Have you heard that an Individual Voluntary Arrangement (IVA) can help some people write off a lot of their debts?
That sounds great – and it’s not wrong… but it is only a small part of the story. IVAs are only suitable for a few people with problem debt.
Firms make thousands of pounds from setting up an IVA for you, so they can afford to advertise heavily on social media. These adverts often stress the advantages and don’t mention the disadvantages of an IVA.
You need to know about the problems that may occur before you sign up to one, not find out the hard way later. And also look to see if you have a better option than an IVA.
Contents
A quick overview of an IVA
An IVA is a type of insolvency, like bankruptcy, in England, Wales and Northern Ireland. It is a legally binding contract between you and your creditors.
IVAs are arrangements with your creditors to pay off unsecured debt such as loans, credit cards and overdrafts. You can also include other debts such as utility arrears, tax debts and benefit overpayments. There is a full list of what can and can’t be included in Insolvency and types of debt.
It works like this:
- you make a monthly payment to your IVA firm for five years (some creditors insist this is six years);
- all interest is frozen during an IVA and you won’t be hassled or taken to court by your creditors.
- if your income goes up during the IVA you will have to pay more each month. This does not make your IVA end sooner;
- there is some limited flexibility to reduce payments if you get into difficulty. But many fail;
- if you have a house with equity, you have to try to release equity in the last year to pay into your IVA;
- at the end of your IVA, all the remaining debts are written off.
What happens during an IVA
All IVAs should have an annual review where your pay slips and bank statements will be checked. If your income has gone up you may have to pay more and if your expenses have gone up this is your chance to ask to pay less. See What happens in an annual review.
If your circumstances improve during the IVA, you will have to pay extra into the IVA. Often 50% of a pay increase or the whole of any money you inherit or any refund you get.
If things get worse, you may be able to get payments reduced, or suspend payments for up to 9 months, or longer if your creditors agree. These missed months are added on to the end of your IVA.
Sometimes it is possible to rescue a failing IVA but big problems, especially in the first few years, may well mean your IVA fails.
More than a third of IVAs fail. Often people were too optimistic at the start that they could manage 5 or 6 years of these payments. Other IVAs have been derailed by inflation, having another baby or losing their job.
If you have equity in your house, you are likely to have to remortgage or take an expensive secured loan in the last year of your IVA, see below. If this is not possible, your payments are usually extended for another year.
Problems that happen with IVAs
What may change during the IVA
You need to know how you will cope with likely changes during the IVA period.
It can be hard to predict inflation. but many likely trouble spots should be obvious at the start of an IVA:
Some examples:
- a mortgage fix ending while your IVA is still running, can be a major problem and result in your IVA failing or being extended for more years;
- how will you manage if your car dies?
- if you have a car on finance, find out what will happen when your car finance ends;
- if you have children, how will the costs rise as they get older? Will they need mobiles, pocket money, school trips?
- if a child gets to 18 during the IVA, what will your budget look like when your benefits decrease? if they will go to uni, how will you be able to afford to help them?
- might you need to move? An IVA wrecks your credit rating for 6 years, even if the IVA is settled early. This makes it very hard to get a new private tenancy – you will probably need a guarantor – and a new mortgage is likely to be impossible.
If your situation may well improve a lot, then an IVA is probably not a good idea either! You can end up repaying more than your original debts because of the IVA fees.
A tight IVA can turn into a disaster
It doesn’t take something dramatic like redundancy or a critical illness – 5 or 6 years is a long time and a lot of small changes can accumulate.
If you are paying £400-500 a month to the IVA, there is wriggle room to reduce your IVA payments if necessary. But if you only have £150 a month to be able to pay at the start, it isn’t going to take much to go wrong for your IVA to collapse.
The “secured loan clause”
Before your IVA is agreed, your IVA firm may just refer to “remortgaging” in the last year of your IVA. And you may feel pretty sure that no-one will offer you a remortgage!
But the IVA legal documentation almost always says you may have to take a secured loan if you cannot remortgage. In 2023 more people with IVAs are being forced to talk to a bad credit loan lender about releasing equity with a secured loan:
- the interest rates can be very high, 15%, 19% or more;
- these loans are often very long.
These are horrific – no-one should have to take out this sort of loan at the end of an IVA that was meant to get you out of debt.
If you are already in an IVA and are being pressured to take one out, you can complain.
But if you are just thinking about an IVA, it’s best to avoid this nightmare.
You could tell your IVA firm that you want the secured loan clause deleted – this is possible but they won’t want to do it. Or you can talk to a different IVA firm – I don’t believe StepChange has ever suggested someone takes out one of these rip-off loans.
If you want to end the IVA early
This isn’t easy and it can cost you a lot more than you expect. You should not go into an IVA thinking that you will be able to do this.
Many people think that their IVA says they have to make 60 payments of £150 say. So they think after making 15 payments, they can settle the IVA by finding the money for the other 45 payments.
This is not how IVAs work.
In an IVA you are expected to pay as much as you can to your debts, not just the monthly amount agreed at the start. So you may need to clear your debts in full, plus the IVA firm’s high fees.
Here are some different cases:
- if a relative could offer money to settle the IVA, read How much should I offer to settle my IVA early?
- sell house to end the IVA. Do not sell your house without getting this agreed with your IVA firm and approved by your creditors first.
- take money out of pension to end the IVA. Same problem – you must not do this until your IVA firm and creditors have agreed first.
- made redundant – some of your redundancy money has to go into your IVA and if it isn’t enough to clear all your debts in full, plus the IVA fees, your IVA won’t end early.
- you inherit money This sounds like good news but the inheritance goes to your creditors. Your IVA only ends if there is enough to repay all your debts in full plus the IVA fees.
Also even if your IVA is settled after a couple of years, it will still be on your credit record for 6 years, so problems getting a new tenancy or a mortgage will continue.
Do you have a better option than an IVA?
An IVA may be your best option, but you need genuinely independent advice about this from people who will not make any money from your decision – Citizens Advice or National Debtline.
