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Early IVA exit loans from Perinta offered in 2016 to Creditfix customers
Some people have been told they can end their IVA by taking an “early exit loan” from Perinta Finance Ltd, via a broker called Just Lending. Creditfix is sending these emails, but the loan may be available to people in IVAs with other firms. Pearse Flynn, the CEO of Creditfix, used to be a director of Perinta, but no longer is.
This was a new concept for IVAs.
How does a Perinta early exit loan work?
You can’t apply directly to Perinta for one of these loans, you have to be recommended by your IVA firm. If you have arrears, late payments or payment breaks, Perinta are unlikely to want to lend you money.
A typical Perinta loan will be offered halfway through an IVA. The loan amount will be the total of your remaining IVA payments.
If Perinta agree to lend to you and you decide you want the loan, your creditors will then be asked to accept this as a Full & Final settlement. It’s a good deal for them so they probably will! After this, the money will be paid to your IVA firm who will close your IVA and you start making loan repayments.
The loan will be unsecured and at an APR of 29.4%. A £200 fee to Perinta is added at the start.
The length of the loan will depend on how much you repay each month. This won’t be more than your current IVA payment. See the following example:
- if you are exactly halfway through a five year IVA, paying £100 a month, then you have 30 payments of £100 remaining, so the loan would be for £3,000;
- if your loan repayments stay at £100 a month, the length of the loan would be about 55 months, just over 4 and a half years;
- you would repay just over £5,500.
There is some flexibility to reduce the monthly payment by extending the term of the loan, but because of the high interest rate, the term can get much longer and you will repay a lot more in interest.
The email being sent illustrates this without figures. I think the upwards curving line is supposed to be how good your credit score is.
Will it improve your credit record?
Ending your IVA early will not delete it from your credit record – it will stay there for six years. This early exit loan will not start to improve your credit record until after the six year point. See Early IVA settlement and your credit record for details.
The email emphasises the big savings you could make in future if you have a good credit record. It is true you can get credit more cheaply with a good credit record, even if the examples quoted seem a little on the dramatic side.
But it is possible to get a good credit rating after an IVA without this expensive unsecured loan. My article on How to improve your credit score after an IVA explains in detail how to do this. It’s not difficult and it doesn’t cost anything at all! Follow that process and early in year seven your credit score should be pretty good.
“It would be great to finish my IVA early!”
Many people are heartily sick of their IVA and may love the idea of getting out early. As one person here wrote recently, “I want the IVA noose gone from round my neck“.
But you need to look at the implications of this loan, not just hear the words “early exit” and decide it must be right for you.
An IVA was supposed to get you out of debt after five years. This early exit loan extends this to seven years. It’s not just the extra cost, though that is significant, you are also taking on a lot more risk.
Think about what can go wrong in your life – redundancy, health problems, separation, rent increases etc:
- in the IVA, if a problem happens in the next 2 and a half years the IVA could be affected. But there are some ways for dealing with IVA problems and late in an IVA it may be possible to get the IVA completed on the basis of what you have paid in so far.
- with an early exit loan, if you have any big problems in the next four and a half years then you are likely to start getting late / missed payment markers or a new default on your credit file.
So although the loan will help your credit score if it is repaid on time, it will also harm your credit record for another six years if there are any problems. And as the loan is 2 years longer than your IVA, you are exposed to these potential problems for longer.
Who gains and who loses from this?
There are two winners here:
- your IVA firm IVA fees are mostly paid in the first half of the 5 year term. By ending the IVA at 30 months, the firm gets most of the fees but saves all the costs of the last few years.
- creditors Your creditors will get all their money in a lump sum in the third year. If anything had gone wrong with your IVA they may have got little or nothing. This loan gives them money sooner and removes a lot of risk – a big gain. This risk is being transferred over partially to Perinta (who are getting paid for it) and partially to the debtors.
The losers are the people who take out these loans who will be in debt for longer and paying back a lot more. That’s a high price to pay for escaping from an IVA early, especially as there are cheaper ways of improving your credit score.
This early exit loan may be a good idea for some people. If you are expecting a large pay rise soon, for example, although it would have to be really big to outweigh the extra cost of the loan.
But I think many people will do better to just carry on with their IVAs. This is especially important if you are finding life tough in an IVA – taking on this early exit loan will just prolong your problems.
Then Sprout early exit loans were offered to Aperture customers
Aperture became the second large IVA firm in 2016 to be offering some IVA customers an “early exit loan”. They are similar to the Perinta/Creditfix loans but with some key differences.
These loans will be provided by Sprout Loans, a brand name of Asgard Financial Services Ltd who are authorised by the FCA. Mark Allen is one of the directors of Asgard and a very large shareholder. He is one of Aperture’s Insolvency Practitioners, but he isn’t a director of Aperture and hasn’t taken on any new IVAs for three years.
Sprout loan details
These loans are being suggested to some people who are three years into their IVA who have been coping well with the IVA repayments. This will include people with a house with equity, who normally have been expected to make an extra year of IVA payments instead of releasing equity.
The loan size will be the total of remaining IVA repayments (including the extra year for people with a house with equity) less a percentage. It is argued – and I agree – that creditors should accept less as they will be getting all the money up front and won’t be exposed to the risk of the IVA failing in the next few years. The size of this reduction will vary. For someone who was due to pay a further £2,400 into their IVA, in the early cases reductions of between £400 and £700 have been agreed by the creditors.
