as it's a 4 hour+ commute so my take home pay has increased by about £700 a month

I've upped all my expenditure amounts to the maximum guideline amounts. They've dropped a couple of them and moved some around.

This leaves a surplus of £1630 ish after all my outgoings which include my £780.

So they're proposing an uplift of £815 to £1595. Before the IVA, the payments on the credit cards, etc, were £1300. If I'd wanted to pay £1600, I probably would have paid it all back quicker anyway.

One of my worries is that the house we're in needs a lot doing on it. We had a problem with the roof last year which caused a ton of damage inside and that was £1100 to fix. It looks like the other side has the same problem where a gulley needs replacing. I put £100 a month down for property maintenance. They've reduced that to £35.

My car is 30,000 miles over a cam belt change and needs new brakes before the MoT in September. There's another £1000.

As I said, my original debt was £55k. At the original payment, I'd pay back £56k. Everything we've done has been to mitigate the impact of the IVA payments and improve our standard of living - something I think everyone has a right to if they do the same things we've done and make some decent sacrifices.

The creditors were more than happy at the start. I get that there's interest, etc, on top of that, but they knew that as well. They knew that they'd be writing that off. I also get that the IVA comes with terms and conditions and that I signed up to those. It just seems wrong that they can do whatever they want, pretty much. There should be a balance when circumstances change. I'm not paying back 40p in the pound or something silly.

Best regards
Andy
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kallis3
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by kallis3 » Sat Jul 29, 2017 7:38 am
Don't forget you've got to factor IP fees in as well.

I would get a quote for your repairs for both the house and the car and argue that £35 isn't enough for the roof. If push comes to shove you could always take a payment break.
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JustPlainStupid
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by JustPlainStupid » Sat Jul 29, 2017 8:46 am
Thanks @kallis3

I'm still going to end up paying 95k back which covers 100% of the debt, statutory interest and fees plus 10k. Yes, they might end it early but I'd rather it ran to term and my monthly payments were lower.

I don't want a payment break. That'll just extend the period even more.

I can see that an IVA might help in cases where your circumstances aren't going to change. But we can't always predict that. 2 years ago, I wouldn't have thought for a second mine would have changed so dramatically. But you're locked into something where there is absolutely no turning back. I've paid back 20k of the original debt. If I fail the IVA and go back to the creditors then it's almost a capital offence. The money I've paid could be just lost forever. They then have the option to add on missed payment charges, interest, etc, retrospectively. Everything they were happy with at the start is just forgotten. All their commitments are written off but it doesn't cut both ways. And we're expected to be grateful. People make mistakes. The risk when you take out a debt is 50/50 between you and your creditor. That's why they charge interest, which probably makes up a big percentage of the debt anyway.

It's immoral. And I don't subscribe to the attitude that it was my choice to go into the IVA. At face value, it was. But you do it at a time when you're completely vulnerable, tearing your hair out and you'll do anything to end the nightmare. They take advantage of that. In exactly the same way as Wonga or anyone like that suck you into taking out a loan at ridiculous rates of interest. They feed off your desperation.

Then in here, you get some great advice. Just about every post I read says about looking round at several different companies before you commit to one for an IVA. Good advice, but completely worthless in reality as 2 months after you start, you could be shoved off to any of the companies that you chose not to go with because you'd read bad reports. Ok, same IP, but the IP probably doesn't have any involvement in your case. It's like saying that it doesn't matter who the government are because we've always got the same Queen. And I'm going to pay for that. I'll be covering the fees in my case. The creditors won't. And I have absolutely no control over anything.
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Foggy
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by Foggy » Sat Jul 29, 2017 9:14 am
Have you pushed the fact that the commute now costs a lot more than it used to .. and got the relevant allowances increased ? I would also challenge the car maintenance reduction --- no car = no job !

I get where you are coming from regarding being trapped etc. But, at the start, the creditors ARE looking at taking a hit --- in your case, which is a rare one, they win. It's a gamble which rarely pays off. At the end of the road you will be debt free and will have paid a lot less to get there ---- had you simply paid in the "new" disposable income (which, let us be honest, you wouldn't have done) it would have largely been eaten up in contractual interest.

Sometimes it's a pig ... but, in three years or so, it will all be done and dusted. You WILL be far better off and debt free. Looking forward, that three years seems interminable, but, when you get there, looking back, it isn't that long at all !
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kallis3
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by kallis3 » Sat Jul 29, 2017 9:37 am
Once again I posted a reply and it has disappeared!!!

I can sympathise as most companies can have good and bad reports as did mine (Payplan) I had no problems with them although I know a lot of people do.

I do agree with Foggy's post.
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JustPlainStupid
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by JustPlainStupid » Sat Jul 29, 2017 1:19 pm
Thanks, Foggy. I know you are the voice of reason when people start to get bitter.

Yes, I've shown my commuting costs. I can't disagree with any of the figure in terms of their maths or their using guideline figures for things. It's the outcome that I think is unfair.

Take your comment about the creditors going into this thinking they're going to take a hit. Either we all go into this with a bunch of assumptions that we live with for the period of the IVA or we don't. But you can't have one party allowed to move the goal posts all over the park to favour them and handcuff the other side. Well, it seems that you can.

I don't live with my ex-wife and kids but I jointly own what used to be the family home, which has some equity. If I thought I could go bankrupt without the risk of my kids losing the roof over their heads I'd do it in a heartbeat. It's absolutely no skin off my nose at all. I don't have an interest in the house I live in now, it's my partner's and she owned it for 12 years before we met so they can't touch that. I don't care if I never get a credit card again. Bankruptcy and IVA mean exactly the same thing in terms of the impact it would have on my life right now. Actually, bankruptcy would probably be a very easy option for me. I'd be the only one that wouldn't lose. The only thing stopping me is the risk of my kids losing their house. Can anyone advise on this?

Cheers
Andy
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kallis3
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by kallis3 » Sat Jul 29, 2017 2:27 pm
Ignoring your ex wifes house, which I can accept you don't want them to lose, you would probably not be better off if you went BR - you'd probably end up paying exactly the same for 3 years to the OR and your six years would start all over again.
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Michael Peoples
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by Michael Peoples » Mon Jul 31, 2017 8:32 am
You may even pay more in an IPO than your current IVA payment so while I can understand what you are saying it does seem better to stay where you are. Personally I would push the figures up past the guidelines especially if you visit your children or keep them for any days. In addition make sure that your partner's income has not been taken into account when calculating the surplus income as this is her money to spend as she sees fit.

It may stick in the throat a bit but remember that if you were still sitting with £55k of debt the interest alone on that could exceed £10,000 per year as many cards charge over 20%. I did see that if you took £5,000 on a credit card and made the minimum payment each month it could take 99 years to clear the debt. At least with the IVA you have an end date and in the event of your circumstances changing again for the worse your payments can always be reduced.
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Lisa Thomas
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by Lisa Thomas » Mon Jul 31, 2017 8:35 am
If there is equity in the house it is at risk of being repossessed and sold in Bankruptcy.

Your ex will be given the option to buy out the Trustee's interest or if it is sold she will receive her share of the proceeds from the sale.

She will be given enough notice to make arrangements to find new accommodation.

As others have pointed out if you go Bankrupt now you may still have to pay that level of contributions into your BKY estate for 3 more years.

Best to grin and bear it me thinks.
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