Don’t dismiss other options – compare them
Look at the choice between an IVA or DRO
If you are renting and owe less than £30,000 in total (this maximum debt limit is going up to £50,000 in June 2024) , you must look into this. If you qualify for a Debt Relief Order that is always a better solution than an IVA! Don’t be one of the thousands of people every year who are mis-sold an IVA which fails because you should have had a DRO.
Look at the choice between an IVA or bankruptcy
Don’t be scared of the word bankruptcy and assume an IVA must be better. Often bankruptcy is a MUCH better choice unless you have assets to protect:
- 7 out of 8 people don’t have to make any monthly payments in bankruptcy.
- IVAs and bankruptcy are exactly the same for your credit rating and your chance of getting a mortgage afterwards.
- bankruptcy never goes wrong – 30% of IVAs fail, leaving you back with your debts.
Look at the choice between an IVA or a DMP
If your situation may change – for better or worse – a flexible DMP is often better than an inflexible IVA. A DMP may sound long at the start but it can be speeded up, eg with partial settlements or refunds for unaffordable lending?
Self-employed or own a small company?
An IVA can work if your business is profitable but you need advice from an expert, talk to Business Debtline about this.
“But an IVA will let me keep my house”
If you have a lot of equity and unmanageable debt an IVA can work well.
But with little or no equity, you may be able to keep the house if you go bankrupt. And if the main cause of your financial problems is the mortgage and the secured loans that you have, then it may be better not to struggle to keep the house.
If you have a mortgage fix ending in the term of an IVA be very careful as the increased mortgage payments may be unaffordable. And with Help To Buy, think about what will happen when you have to start making payments on the government share – if this is in the term of your IVA it may make the IVA hard to afford.
Also think very hard about the implications of being made to take an expensive secured loan in the final year of your IVA (see above.)
“But an IVA won’t cause problems with my job”
IVAs are the best choice for the small number of people such as solicitors and MPs who cannot go bankrupt. But many people worry unnecessarily about whether their job would be affected.
How an IVA is set up
Choosing an IVA firm
An IVA has to be arranged by an IVA firm – there is no “DIY” option. Read How to choose an IVA firm.
A good IVA firm will help you understand all the terms in your IVA – keep asking questions until you are sure you know exactly what you are committing yourself to. And get the answers to these points in writing from the IVA firm.
If you don’t feel your IVA firm is being helpful or is pressuring you to take a decision, talk to another one!
A good firm should want to answer all your questions and give you time to think about whether this is right for you. Any firm that is trying to get you to make a decision fast is more interested in their own fees than the best option for you.
Creditors vote to approve the IVA
The terms of your IVA are set out in a formal legal document, which your creditors vote to accept:
- 75% of those voting have to approve your proposal;
- if you have one very big creditor, this effectively gives that creditor a veto on whether you can have an IVA;
- if they agree, your IVA is then legally binding on all your creditors, not just those who voted for it;
- sometimes a creditor may require a change to the proposal. Don’t be pushed into agreeing to this, take some time to think about it. In particular, an extension to 6 years – consider if a more flexible DMP would be better.
Summary
Pros interest frozen, no hassle from creditors, debts wiped out after 5 or 6 years (may be extended), good for high-earning professionals with jobs where bankruptcy is not possible
Cons not much flexibility – one third of IVAs fail and leave you back with your debts, as much of your IVA payments will have gone to the IVA fees.
If your mortgage or rent may go up this may be a big problem.
Moving house or car finance ending can be big problem.
If you expect your income to fall or increase a lot, look at a debt management plan not an IVA.
Debt Camel says IVAs are most suitable for people owing a lot of money (£15k+) with assets to protect, and who have a regular and secure income. If you can’t tick all of those boxes, then there are likely to be better options for you. Even if you can tick them all, still go and investigate the other choices. You probably have a better option – IVAs are often mis-sold so it is right to be suspicious.
Can you get a mortgage after an IVA
Inflation – can you cut your IVA payments ?
Articles on what happens in an IVA
Chris says
I am in month 57 of my IVA and also unable to remortgage. My IP is hinting at bankruptcy unless I take a secured loan with high interest over another 15 years. There has been no mention of extending the IVA for another year, there are no clauses in my IVA regarding taking out a secured loan if remortgaging is not possible and I haven’t been sent anything regarding a variation in the T’s & C’s. Do I just stand my ground and hope they suggest that I pay another year of IVA payments?
Debt Camel says
hi Chris, if your IVA has the common terms relating to extending the IVA term by a year if you are unable to remortgage, then I suggest you write to your IP quoting the terms and asking them to confirm that this will happen as you are unable to remortgage.
Chris says
Thanks for the reply. I wrote to my IP in March stating what you suggest and he replied saying that the loan (which was put forward by a company suggested by my IP) was for half the amount I was required to remortgage by so I would be no worse off than if i had been able to remortage. When I refused to accept the £15000 interest on a £9000 secured loan my IP wrote stating ‘I cannot convene a creditors meeting and tell them you have not been able to find a willing lender as that would be untrue’. He went on to say that he would leave me to find a remortgage at a lower rate but I need to do this immediately.
Any advice would be most welcome.
Debt Camel says
That is an astonishingly high interest rate (16%) for a secured loan. People go into in IVA expecting a clear solution to their debts, not to get saddled with a loan like that at the end of 5 years.
I suggest you should put in a formal written complaint. From what you have said (and remember I am not a lawyer and I haven’t seen your IVA) the basis of your complaint should be that you have complied with the terms of your IVA by seeking to get a remortgage; your IVA provides for it to be extended if you are unable to remortgage; your IVA does not specify that you should take a secured loan and you would not have entered into the IVA if you had thought this might be required. Additionally you feel that threatening you with bankruptcy amounts to unreasonable pressure as you have complied with the IVA terms.