The interest rate on these loans will depend on the individual case but it’s likely to be in the same area as the 29.4% that Perinta are charging. No upfront fees are added.
The term of the loan will usually be three years, or four years for someone with a house with equity. If you are offered a loan you need to check the exact terms that are proposed.
But let’s look at what a three-year loan at 30% interest could look like for someone at the three-year point, who doesn’t have a house with equity, and who has 24 months of £100 payments remaining:
- if the £2,400 is reduced to £2,000, the loan payments would be £81 a month and the total cost would be c. £2,920. This is £520 more than would be paid if the IVA payments continued at the same amount;
- if the £2,400 is reduced to £1,700, the loan payments would be £69 a month and the total cost would be c. £2,480. This is only £80 more than would be paid if the IVA payments continued at the same amount.
Better than the Perinta loan, but still not good for most people!
These loans are a better option than the equivalent Creditfix/Perinta loans because they are shorter and cost less.
But this doesn’t mean that one of these Sprout loans is a good idea for you. The three main problems with them are the same as for the Perinta/Creditfix loans:
- most people will pay more with an early exit loan than they would by continuing in their IVA;
- you don’t need this loan to improve your credit rating – it’s easy and cheap to “clean up” your record when an IVA ends.
- a loan means you are taking all the risk of any problems in the next three years. That’s good for your creditors and bad for you. With this loan, any late or missed payments will mess up your credit record for a further six years.
The people who may benefit from one of these loans seem to fall into two groups:
- those who are sure they will pay less with the loan because they will expect to get more money over the next two years, for example a promotion, large bonus or a probable inheritance. If you think this is you, I suggest you do some calculations and think how certain something is. For example, if a new, better-paid job goes badly, you may wish you were still in the IVA.
- those who want to sell their house before the IVA ends, perhaps because of a divorce, job move or you need a bigger house. Here the loan may be a good idea but think about your alternatives. Could you agree with your ex to sell the house when the IVA has finished? Rent the house out and rent somewhere else? You won’t be able to get a new mortgage until the IVA marker goes from your credit record, six years after the IVA started – an early exit loan will not change this.
It can be hard to weigh up options involving risk, but don’t underestimate the “safe” option of finishing your IVA as planned. Your IVA was supposed to get you out of debt, not into more debt.
What happened to these loans after 2016?
In 2017 Creditfix started telling people about these loans before their IVA had started. Mr D said:
I was contacted by company called Creditfix to clear my debts in an IVA. I have about 30,000 debt (two loans, some credit cards, overdraft) and the advisor calculated my options. I was told 2 and half years of paying £150 a month, then get a £4,500 loan to pay rest. Is that ok???
I don’t think it’s OK for Creditfix to suggest to a potential client that an IVA could be 30 months long followed by a loan. That makes an IVA seem much easier than it may turn out to be – because if someone misses payments or needs a payment break, then they won’t be offered the chance to end the IVA early.
Perinta stopped offering these loans in December 2017 whilst it reviewed its business. Pearse Flynn ceased to be a director of Perinta at this point.
In September 2018 the Insolvency Service considered early exit loans as part of its review of IVA regulation. It said:
The loans… ultimately cost the debtor substantially more… are sold on the basis they will help the debtor in the long term, by improving their credit rating. There does not appear to be any evidence that this is actually the case… By concluding the IVAs early the IPs concerned will also benefit by not having the ongoing cost of managing the IVA so there may well be a conflict of interest.
Car finance – what happens in your IVA
Insolvency statistics in 2017
Changes for Aperture & Vanguard IVAs
Michael Peoples says
I agree that I fail to see the benefits to the debtors of such a loan unless it saves them money. As such I would be cynical as a creditor of why someone would commit to repaying more than was due in the IVA. The early settlement would be useful for those due substantial payrises or large bonuses but also those who would be due windfalls such as inheritances. There would have to be a temptation to try and close the IVA down early rather than lose a windfall.
Therefore these loans must produce losers because either the debtor ends up paying more than they would in an IVA or the creditors would receive less than if the IVA ran its course. Perhaps there is something I am missing.
Sara (Debt Camel) says
There is definitely an element of moral hazard here because some people will know something good is going to happen (inheritance if parent dies next year? big redundancy payout?). However these will be pretty rare and they require a good crystal ball to be sure about the timing. If I was a creditor I would be pretty happy to lose in these cases because of the lower risk and up front payment for all the rest.
In most cases the losers are clearly the debtors. I don’t think the promised credit record gains are anywhere near good enough to outweigh the extra cost which will usually be substantial.
Michael Peoples says
I agree. Your point about missed payments is also a good one as currently any missed IVA payments or breaks would not show on a credit search and would be between the IP and the debtor. In addition, even after the IVA has disappeared this loan will still show on the credit file as a monthly commitment and potentially reduce the ability to borrow. Furthermore, underwriters may be able to ascertain that the loan was as a result of the IVA and reject the application as is the case with payday loans. Even paying these back on time does not help your credit scoring as banks are wary of anyone who needs to use a payday loan company.
Personally I see very few benefits to debtors and while I can understand why someone would be tempted to get out of the IVA and have their name off the insolvency register, they should think long and hard before agreeing to such a loan.
Jim says
Good article thank you. Isn’t it likely that the loans are only going to be available to the very people who are managing their IVAs well? And who are most likely to realise that their best bet is to carry on with it.