You must complain formally to the firm and give it the chance to resolve matters before escalating the matter. You could mention at the end of your letter of complaint a list of the bodies you intend to complain to if it is not resolved:
• the parent firm that your IP is a partner of;
• your IP’s Authorising Body;
• the government Insolvency Service;
• the Financial Conduct Authority (complain that the firm is violating Principles 6 and 7 in threatening you with bankruptcy, its website is in breach of CONC 8.2.4 and the firm’s name is not listed as a trading name of the regulated entity. The FCA will not adjudicate on your particular case so this complaint would not do you any good directly, but firm would probably prefer to avoid you making this complaint.)
If you would prefer to get help with the process of complaining, ask your local Citizens Advice Bureau to write letters on your behalf – sometimes headed notepaper gets taken more seriously. Local CAB advisors will have access to national CAB’s Specialist Support teams, which includes a money advice team. Alternatively you could go to a solicitor, but this could be expensive.
The other thing you could consider is name & shame for example on MoneySavingExpert’s IVA forum and theivaforum.co.uk – there you are anonymous. By naming the firm you are more likely to come across other people with the same problem who may have resolved it.
Chris says
Thanks very much for taking the time to go into that detail. I feel like I’m just going round in circles and, you’re right, I took an IVA to get out of debt in 5 years not 20! Will speak to CAB and update in due course. Thanks again.
Dave says
Hi, I have got 1 payment left at the end of February to end my IVA, but DFD are stating that I owe them a further £11,000 before my IVA is cleared. When I questioned this they said that I signed to pay back 100% of my IVA. I owed £43,500 which they have bumped up to £49,000 and after the last payment I would’ve paid back over £38,500. Is this right or am I getting ripped off?
Sara (Debt Camel) says
hi Dave, that would be an unusual IVA, but you need to get your IVA terms and conditions checked to see what they say. Good places to do this are the forum theivaforum.co.uk if you are happy to post a lot of details on-line, or go to your local Citizens Advice Bureau with all your IVA documentation. I’m sorry I can’t give a simple answer but it’s important that this is looked at in detail.
Rachelle says
I’m in an iva which I presumed finished on the 7th April this year, however I received a letter from GT asking me to ring them as a matter of urgency which I did. They said that id missed payments, which I knew I hadn’t and that I still owed £4000. My iva was for £14823. My annual report in November 2013 stated that I my iva was for £14823 and all payments are up to date. The woman on the phone said that there was a variation in October 2010 and that my iva was actually for £17000+, however I explained that the administrators at GT who’d I’d spoken to told me my iva would end once I’d paid my final payment in April 2015 which I’ve paid. I asked that if a variation in October 2010 happened (which might I add I knew nothing about) then why wasn’t this new figure in my November 2013 annual report?? She got quite stroppy and constantly repeated about this variation and said she’d send me a copy. At this point I couldn’t speak for crying and had to hang up. I have written a complaint to my supervisor and also to thier complaints department after speaking with CAB and I am refusing to make any further payments to them until this is resolved but I am having panic attacks in the meantime. I can’t understand why I’ve been told one thing by two members of GT staff and then being told another by someone else and I feel that I’ve been the victim of error on their behalf . Am I right in not making any further payments to them until this is resolved because quite frankly I’m disgusted at how I’ve been treated. Id appreciate your advice please
Sara (Debt Camel) says
Hi Rachelle, putting in a written complaint to GT is the best first step. My instinct would be that you shouldn’t make any more payments to GT until your complaint is resolved and you have a full explanation about what happened in 2010 (you should have been informed about any variation) and a complete statement of your account, but really CAB are the best people to advise you on this as they will have seen your paperwork.
When GT have replied to your complaint, if you are unhappy you may decide that you want to complain to GT’s regulator – I’ve discussed this in another article https://debtcamel.co.uk/complaint-iva/ but I would suggest that you should return to CAB and ask for their help with this further complaint.
Rachelle says
Thank you so much for replying so quickly – I might now sleep tonight. We (my husband and I ) sent all documents off regarding equity in mortgage to which there was none and returned saying the same and because my iva was literally at an end and all money owed to creditors (£14823) was, what I thought was literally paid, I presumed that was it, until the letter and telephone call that is. I’m beginning to think that they have made an error somewhere and I’m the scapegoat ? Our iva was originally with MDC and taken over by GT and somewhere during this period everything has gone Pete tong. PPI paperwork has been done even though we knew there was none. I presumed if my iva was for a set figure and creditors were happy with that figure and that figure was paid then that would be it, however it seems variations have been put in place without my knowledge and now I’m in the middle of a field not knowing where to run. I’m keeping in touch with the CAB and debt company through the CAB as they have helped me by listening, being understanding and giving advice. They will probably threaten me with a failed iva if I miss payments (which I haven’t in my eyes) but because I have this paperwork with this figure on I’m sure I stand a chance of some sort of explanation, apology or whatever even in court if it goes that far ! I did my bit by sticking with this iva for five and half years and giving back what I owed which I thought at the time was great, however it has been an hard and emotional journey which seems to be never ending. Iva companies to me are vultures pecking at your bare flesh until there’s nothing left but an empty shell that used to represent a strong person. I wished I’d of gone bankrupt now x
I would like to thank you all on here as you are someone’s lifeline when there’s literally no life left . Thanks
Jeanette McKellar says
I have just completed my second year of a five year IVA, and three months into my third year, they have managed to gain over £11,000 from PPI and the other arm of the company call me every single day, I am at the point that I no longer answer first target recovery’s calls as they are stressing me big time. I have not missed a single payment to Knightsbridge but these people call me every single day! Knightsbridge are getting their monthly payment on time every month so, why are Target Recoveries hounding me? They have just about recouped all that was owed and this is very distressing. I need to know what and when this will stop. Also, what happens after my five years?
Thank you in advance,
Jeanette
Sara (Debt Camel) says
You could write to Target Recoveries and copy your letter to Knightsbridge saying you are tired of their constant phone calls and you are only prepared to deal with them by letter.
If they continue to call, put in a formal written conmplaint to Knightsbridge.
This will I am afraid probably continue until they feel there is no more PPI to be reclaimed. It is a great shame you didn’t try to reclaim the PPI yourself rather than start an IVA, as one may not have been needed at all by the sound of it.
Nuala says
Hi I have recently gone for Iva, the creditors have asked to extend my 5 years to 6 years. Which I have agreed to. However as I am a single parent , having no contact with my child’s father for over 3 years. I receive no maintance, which suits me as we don’t see him. The creditors have asked for a percentage of the child maintance.
Can they do this when I don’t receive any and certainly don’t want contact with the father?
Sara (Debt Camel) says
Have you actually signed up to an IVA yet, this sounds odd? Why have your creditors asked for 6 years – how large are your debts? Are you buying or renting?
Nuala says
Hi
I am actually renting £500 per month. My debts are £22,000. I was told it would be 5 years. But received a call saying a meeting took place with my creditors and they asked to extend the 5 years to 6 years. That also 1 of the creditors has noted I had a child and asked for a percentage of child maintance . Which I don’t receive as I have no contact with the dad.
Sara (Debt Camel) says
Have you looked at bankruptcy? Because it sounds as though that might be a much better option for you. Talk to National Debtline 0808 808 4000 and see what they say.
JLC says
If a child under 18 receives DLA which is paid into parents account, can an IVA company take this into consideration as income for the parent
Sara (Debt Camel) says
Yes, but they should also take into account additional expenses you have for the child because of their disability. Are you buying or renting?
Jlc says
Home owner! Does that make a difference
Sara (Debt Camel) says
Yes, if you were renting then you should have been looking at bankruptcy rather than an IVA. It’s much easier to get things like disability expenses handled properly in bankruptcy. Do you currently have an IVA or are you just looking into one? Have you been talking to a firm?
gardner says
hi my x has left I had no mortgage on my house plus my parents left me enough money to do my leeks and other problems I went out with my x I’d not long lost my parents 4 days apart of each other. I was in a very poor mental state he said need a holiday we went to Cyprus then he suggested we buy a flat borrowing my bit of money as down payment then he said he work to pay the rest. in the end I agreed then he said there was no work weekends so still unwell as I had nearly died he suggested we mortgage my house and get rid of the apartment which I lost all my money to pay for the improvement s which he promised to pay he suggested this mortgage which he’d pay for his bit what we lost in Cyprus. the house needed he started weekends again then he said he back gone. but he was alright gardening the he took redundancy by then from him doing 5 weeks a day my dla was paying the mortgage we ended up in a iva which the rest of my dla was took up he said I know I care for you after 2 years this stopped him taking me out. he did nothing in the house expecting my autistic son to do it he couldn’t look after himself not me. my partner sat on his telephone all day. he went to hit me when I asked where my hat was. finally he pretended to take a overdose on ten of my mistake relaxant my son and daughter lost there weekend pay being at hospital with him the doctor said he needed to take 3 times the amount of tablets to of overdosed well he left I’m still having to pay I v a and mortgage his telling everyone his paying it how can I get him to help pay anything half the I v a which is nearly all his I’m having to pay to stop loosing the roof over both my autistic son and me but gas and electric are 150 a month as i live in a valley i have to pay for sky we have no ariel. we are so broke i cant afford to eat why his out there lying his paying it working kobs here and there. i shouldnt even of had a mortgae just because my mental health. normally I’m cautious person. if I was normal I’d never gone there.its happened and I can’t change it. problem is what do I do about the whole lot of this it’s a mess.
Sara (Debt Camel) says
It sounds like a complicated mess. I think you need some debt advice on what your options are – I suggest going to your local Citizens Advice. The options may include letting the IVA fail or asking the IVA firm to agree that your IVA (not his) should be treated as completed. There may be other possibilities as well.
R sherratt says
I am looking at a possible IVA as I have been in a DMP for about 9 years and paid off about 1/3 of my debts. However I was thinking that I could apply for ppi as my ex husband and I had many joint loans and always had no choice in accepting the ppi with it. I have 2 questions
1 would I still have the money if owed any (I need to use some for a car as mine is old and I need it to work, and the rest to my dmp/Iva)
2 I don’t have any dealings with my ex husband!
Sara (Debt Camel) says
It’s a good move to think about your options after such a long DMP. reclaiming PPI is a very good first move.
If you still owe some money on a debt by now it will probably have been sold to a debt collector. In this situation any PPI refund will sometimes come to you and sometimes be offset against your debt – there isn’t a way to find out which will happen. Either is good, though obviously, you have more options if the money comes to you – so hopefully if you are making several claims some of them will.
Definitely do this now and don’t opt for an IVA until your claims are finished as it may well not be needed. After so long you may well be able to get a good final settlement offer on quite a lot of your DMP debts. And don’t use a claims firm, not only do you need every penny you can get, but I’ve seen people sued by a claims firm and get a CCJ because the PPI refund was offset against a balance so they didn’t have the cash to pay the claims firm fees :(
With joint accounts, half of the refund is likely to go to your ex. But you don’t have to make a joint claim, you can just do this on your own.
The other think it is worth checking is whether any of the debts are unenforceable because the debt collector can’t produce the correct documentation – this is for credit card, catalogues, and loan debts – not overdrafts. See https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx. If the debt collector can’t produce the CCA agreement then you can simply stop paying it as they can’t take you to court… This is much more likely for debts that started pre 2007. National Debtline can explain further about this.
Sarah says
Hi,
Not sure if I’m in the right area to ask this question but I wanted to find out if anything could be done about a lender that added charges to an account whilst an IVA was in place
Sara (Debt Camel) says
Is your IVA still continuing?
Sarah says
Hi,
No it isnt now I’m make my payments and interest and charges have been frozen it terminated in 2014. I was just wondering if they had breached the IVA when I had it. The IVA was started in March 2008 in April, may, June, July, August, September and October of 2008 whilst I was adhering to the rules of the Iva and making all payments correctly they added a total of 8p in interest charges and £30 of fees. I know it’s a silly amount to argue about but I didn’t think they were allowed to do this
Sara (Debt Camel) says
They shouldn’t have added these but it is a silly amount to argue about. Especially if they have since frozen interest and charges.