There will be a (pretty small I would think) number of people, with specific circumstances, who may benefit but I think an eye will have to be kept on the selling of these loans. Of course, full disclosure of any germane information should be made to creditors when asking them what they think…
Foggy says
I think the final paragraph sums it up, as do Michael’s comments here …. the winners ( as always) are the creditors to some degree, but more so the loan company and CF’s CEO, who gets a double bonus !!
Dave says
I’m going to put my hand up and say that I’ve gone for it.
In my case it results in an additional 9 months payments but has a couple of useful advantages.
I’m a Salesman and can potentially get large bonuses, which obviously currently most of goes into the IVA.
The interest is front loaded so any spare cash can be used to overpay the loan, for example currently if I get £1k bonus 50% goes directly into the IVA, this doesn’t reduce the term. The remaining £500 is mine but cannot be used to reduce the IVA term.
That same £1k would reduce the term of the loan by 5months.
My Student Loan will be repaid in 12months meaning an extra £120 per month in my pocket, in the IVA that just gets swallowed up, again with the loan thats another month knocked off the loan every 2 months.
Sara (Debt Camel) says
You have obviously thought this all through – taking this loan because it will reduce the amount you expect to pay is a very good reason. My concern is with people who are either struggling with the IVA and think this will help (it won’t, it means making payments for longer) or who are worried about their credit rating and think this will help (it will, but there are much cheaper ways of doing this.)
Good luck with the bonuses!
angela powell says
My husband and I are in a credefix iva with ends June 2018 . I had a telephone call from Purina telling me about having an unsecured loan to finish our iva early. I was told the creditors could request we mortgage or we take equity out of home . . I was also told the creditors could demand putting an extra year on our iva . Since taking out the iva our circumstance have changed and not for the better. I am now on a pension of 237 a week and pay credifix 238 a month . Do you think we would benefit going for an unsecured loan to pay the iva off early .
Sara (Debt Camel) says
I think if you are finding the IVA payments difficult, changing to a loan which means you will make those same IVA payment plus a high rate of interest is unlikely to be a good idea. I think you should talk to Creditfix about the change in your circumstances and see if your IVA payments can be reduced.
Daniel says
The loan is not for people who are struggling with the IVA they would not even be considered. This loan is designed for people who are up to date with IVA who pay every single month and are not in any difficulty at all. Most people on average are paying between £300 to £500 a month to credit companies and bank so these people who are on IVA`s payments are usually between £85 to £100 a month so they are already saving a lot of money per month. The early exit is a fantastic option for people who just want the situation to be OVER
Sara (Debt Camel) says
Most of the people who are most desperate for an IVA to be over are not finding the IVA easy. If you aren’t struggling, why would you bother to try to end an arrangement which is on track and working well for you, and replace it with something that costs more and is higher risk?
Michael Peoples says
I can see why this product would be attractive to you Dave and hopefully creditors accept the offer. However your type of case would not be the most common and if I were a creditor I would certainly be suspicious of anyone’s motives in obtaining a loan such as this. It is possible that creditors reject the offer for the very reason that it potentially lessens the amount they would get back but with a bit of luck they will not notice this. I would be interested to know the outcome.
Darren says
I am currently considering this loan option myself.
I have 9 months left on my IVA, I am self employed and the IVA restricts my ability to earn money. I like that the IVA would be cleared and when i hit the 6year mark its already a step towards rebuilding credit. I also like that i could pay the loan off early as i wouldn’t be borrowing anywhere near as much as someone who still has a long time remaining on their IVA.
Obvious drawbacks are the administration fees of £200 which gets lumped into the loan and the 30% apr. I am curious to see if anyone else provides this kind of product at a lower apr or a reduced fees.
Robin says
Thanks for this information and everyone’s comments.
I have just been approached by Perinta and have 2 years 8 months to go ( if I include 12 months extra for home owning) and if the figures the rep told me pan out it would mean just paying £10 per month more for 2 less months (30 months total)as I no doubt will have to pay the extra year 6 as I have a home .This is basically the same by the time £200 fee added on .
This would mean the benefits would be the ability to start building my credit as soon as a statement has been put on my credit file and the certificate of completion certificate has been sorted so in my case it seems ok so far.
I also wondered if the other benefit would be that as I may have up to £40K equity in my home this would stop them making me taking a remortgage to pay off my debts.
I read on my contract this can be up to 100% of my debts .
Does anyone know if this means the full amount of my debts or if it means the 16 p in the £1 I am paying which Stuart the rep is talking about to repay as the loan
You can imagine I would hate to have an extension of my mortgage to match my current mortgage end of 67 years old when I could pay for 2 months and avoid that risk.
Am I right in thinking if Perinta is able to offer me a loan then Credit fix could have the ability to make me take a remortgage?
Sorry it’s lengthy but on the surface it seems good for me to take this exit loan offer but I don’t want to take an easy option which will cost me but in my case it’s the same price and 2 months less payment although I’m aware I have check out if 29% is fixed for the whole 30 month terms.
If people are aware of anything i need to think about I would be most grateful for advice
Sara (Debt Camel) says
“I also wondered if the other benefit would be that as I may have up to £40K equity in my home this would stop them making me taking a remortgage to pay off my debts.
I read on my contract this can be up to 100% of my debts .Does anyone know if this means the full amount of my debts or if it means the 16 p in the £1 I am paying which Stuart the rep is talking about to repay as the loan”
Your IVA will probably say that you have to remortgage up to the full amount of your debts plus the IVA fees, BUT you will have to be left with 15% equity in your house after a remortgage.