Sarah says
Thank you, is there anything I can do about that or is it a lost cause now. I’m only asking as this creditor has caused me a lot of problems
Sara (Debt Camel) says
Well you could write and ask for them to be removed…
But this (and your other debts too!) is really old. If it was a credit card, catalogues, or a loan, my first thought would be to ask the creditor if they can produce the Consumer Credit Act agreement for the debt – because if they can’t, the debt is unenforceable in court and you can just stop paying them anything! See https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx which has template letters for this.
Vilas says
Hi,
I have come across this site. I have a recent DRO and my wife is in IVA with Payplan we are above 60 and no other income other than benefits which includes PIP and ESA(Support) , carer, H Benefits. Because I have gone with DRO my wife’s annual review for lowering her payment due to affordability is under consideration, however, previously, we have been told by Payplan that they don’t exclude the DLA/PIP and such benefits from income whereas, we have shown the money required to be utilised to overcome the disability as well as our age concerns as we are only two of us living together, this had previously made the monthly payment go higher than affordability and we were made to accept that. What are the actions required to be taken in case the same episode is repeated as we are now in a position to afford the minimum required payment towards her IVA instead of going bankrupt. Please let us know the avenues available for us to make either creditors or the IP to consider that PIP is not a part of income.
Sara (Debt Camel) says
Does your wife own a house?
Vilas says
No, no other assets. No other income too, rented house private furnished
Sara (Debt Camel) says
Then an IVA is very probably a very poor option for your wife, bankruptcy would be much better.
Vilas says
Agreed but what about my main concern about considering PIP payment as income for the repayment for IVA
Sara (Debt Camel) says
PIP is just income. If you have disability costs which are not being taken into account talk to Payplan about these. But in the end if you want to avoid bankruptcy, it is necessary to make IVA payments and some of the PIP may need to be used. I suggest you should talk to Payplan about your wife’s options, including letting the IVA fail and opting for bankruptcy if it is not possible to reach an agreement on the IVA payments which you and your wife feel are realistic, not just for a few months but for the rest of her IVA.
vikki williams says
hi I was looking for some advice. I am struggling to pay my debts since going part time. I have £18k worth of credit card debut & pay £340 per month. I was looking into an IVA but I am concerned about my house as I am a single parent. I have very little equity, will I lose my home or be forced to remortgage at the end of an IVA?
any help much appreciated?
Sara (Debt Camel) says
If you have little equity in the last year of your IVA you should not need to remortage or take a secured loan. But if house prices go up so your equity increases, you may have to, or have a 6th year of IVA payments.
Why have you gone part time? Are there like to be any more changes in your income or expenses over the next 5 years? If there are, it’s possible your IVA could fail…
Have you looked at reclaiming any PPI from any debts? In an IVA all this money goes to your creditors and doesn’t reduce your payments… the PPI refunds can be so large that you wouldn’t have needed an IVA at all if you had done this at the start.
When you are in an IVA you will find it very difficult, probably impossible, to remortgage. If you are on a fixed rate at the moment, you need to think how you will manage when that ends – what is your current lender’s standard variable rate as that is what you will switch to? And how will you manage if there are more interest rate increases? A quarter of IVAs fail and you are left with your debts and then the IVA fees.
I suggest talking to some like National Debtline 0808 808 4000 to see if an IVA is a good option for you, taking into account your situation and what may happen in the next 5 years.
vikki williams says
thank you!
I was forced to part time, under a job share. that or lose my job.
Would I be given the option of remortgage or a 6th year of paying?
My circumstances are not likely to change over the next 5 years.
I will look at PPI but back then when this was all going on, I was only quite young & still living with parents & didn’t have loans etc.
I am on 5 yr fixed rate, due to expire Dec 2021. I will look into what happens at the end of this term.
I thought the IVA assess your income/expenditure & an affordable repayment plan of what I can afford to pay per month was agreed & passed to my creditors? Is this not the case & will I still pay out what I am paying now?
Sara (Debt Camel) says
could you not find another full time job? Don’t start an IVA because you have a temporary income problem, it is a form of insolvency like bankruptcy, if nothing else will work for you it could be good, but look at your other life choices first.
“Would I be given the option of remortgage or a 6th year of paying?” No, you only have to pay a 6th year if you can’t remortgage. the problem here is that for new IVAs there is a “secured loan” clause which means you may have to take out an expensive secured loan – this is new so not much is known about how it will work in practice.
“I am on 5 yr fixed rate, due to expire Dec 2021. I will look into what happens at the end of this term.” You move onto whatever your lender’s Standard Variable Rate is at that point. You should find out what that is now, but of course it could go up 1 or 2 % in the next few years.
“I thought the IVA assess your income/expenditure & an affordable repayment plan of what I can afford to pay per month was agreed & passed to my creditors? Is this not the case & will I still pay out what I am paying now?” No, that is what will happen. But the problems arise when something in your life means that you can’t meet those payments. Your car dies, your mortgage goes up a lot, other bills rise more than your income etc. Your IVA payments can only be decreased by 15% easily, more than that and your creditors have to agree to the change.
This must sound as though I am trying to put you off – I’m not, I am just trying to make sure that you know what you are committing yourself to.
JOE says
Hi
I am waiting for an IVA to be setup I am told the amount to pay would be £6100
I have just been told I could possibly get a contract which increases my money
Will this money be taken and deducted from my repayment or is there an option where it can be put aside and paid in a lump sum?
If I get the contract and the £6100 could be paid off in 6 months would I get any issues?
Any advice would be appreciated
Sara (Debt Camel) says
You have badly misunderstood what an IVA is. If you are about to get a large payrise, you may wish to urgently reconsider if you should decide not to start one.
If you get more money when you are in an IVA you have to pay more into your IVA. The £6100 is what you would have to pay if you get what you are paid now, it is not a fixed sum. Being paid more does not enable you to end the IVA sooner, or to save up a lump sum to make a settlement offer, it just means your creditors get more.
Also have you looked at PPI reclaims? In an IVA your IVA company will make these, the money all goes to your credits (less the IVA and claims firm fees). this too doesn’t mean your IVA ends early.