“Am I right in thinking if Perinta is able to offer me a loan then Credit fix could have the ability to make me take a remortgage?” No. The chance of you getting a remortgage is close to zero. Your alternative would be a 12 month extension.
The 29% loan on offer is fixed rate so far as I know.
“If people are aware of anything I need to think about I would be most grateful for advice.” I think you need to double check with Creditfix what is on offer, as it sounds as though you are just being offered a loan for the remainder of your 5 year IVA payments, not for the 12 month extension. You need to ask Creditfix if they think this will be acceptable to your creditors. If it is, then it may be a pretty good option for you!
Robin Hurd says
Thanks for your helpful answers Sara, they really helped me move forward with more confidence.
You were right in that they had not added on the 12 month extension so this meant I would be paying for 59 months now not 30 months which is very saddening and meaning I would be paying back twice the amount I would be borrowing.
It still seemed a better bet than risking them forcing a secured loan on me in year 5 which is available to them in my contract which Credit Fix took over.
I see on other forums people being pressurised to take out this payment even when their contract does not even specify anything other than remortgage.
What exactly is a secured loan and what are the possible implications for me?
My better half is looking into taking out a loan of the same amount and even though I have signed the contract with Perinta for an early exit loan,before her offer, do I have the right to cancel this loan within the 28 days period it states I have and get her to pay directly by transfer to the IVA practitioner?
I should clarify I don’t know if the creditors will accept the amount Just loans/Perinta are offering the creditors via the IVA practitioner but if they do, does it have to come solely from their linked company Perinta for payment?
I am concerned that when I rang Perinta to check time scales they said it can take up to the same 28 day period to decide if the creditors will accept this early exit loan offer as this means technically as I have no time to cancel this loan which seems awfully convenient to keep it “in house” and for everyone but me.
What is the best way I can move forwards or do you think I can simply notify the IP I am considering 3rd party offers to get the available funds as being set up by Perinta or do you think this will allow them to shut the door on me by advising them early of my intentions?
The savings for my fiancee going direct to the IP will be over £5000 for me in interest which will allow me to reduce the payment period by half with interest rates between 4-6% not 29% APR and would enable me to move on with my life and plan a better future.
However I want to tread carefully as you can imagine I do not want to lose this early exit loan offer even if I have to take the higher rate as I’m thinking it may be a better deal for me as in year 5 I would have £460 more pcm available (which otherwise will go directly go to my IVA I’m guessing otherwise) due to finishing paying maintenance for my son which would give me up to £5000 pa towards paying their extra interest and giving peace of mind of avoiding a secured loan with the equity in my home.
Any advice or further comments would be really helpful,many thanks again for taking the time to read this.
Sara (Debt Camel) says
Ah, I thought the original offer sounded too good to be true :(
For what it’s worth, I haven’t hear of Creditfix trying to force people to take a secured loan when their T&Cs don’t mention one. That isn’t to say it couldn’t happen obviously, but you might want to think how much it’s worth paying to avoid something that may never happen.
I can’t imagine why your IVA firm would not be happy to accept the amount from your partner that they are prepared to take from Perinta. In fact if they say they would, I think you should be considering a formal complaint about this to their regulator.
Liz says
I have been offered this to. Does it mean that I have a relatively OK credit rating if I take the loan out or am I still in the black…I’m confused I was told I would have a chance if I took it out. I currently pay £100 a month and I am 30 payments in so half way. If I paid £150 a month to the loan I would be free in 29 months…..but she said I would have no worry about credit. Is this wrong ?
Sara (Debt Camel) says
Hi Liz,
If you take out this loan, your IVA ends early. But the IVA marker will remain on your file until 6 years after the IVA started, ie a year after this loan finishes. Whilst the IVA marker is there, your credit rating will always be poor, this loan will not help your credit rating improve until after the 6 year point.
Few people find an IVA very easy. Unless you have found paying £100 a month to be trivial, you would be VERY badly advised to agree to pay £150 a month to this loan. If you make late payments or miss payments to this loan, that is your credit record wrecked for another 6 years! So you won’t just be paying a lot more, you are also taking on a big risk.
If you are worried about how to improve your credit rating after your IVA finishes, this article https://debtcamel.co.uk/repair-credit-record-iva/ explains how to do it. If you start the clean up process (it’s not hard!) when your IVA ends, your credit score is going to leap up when the IVA marker disappears even if you don’t take this early exit loan.
Jim says
” I currently pay £100 a month and I am 30 payments in so half way. If I paid £150 a month to the loan I would be free in 29 months…..”
Think about who is really going to benefit from this loan. Yes, you could finish your IVA early but your (increased) payments would go on for just as long and, as Sara has said, there are potentially serious risks if you hit some kind of stumbling block. Commissions, profit etc etc for providing and arranging the loan are going to be there whatever happens to you.
Don’t forget that your IVA has mechanisms built into it to cope with short term problems or changes to your circumstances. You might be thinking that the IVA is a noose around your neck but, really, it’s the debt that you are dealing with which is the problem – the IVA is the solution.
I agree that you should question whether the loan is a good idea unless you are sure that you will find the payments of £150 very easy to manage.
Why not think about maintaining the IVA payments and saving the extra £50 each month. That’s a nice little sum waiting for you when your IVA finishes in 30 months.
All the best, whatever you decide.
Foggy says
I am also concerned at the language she is using to “sell” this to you ….. “no worry about credit” ??? Well, yes … you still won’t be able to get any — so no worries there !!! This is misleading to say the least !!
Michael Peoples says
Liz.
If I were a creditor I would want to know why you were paying £100 per month to the IVA but you can afford a loan at £150. Either you are not paying enough into the IVA or the loan is not affordable. As a creditor I would prefer the extra £50 per month is paid into the IVA for the benefit of creditors rather than funding interest payments on a loan.
If the loan repayments were actually less than the IVA payments I could understand how the loan may seem attractive but not when the they are higher.
Liz says
Thanks for all the advice…..she gave me the options on the phone regarding payments up to £200 a month which obviously is double what I pay now. I think I am going to stick it out with my IVA I’m halfway there and if the loan doesn’t effect my credit rating and make it any better then really what is the point. If I have any spare cash then I will happily put it aside or pay a bit more to my IVA.
liz says
Thanks Michael. The lady i spoke to gave me several options… to continue paying £100 for 4 years or £150 for 29 months or £200 for 20 months. I completely agree that if the payments were lower it would seem sensible but after careful consideration i think that i am going to stick my IVA out. I am happy to have my annual review each year to ensure i am paying enough that i can manage and i think adding the extra £50 is probably not the best option right now especially if it is really just to pay the interest on a loan that ultimately is making no difference to my credit score. The lady on the phone told me that if i took this loan out my credit score would be repaired to the extent that i could start making this better but to me it sounds like it has been a bit misleading. Thank you though
liz says
i am confused even more. They have called me again and they have said that my IVA will be still on file but i wont be classed as being default and that i will be removed from the register. Each monthly payment i make will make my credit score better… is this right??
Foggy says
It will add green ticks to your credit file, but the current defaults and the IVA will sit on file for 6 years from the start of the IVA and eclipse everything else —- the loan will make no difference to your score in the meantime. Smoke and mirrors! Remember the people pushing this get a £200 referral fee, as well as 15% as agreed by the terms of the IVA, for doing nothing more — so they work less and get more.
Sara (Debt Camel) says
Sorry but I think that is misleading. It is correct your name will be deleted from the Insolvency Service database – but that will not help your credit score. The IVA marker will appear on your credit records for 6 years from the start of the IVA and all the debts in your IVA will continue to show as defaulted for the six years too.
Although each monthly payment you make may improve your credit score (actually the first couple of months certainly won’t, they will make it worse!) the improvement will only be very small. Your credit record will continue to be Poor until the end of the 6 years.
Jane says
Hi thanks for all this really.good to read! I’ve been offered the same…. monthly payments of the loan almost exactly the same as what I’m paying for my IVA but I can start building up my credit rating sooner (which is rubbish isn’t it).
But, I’m also going through divorce and have a shared mortgage with my to be ex husband. The advantage Perinta say is that if I exit my iva early should the property have to be sold (hopefully not), I will get to keep my half of the equity. This appeals to my because I have 2 small children and would need some capital for housing.
The other thing is that you can increase your payment should your situation change and pay off your loan early.
Perinta are arranging to meet with the creditors to see if I would be accepted.
Thanks… any comments appreciated!!
Sara (Debt Camel) says
If you know you will have to sell the house within the term of your IVA (how much longer is there to go?) then this may be a good reason to go for this early exit option. As you say the the rebuilding credit rating reason is pretty rubbish, as there are much cheaper and less risky ways of doing this.
However you will need to think hard about the extra risk that you are taking on. Your life must be looking pretty uncertain at the moment. This loan may solve one problems whilst bringing in another one, as the repayments will last for longer than the IVA. If you could agree with your ex that the house will not be sold until after the IVA ends, this may be a better way forward for you?
Foggy says
I agree with Sara. Have a chat with the soon to be ex about the housing situation first. Although his share of the equity will be safe, there will still be a more complicated transaction due to the restriction on the title and how your IP proposes to deal with the sale proceeds. Some IPs demand the whole of the proceeds get paid to them — then they deduct what is required and, at their extreme leisure, eventually return the balance. I can see the allure, however, if he is going to insist on an early sale.
Jane says
Hi thanks for replies! I’ve got another 16 months left ok iva plus most probably a further 12 month extension.
My ex also has an iva. I don’t know yet if he even realises that making me sell has no benefit to him as his share of the equity with go to his creditors. I’m waiting for his financial proposal via solicitors to see what he was to to do. So yes your right I won’t be rushing into accepting a loan until I know his intentions i.e. if I can persuade him to at least remain on the mortgage until the end of the iva it will be in everyone’s best interests.
Our relationship has broken down so badly that we don’t talk but I know he won’t be aware that the equity won’t come to him and also he can’t ‘just give’ me the house as he’s proposed previously because of the restriction.
The loan appeals to me because of the equity situation plus, also the though of when my wages increase I can increase payment and pay it off quicker.
So far I’ve almost been divorced for 2 years and it doesn’t look like it’s going to be resolved soon….
Thank you so much… I won’t be rushing into a load until all his cards are on the table!
Janine Castle says
The most important benefit I see is that you are no longer in an ‘IVA’!!! I have been in one for the last 5 years ( and it does feel like a noose around your neck) and this was to be extended to 6 years due to the equity in my property. They didn’t even ask me to release it when I have over £100 k. I was offered a loan from Perinta which lasts for 12 months which coincides with the end of my original IVA and it was only £2 more to pay than I would have paid in my IVA so I have taken this out. I have made my first payment and am awaiting my completion certificate. The benefit for me I was told was that my credit rating would start to improve after a few months of paying the loan. I also feel a weight has been lifted even though I am not financially better off as yet but just by being IVA free. I used Creditfix and have been very impressed with them. I even managed to purchase a car for £9 K as my old one had given up with help from them.