So if you are getting a lot more money its best to stop and think now to and see if you can manage without an IVA and avoid having the insolvency market on your credit record for 6 years.
Hayley Gooding says
Hi there, my partner and I are trying to set up an IVA with a debt support agency (we have had a great reduction in income of recent times and have not been able to pay some of our debts off for quite some time) just tried to get a statement from Barclaycard for my partners card and it seems as though they’ve sold the debt on to a debt collection agency however as the card was registered in our old address we’ve got no way of knowing where the debt has been sold onto? Also, vanquis and a hitachi loan were sold on as well as been paid off on credit file but not had any contact from debt collection agency for vanquis and the debt collector that supposedly took over the hitachi finance debt is still writing to us but it looks like that has been settled on his credit file as well so could have been sold on to another company but we don’t know where? Don’t want to be bombarded with letters by calling as my partner recently had a mental breakdown and I think the letters would add undue stress and we want to get this IVA set up but cannot without knowing where the debts have been sold on to. Help!
Sara (Debt Camel) says
Which debt support agency are you talking to, because they should be helping you with this!
Yes, you do need to know who owns your debt for an IVA and how large it is. A debt that looks as though it is settled has probably been sold on. You can phone up to get the details of who it was sold to, but if you don’t want to do that, you could ask barclaycard and the debt collectors for the information by writing a letter to them. There isn’t a way of doing this “in secret”, but it is unlikely to result you being bombarded with letters or calls.
A couple of other points:
– you may be going to get some good news about the old Vanquis debt if you ever paid for the ROP product on it (this was a bit like PPI). If you did, a lot of interest may be refunded to you sometime in the next few months. If you have started the IVA, this refund just goes into the IVA and you never see it.
– is there any PPI you could reclaim? Again if you have started an IVA you never get this money. A lot of people say they would never have needed the IVA if they had known how much PPI they could get back!
– I’m sorry to hear about your partner’s mental health problems – are they still in work or on benefits? Do you have a mortgage you are struggling to repay?
Steve says
Hi
So I have spent the last 8 weeks discussing with Creditfix to get an IVA across the line and set up.. creditors declining and 3 creditors meetings, then Creditfix say they need to redo the proposal due to their changes in fees, I never received this, I incurred a change of circumstance and they say they would need to go through the income and expenditure again… this was two weeks ago and no more communications..
Am i allowed to explore other IVA or other debt solutions away from CreditFix?
Sara (Debt Camel) says
I have heard of other people having their IVAs proposed by Creditfix being declined at the moment so this isn’t something unusual about your case.
If you are having second thoughts about whether an IVA is right for you, you should tell Creditfix immediately that you do not want them to proceed at the moment as your circumstances have changed and you want to rethink if an IVA is right for you. Tell them on the phone but also put this in writing by email and keep a copy of that email. Be very clear that you do not want them to proceed.
IVAs are big, serious, long term commitments. You need to be convinced that you don’t have any better options not just at the moment but that your circumstances aren’t going to change significantly over the next few years – either for the better or the worse!
Can you say something about your current situation?
John says
I was in an IVA and was told to lie about some of my debts! They said just say this is 30 a month instead of 150.
They said this was because if it was more than 75% written off I wouldn’t get it.
This led to serious problems with me trying to pay it each month as I was always struggling and it had to get extended for another year
Lexi says
I have over 15000 on credit cards its all my fault as I still live with my parents and only pay 200 rent. I stopped spending last summer but it isnt going down much because of the interest and I cant get 0% cards with my credit record.
A friend suggested an IVA but can I get one as I can make the payments? I am hoping to move in with new partner in the summer and want this sorted before then so it isnt his problem. I would have to pay more rent and bills but time to start being an adult and less petrol costs as hes next to my work.
Sara (Debt Camel) says
You may be able to get an IVA now, it will depend if you have enough to pay the debts each month after allowing for a reasonable level of expenses. But if you do have enough left than your creditors are not likely to agree to an IVA.
But in your case you absolutely shouldn’t try to get an IVA now! You have potentially a very big change in your finances coming up, moving in with a partner, increased bills but possibly lower commuting costs. It is much better to wait and see what your situation is like at that point. You may have a lot less money available each month – although IVAs can sometimes be changed, this isn’t guaranteed. More than a quarter of IVAs fail when people can’t manage what they originally thought was an “affordable” payment.
I don’t know if your boyfriend knows about your debts – it’s also not practical to keep quiet about being in an IVA.
amanda jane whitfield says
Hi I used iva company , on which I was given only 2 option , either go bankrupt and pay debt within one year if not I would loose my home . the second was to re-mortgage and pay the iva off in one go, as I was confused and desperate and also new I would be unable to pay within one year I would loose my children’s and I our home. I was sent to a mortgage company to apply for a re-mortgage little did I know that the apr is 13 %, I was advised to take this over 25 yrs , is this actually a iva , I was charged around £4000 to the practitioner had to pay £150 for interim order, pay ridiculous charges broker fees this was done in 2006 . I should now of been free of debt in 2011/2012 but now I am in a worse situation than ever , I have to pay over a £111000 for second mortgage , I only owe £7000 to my original mortgage and this will be finished in a couple of years, instead I will have to pay into my retirement to pay swift advances off , I am at my wits end with this see nothing than interest on this as I missed payment please help
Sara (Debt Camel) says
That sounds as though you have taken out a large secured loan and used the proceeds to clear your debts through a single payment IVA. You may have been given extremely bad advice back in 2006 – who was the IVA firm?
Denise says
Hi I was with clear debt, my Iva started may 2014, however due to a change of my Iva company was transferred over to aperture who took over in 2016, when they took over does that mean my Iva started again? I am still making monthly payments and have just been sent an expenditure form with an account of my Iva with no say of how long I have left. Any info would be appreciated thank you.
Sara (Debt Camel) says
No, your IVA terms and conditions, including the length of the IVA, will have remained the same. Was it 5 or 6 years? Any payment breaks so far? Do you have a house with equity?