Sara (Debt Camel) says
If your loan is no longer than your IVA that is a big plus. realistically your credit rating is never going to be anything but bad until your IVA disappears, 6 years after you started it. Paying this loan on time will make very little difference until the IVA marker doesn’t show.
Steve P says
Interesting read and I’ve just decided to go with a Perinta loan. 21 months left @240 becomes 31 months so extra 50% nearly. A lot but easy decision for me due to inheritance almost certainly due in the next few months that I’m certainly not giving a lot of to creditors!!!
The features of no early repayment penalty and interest only paid until cleared are great if the situation is right.
However, had it not been for the security of inheritance then I’d be carrying on with IVA rather than that much interest…..
Jim says
Good plan as long as the person that you will be inheriting from hasn’t died yet. If they have then you’re already entitled and should disclose that asset to your supervisor.
Roy says
I have just been offered the same deal as everyone else by the sound of it ,I have paid 44 payments of 60 so still have 16 payments to pay .I have been offered the unsecured loan to release me from my iva straight away but for this I would pay exactly the same amount that I now pay per month but for an extra 6 months so 22 months in total at an extra cost of approx. £1000 .My mind was initially made up as the lady said my credit rating will improve as soon as the deal was done but reading the comments i’m not sure that’s the case , or am I wrong to think that ? It seems like I lose on this one as I have no protection from further issues ie/ job security or relationship security !!!! Although the iva is a weight it seems better to stick than twist ……. Any more thoughts anybody ?
Sara (Debt Camel) says
You credit rating is always going to be poor until the IVA goes from your credit file. It may creep up a bit from appalling to just dreadful, but it is misleading (I think) to say it will “immediately improve”.
I don’t think this extra £1000 is buying you anything worth having. If things go well, your credit rating will be well on the road to recovery in 22 months time if you don’t take the loan but follow the advice here: https://debtcamel.co.uk/repair-credit-record-iva/ and you will have £1000 in the bank. If they don’t go well, you are close to the end of your IVA and it should be possible to get it closed – you will be very glad that you haven’t taken on a new debt you may have to default on :(
Sara (Debt Camel) says
I am assuming you don’t have equity in your house so you may need to do an extra year here…
Roy says
Thanks for the very quick reply , We are thankfully in rented (which seems strange to say !) so no need for the extra year …..the iva finishes in June 2018 . I was all for it as the promise of rebuilding the credit was so appealing as I would like to have a mortgage in the future .I’ve just checked my credit score and it’s at 308 out of 700 , with the invitation to take on a credit card to improve my credit rating score but i’ll leave that for a bit .I’ll stick with what I have and see it out I think ……Thanks again for the help :)
Ruth says
I have 17 payments left of my Iva and I am moving in with my partner who earns £50k+! I have qualified as a nurse so will be getting a wage. I think this will be beneficial to me as I am only going to pay £852 extra but I fear my payment will increase dramatically? Any advice
Sara (Debt Camel) says
You may be one of the people that would gain from this early exit loan.
John Blakeley says
Two months ago and only 3 payments of £230 left to pay we have also received the following email:
I refer to the above and confirm that in accordance with the terms of your arrangement, I am now obligated to review, calculate and realise my interest in the equity in your property.
Your equity will be calculated by obtaining a valuation at 85% loan to value and deducting the outstanding balance on your mortgage and any secured loans, if applicable. If the equity is less than £5,000 then you will not be considered for re-mortgaging and your Arrangement will continue as agreed per your proposal. On the other hand, if your equity is greater than £5,000 then it may be possible for you to re-mortgage to introduce funds into the Arrangement.
If a re-mortgage, which also includes all secured lending options is possible, the amount you have to borrow and pay into the arrangement is subject to specific limits. These limits are detailed in your proposal to creditors. A copy of your proposal can be provided, if requested.
To help calculate your equity and to help you apply secured lending I will introduce you to Just Lending (Scotland) Ltd. Just Lending is regulated by the Financial Conduct Authority and are qualified to give financial advice in relation to secured lending. A member of the team at Just Lending will be in contact with you in due course to discuss their services and to explain how they can help you at this stage of your arrangement.
You are of course able to take other independent financial advice to ascertain if a re-mortgage or another form of secured lending is possible. If you chose to do this, then please keep your case officer informed at each stage throughout your application process.
If, after taking independent financial advice either from Just Lending or elsewhere, you are unable to re-finance then I will require documentary evidence showing the reason for rejection.
In circumstances where re-mortgage or other secured lending options are not possible you will be required to introduce all or part of the available equity in your property by other means as described in your proposal. These alternatives can only be discussed once written evidence has been provided to show that a re-mortgage or other secured lending option is not possible.
Please remember that the property is an asset in the arrangement and is held in a trust for the purposes of the arrangement. A restriction, in my favour, remains in place and you are not permitted to sell the property without my written consent.
Please note, if you are currently paying a monthly contribution from your income, then this should continue until you are advised otherwise.
I am now a little confused as to why I have received this email, I only have one payment left to pay whilst everyone else seems to be getting them half way through their IVA term. Surely the purpose of the IVA is to help people resolve their problems and assist in paying if not all but some of the debt back to the creditors.
I still haven’t been contacted by Just Lending to advise me of what the figure I am likely to be asked to pay and the terms involved.
I am very grateful for the help the IVA has had in getting our finances back on track but this just seems another way of both the creditors and the IVA companies getting more money from the people trying to resolve their money problems.
Any comments would be much appreciated.
Sara (Debt Camel) says
You are getting this email because it is a term of your IVA that you will try to remortgage to release equity in the last year. This should have been explained to you at the start of your IVA.
What is being proposed here is a remortgage, not an unsecured loan. this is not the same as the perinta early exit loans being discussed above.
I suggest you read https://debtcamel.co.uk/iva-equity-release/ as this covers your situation. NB it is unlikely that your IVA says you have to accept a secured loan to release equity – most IVAs started 4 years ago would just have said a remortgage.
Sam Jones says
I am in the process of trying to make my mind up for the better and am struggling. Any help from anyone would be greatly appreciated. I have 18 months left with IVA paying out £270 per month. I have a joint mortgage (though divorced) with more than £5,000 equity at the moment so am aware of the 12 months extra as will not be able to re-mortgage … so totalling 30 months left with IVA. Perinta have approached me with their unsecured loan at 33.5% paying £264.67 over 30 months. I have had all the “will build your credit scoring”, name will be cleared etc, but I am aware that it won’t be until after 6 years! They have also added their £200 processing fee. My 2 main concerns are (1) with the IVA, is there any hint of forcing me to sell my home in order for their money? Does this whole thing end after the extended 12 months? (2) with Perinta, if anything was to happen to my job (only form of income) will they give me a payment break, as IVA will do, for up to 6 months (or anything like). Also, why, on Perinta’s website, do they state an interest rate of 29.4% and telling me it will be 33.5%. I feel I am so close now and really don’t want to start to jeopardise anything. Any help/advice please? Thank you.
Katie says
I’m 2 years into my IVA and am about to receive a severance payment from my employer to leave my job as part of their job cuts. I’m currently paying £178 a month. My partner and I are hoping to buy our first home with the help of this pay out but I’m worried about being named on the mortgage. My questions are: can I used this settlement to end the IVA early?; and once paid off, can I be named as a secondary applicant on the mortgage? We wouldn’t be able to get enough with just him on the mortgage alone, but with my income on there too we can. To add to the mess, my partner does not know about my IVA and I want to keep it that way.
Please help, I’m so confused.
Sara (Debt Camel) says
You will be allowed to keep six months’ worth of wages to help you look for employment and to allow you to keep making your IVA repayments in the meanwhile… but any money over 6 months of pay must be paid to your IVA creditors. And if you get a job within the six months you need to pay any remaining funds to your creditors.
Basically your severance pay has to be paid into your IVA in full as it is treated as a windfall payment… Unless it is very large so there is more than enough to repay all your debts in full, plus your IVA fees, you probably won’t see a penny of it except to keep you going for a few months until you get another job, when your IVA then continues.
So no, you can’t use this to end your IVA early.
I am afraid you have to tell your partner about the IVA. I can’t imagine how you can hope to conceal it as you are going to lose this redundancy payout.
Also even if there is enough to repay all your debts in full, there is no way you will be able to get a mortgage until the IVA has gone from your credit record, which will be 6 years.
Katie says
I have another job lined up so finding employment isn’t a problem. I will be receiving around £21K, so will they take the whole lot off me????
Sara (Debt Camel) says
How large were the debts going into your IVA? Has any PPI been reclaimed by your IVA firm?
Arita says
We as a couple are with IVA company for 28 months of 281£ per month and already since August 2017 (23 months full payments made already but had 5 months pay break in between as my husband was redundant from work). Can we apply for this now or we need to wait for exact 3 years of payments and contract length to be able to do that?
Sara (Debt Camel) says
I am not sure that this is being offered any more. I suggest you talk to Creditfix.
Mark says
Would you be classed as a third party paying IVA off.
Sara (Debt Camel) says
sorry, not sure what you are asking or why?
tina says
i wont cencel creditfix iva I haven’t signed the contract yet, I may have some jurisprudence
Sara (Debt Camel) says
I’m sorry, I don’t understand. Are you saying you have tried to start a Creditfix IVA but you haven’t yet signed and now you don’t want to?
Can you say some more about this jurisprudence?
M. says
Please if you can help me I would appreciate it, I am in my 3rd year of Iva and I have applied for a settlement loan. I previously worked two jobs (1 main 1 side) my main job was furloughed so I made my side job my main and then I got an agency job to fill as my side job (care assistant). Obviously with my agency job I have no guarantee hours, however I have earned much more money due to the statement of key workers overtime. I was semi interrogated on the phone today regarding this. They are arguing that the amount of money I have made is not classes as overtime but as salary (definition of salary is a regular fixed amount). Please can anyone help??
Weatherman says
Hi M
This is a tricky one. Because you’re paid hourly at your agency job, you don’t have a ‘salary’ plus ‘overtime’, but an hourly rate and a variable number of hours. Ask them to average your earnings from this job over a six-month period – that might still mean your IVA payments increase, but it’ll mean that one or two high-income months don’t have a massive impact.
The advantage of this of course is that if/when your earnings fall again, your IVA payments should drop again.
As for the settlement loan, that can be a good solution in some cases, but have a read of the article above before finally agreeing to it!
Sara (Debt Camel) says
So is your current income – furloughd , old side job, new side job – more than your previous income?