Denise says
It’s ok spoke to Iva today apparently my final payment was may and it is being sorted, I have to wait between three to six months for completion, no payments all up to date never missed a payment. Thank you.
Virginia Gibson says
If you are getting attendance allowance
Which is non means tested should it
Be put as an income on your Iva thanks
Sara (Debt Camel) says
Yes it’s income – but most people also have had additional costs that AA was intended to cover, so they should have been included as expenses.
Diane Bellamy says
I have an IVA which I took out in april 2019. Included in that iva is a store card with next. Obvisiously I can’t take out anymore credit with next and I don’t want to. However I would like to be able to use their website to order and pay with a debit card but the website won’t let me do this. What can I do?
Sara (Debt Camel) says
Buy from somewhere else? Not sure what else I can say.
Emily says
Hi Sarah,
Do you envisage the 3 month mortgage payment payment holiday extension announced recently to be followed on by personal finance extensions on the existing 3 months?
I’m debating whether to hold off my IVA application or to wait.
Sara (Debt Camel) says
I think we will probably find out in the next couple of weeks.
Have your finances been affected by coronavirus and how likely are they to recover in a couple of months? 6 months?
Do you have a mortgage?
Emily says
Hi,
Thank you!
No, I don’t have a mortgage. Ideally I would do bankruptcy but I have a car worth £2,200 so that’s what is stopping me. I owe £38,000.
My finances were in a mess before coronavirus. I don’t think they will be getting any better in 6 months time.
Sara (Debt Camel) says
30% of IVAs fail. It is not sensible to opt for an IVA to protect a second hand car asset that is worth little. Is there anyone in your family who could buy half your car from you? You could use the case for the bankruptcy fee…
Talk to National Debtline on 0808 808 4000 about your options. One would be to make token payments to all your debts for 6 months and then see what things look like… second hand car prices may have collapsed.
Emily says
I didn’t realise that I could get someone to buy half of the car from me. I thought they would need to buy the whole car.
So, is it that they can buy any amount over £1000 from me?
Thank you for your advice.
Sara (Debt Camel) says
This should be possible. They would need to write you a letter saying they know you are in financial difficulty and to help you they are happy to buy 50% of your car, say that you can drive and insure it and that it will be your responsibility to maintain it, but if in future you want to sell the car you should talk to them first and they will expect you to give them 50% of the sale price.
Have you checked what the value is on Parkers? use the “poor condition” option. You would need to keep a record of this to show you sold half the car for a reasonable amount – you can’t sell half a nearly new BMW for £1000 :)
Before starting on this, please talk to a debt adviser about bankruptcy and whether it is a good option for you at the moment. Mention the car as well, but I think you need proper advice on your options and their pros and cons, not just on the car issue. I assist you phone National debtline on 0808 808 4000.
Issy says
Hi Sara , I’m currently 2 years into my Iva, which is for 60 months . I’ve recently paid £6500 into my Iva due to a poi payout , I’ve been told I still have to carry on paying till the end of the plan . My debt is for £10500 , but when it’s complete I’ve calculated I’d ov paid well over £12000 is this correct ,I don’t think I was given the correct advice about this IVA as I only rent my property and think a DRO would of been my best option, any advice of this .
Thanks Issy
Sara (Debt Camel) says
A DRO may have been a better option for you at the start. But now 2 years in, with only three to go, the question is can you manage the monthly IVA payments?
Your IVA will only be completed early if you have repaid all your debts plus the IVA fees, usually at least £3000, often more. ANd sometimes 8% per annum interest is also added onto your debts.
Making a large payment eg PPI or redundancy money often doesn’t clear the IVA and you still have to carry on maying the IVA as usual.
Fresh Mind says
Wouldn’t recommend an IVA to anyone. I’ve been in mine 2 years but am woefully behind on payments and have made the decision to just let it fail. Separated myself emotionally from debt and I feel free as a bird. There should be a ban on credit applications for anyone under the age of 30 with the exception of mortgages. We’re all warned about our credit file but what ever happened to saving for stuff?
Sara (Debt Camel) says
Too many IVAs are being missold to people and the failure rates were high even before the pandemic.
Feeling free is good, but read https://debtcamel.co.uk/when-iva-fails/ to see what your possible options are after an IVA failure.
Steve says
Hi so we are currently in a Iva ,due to change in circumstances The repayment as gone from £90 a month to £415 a big in crease ! But anyway my original debt was £14500 and now they saying the total I must pay is £21000 effectively adding £6500 to my original debt I thought the purpose of a Iva was to reduce your debt not to plunge you further into debt can I Iva plunge you into more debt than you was in , in the first place ?
Sara (Debt Camel) says
yes. if you are trying to settle it early in full, you also have to pay the high IVA s fees and sometimes also 8% added interest per year.
Huseyin says
Hi! I have started a IVA and made my first payment last month. Although all my creditors have accepted the plan, one of the creditors have sent me a claims form and taking me to court. I want to know if they have the right to this as the plan has been accepted by them? What do i need to do regarding this matter? I would be very grateful if you could assist.
Best regards.
Sara (Debt Camel) says
No they can’t. Ask your IVA firm to help you with this, either to get the creditor to withdraw the claim or help you defend it.
Snahan says
Hi Sara I’ve recently had refunds from creditors for affordability complaints , as I’m in an IVa and some of these debts have cleared should I ask my IVA if this has made a difference to my balance ?
Sara (Debt Camel) says
Unless you think you are close to being able to repay all your debts in full, getting these refunds will make no difference to your IVA :(
Maggie says
Hi, I have 6 defaults total of £22,000 defaulted in 2019. At the moment I’m only paying £1 monthly towards each one. Is IVA a good way to pay them off?
Thank you
Sara (Debt Camel) says
Are these your only debts?
An IVA is a form of insolvency – it has the same very bad effect on your credit record as bankruptcy or a debt relief order. If your situation has much improved since 2019 and you could pay a lot more a month – say £350 or more – then you could just increase the payments and clear the debts without insolvency. Interest should now be frozen on these debts.