Can you say something about this setlement loan?
M says
My current income is two jobs 1 main which used to be my side and the agency job which I just got to fill the rest of the money that I needed to earn to hit my previously agreed income of around 1300. I started in September and in November they asked if I could do more to help out.
I agreed because of the following information from the gov.U.K. Website which states ‘ 1.11 Paragraph 10.4 of the protocol should not apply to critical workers’ overtime during the COVID-19 pandemic. A critical worker is defined by the list published by the Government and determined by the employer. Additional proof of critical worker status may be required by the supervisor.’
And the Iva protocol states ‘ 10.4 Where the individual is employed, the consumer must report any overtime, bonus, commission or similar to the supervisor if not included in the original surplus calculation, where the sum exceeds 10% of the consumer’s normal take home pay. Disclosure to the supervisor will be made within 14 days of receipt and 50% of the amount (over and above the 10%) shall be paid to the supervisor within 14 days of the disclosure.’
M says
I have earned a considerable amount of money since November therefore even averaging will not help much, they will want to argue that it is a salary which means that it is not covered by the government statement. But surely if anything my salary is what me and Iva had agreed is my income (1300) and anything after should be classed as overtime. Especially with an agency job. Anymore thoughts Sara?
Sara (Debt Camel) says
I think you should go back to the IVA firm and argue that in the spirit of the Coronavirus (COVID-19) Guidance for the Straightforward Consumer IVA Protocol you should not be penalised because you had additional hours of work as a key worker, even though this were not strictly overtime.
If they will not change their mind, ask for a variation to be put to your creditors saying that this extra work should be disregarded.
M says
I will keep note of what u have said, I am definitely arguing this. My email to them yesterday provided the links they requested and asked them to write in due time as to wether or not they were going to go against government advise and penalise me as I would seek legal advise on the matter. I am awaiting their response still. (I appreciate what you are doing on debt camel to help people) i am now with jarvis
Sara (Debt Camel) says
ah. So Jarvis are continuing with the Sprout loans are they? I think you should be very wary of this. Your work has been erratic but good recently. If later it is erratic but poor, you can ask for your IVA to be completed on the basis of what you have paid so far. If you have taken a settlement loan, then you end up defaulting on that and having unmanageable debt again.
M says
That’s correct Sara, I asked sprout if I can repay the loan quicker and not be penalised or charged with the full amount of interest which they agreed (does that sound ok)? My thoughts are that I would do a lot of overtime and pay it off very quickly
I am currently waiting for a variation due to the settlement loan which I want. I want to get out of this Iva which causes me so much in anxiety and stress with annual income and expenditures. I want my debt to be sorted and not have the risk of failing. I am currently arguing that the home which is in my husbands name only should not have been an asset on my Iva. I have provided all documentation to them based on the house, none of which have my name on any. Thank u
Sara (Debt Camel) says
But it is still risky in case you can’t get that extra overtime. If you are confident, it’s your decision!
M says
Thank you so much Sara for what you are doing here, you have been so helpful, I just hope that they will not penalise me for the agency care work, and hopefully the creditors will take the property of the asset and agree to early settlement.. do u think it’s likely?
Sara (Debt Camel) says
I think they should be helpful. But you can insist on your creditors being asked to vote on this if Jarvis won’t change their mind. It is money that you have worked hard for during a very difficult year.
You could also point out that your driving costs have gone up a lot?
The country needs good care workers…
M says
Thank you, I didn’t know that! I am about to do my 5th night in a row, so many vulnerable people need to isolate In care home and so many care staff have been off with covid. With agency I am contacted last minute and asked to drive to various locations. I have literally worked in places where there is more agency staff on duty than regular employees. If they cannot get agency staff to work then these places run on reduced staff to CARE for elderly people who literally need fed washed and pads changed.
M says
Hi Sara, after waiting 6 days (mostly sleepless nights to say the least) Jarvis have finally replied to my email. Only to say that this is the last day for me to submit my income and expenditure. And to ask again for 6 months payslips so that they could average my income. (Which will be substantial).
————————————————————————–
I replied with the following.
To whom it may concern.
I have submitted all payslips that I can find.
Do be aware that the only guaranteed income I currently have is approximately £750 each calendar month. I rely on the agency work for the remainder of my salary. Totalling approximately £1440.
The remainder is overtime for frontline work in the care sector.
I am currently (almost 1 week later) still awaiting on your reply regarding whether or not you will be forgoing the governments instructions and penalising me for this overtime.
You may or not appreciate that over a number of years I have suffered with ill mental health. Your delay in responding to my email is causing significant emotional and mental distress.
———————————————–
Please excuse my honestly. I suffer quite a lot with mental health problems. Unfortunately this has been one of the worst times in my life. I have not wanted to go on, multiple times. Not that it is of any concern to Jarvis of course. Unfortunately for people like myself in debt but with life insurance I am worth more dead than alive. I can understand why people Jill themselves in such circumstances. Again, apologies for the frankness Sara.
Sara (Debt Camel) says
I am very sorry that they haven’t been more positive so far. I am thinking it would be good for you to ask your local Citizens Advice for an appointment now, because if Jarvis carry on being difficult it may help if Citizens Advice could write on your behalf.
As i said, it is your right to ask your creditors to vote on not requiring you to make extra payments because of this extra income. But sometimes standing up to an IVA firm and insisting on your rights is very stressful, especially when you have mental health problems.