But if you could only pay say £100 a month it would take forever to clear the debts even with interest frozen so looking at a form of insolvency makes sense.
IVAs are suitable if you have assets to protect, normally a house with equity. Without assets you should be looking at bankruptcy.
IVAs should avoided if you have a good alternative. You will pay more and for much longer than in bankruptcy. And more than 30% of IVAs fail as they are not really flexible enough and they go in for so long. If your IVA payment is less than £100 a month there is little room to reduce it much if your expenses go up more than your income.
Not liking the sound of bankruptcy is a big mistake. Don’t sign up to a 5+ year IVA that may well fail!
iVA firms make very large fees from IVAs so there is a lot of mi-selling. Pay no attention to the Firms saying they are giving free advice, they expect to make big money from selling you an iVA and nothing from bank or a DRO.
If you do want to look at an IVA, talk to StepChange:
– They are a charity and they don’t care what solution you choose.
– Also if you have a house with equity they are one of the few firms that will not abuse the dreaded secured loan clause and try to force you to take a very expensive secured loan at the end of your IVA to release equity.
– I see very few complaints about StepChange IVAs compared to other firms.
Also talk to StepChange about a DRO. At the moment you would not qualify for a DRO as your debts are over 20k.
EDIT – the DRO limit was increased to 30k in June 2021
Issy says
Just reading the article regarding IVA”s , wish I had been given better advice before going into an Iva , I mean why would anyone get into more debt with the ridiculous fees they charge , no wonder they thought it was my best option, surely there’s a lot of mis selling going on !!
Sara (Debt Camel) says
Are you managing the IVA payments ok?
M says
I am just about to enter an iva with a company called hanover insolvency. I originally called a company called money bubble who went through all my options and said an iva would best be suited for me. They put me through to hanover insolvency who did a short interview and have sent me docs that i have signed to agree as in my head i thought if i pay £125 a month over 5 years i am happy to do so if that wipes off all my current debts to be debt free as i currently pay around £300 for just credit cards and £350 for a car which is now become impossible to maintain on my salary.
I have 26k worth of debt which is credit cards and a car on HP. They have advised me that the car will go back to the finance company and auctioned of as i am only 5 months into the agreement but regardless of amount they recover have said i will pay an amount of £125pm for 5 years. It all seems fine i currently live in a rented council house and explained the reason why i want to clear my debts is to be in a position where 6 years from now my credit report is clean and i can apply for a mortgage.
I am happy to pay £125pm as it is affordable i am just worried after reading different peoples issues of paying that amount for 2-3 years but showing no decrease in balance. Should i be worried or not as i thought if the documents show an agreement of £125pm over 5 years and all other debt remaining to be wiped of i am doing the right thing?
Hope you can help thank you in advance
Sara (Debt Camel) says
STOP. This sounds like a bad idea.
Before I list the reasons why and say what your better alternatives may be, can I check a couple of points.
1) do you need a car, or can you just manage without one?
2) how far through the HP agreement are you? Are you up to date with it at the moment?
3) has your salary reduced or have the debts just grown much too large?
M says
1) do you need a car, or can you just manage without one?
I have my wifes far to use so its not a problem
2) how far through the HP agreement are you? Are you up to date with it at the moment?
I am only 5-6 months into a 5 year agreement so a VT was not an option payment were up to date up until this month.
3) has your salary reduced or have the debts just grown much too large?
My salary has reduced and my debts have got to in total without car 18-19k
This is the only reason why i chose to go with iva route as 5 years from now my debts would be wiped off, 5 years from now i can wait patiently till year 6 and apply for a mortgage on the council property i am as i would have 6 years of discount to use which is why i went with it. As if i continued to pay what i did it would take me over 10 years to pay and each month would be a struggle
Sara (Debt Camel) says
As if I continued to pay what I did it would take me over 10 years to pay and each month would be a struggle
That is a good reason to go for a type of insolvency.
But there is no good reason to go for an IVA unless you have assets to protect, which you don’t.
Bankruptcy is probably a much better option for you than an IVA. You only have to make payments in bankruptcy for 3 years, not 5. And bankruptcy can’t fail…
At the moment more than 30% of IVA s fail because what looks affordable at the start turns out not to be if your expenses go up more than your income does.
IVA firms make more than £3500 in fees from an IVA – no-one makes any money if you go bankrupt, that is why no-one advertises it or pushes people into it. If your IVA fails after 2 or 3 years, most of your monthly payments will have gone in fees, your IVA firm will be sitting pretty and you will be back with your debts hardly having dropped at all :(
In bankruptcy if your income drops or your expenses go up, your monthly payments are reduced. To nothing if necessary. Bankruptcy doesn’t go wrong it is much less risky.
An IVA doesn’t make it easier to get a mortgage in future than bankruptcy does. Read https://debtcamel.co.uk/bankruptcy-iva-dro-credit-rating/ which looks at this problem.
Bankruptcy you have to pay a £680 fee at the start, but if you can afford £125 a month for an IVA that will only take a few months to save up.
There is a third type of insolvency – a debt relief order (DRO).
A DRO is a simpler, cheaper form of bankruptcy. At the moment you have to have debts of less than £20,000 so yours are too large. And you have to have a spare income of less than £50 a month.
But the DRO limits are being increased from end June 2021 to 30k, so your debts would be under that. And that the £50 a month spare income goes up to £75 a month.
So I suggest that you should talk to National Debtline on 0808 808 4000 urgently about this IVA and whether bankruptcy would be better. And ask National Debtline what they think your spare income is each month and if you might be under the £75 DRO limit, as they may not use the same calculation your IVA firm does.
If National Debtline thinks an IVA is a good option for you, fine. You have done your research and know it is right.
M says
Thank you for your reply appreciate it, i did think about bankruptcy but it was the inital fee that scared me and thought i have to pay that straight away,
Also my iva if i cant afford £125 a month my wife can help cover that cost so it should be manageable. I have a meeting on the 15th but im guessing now iv signed docs and asked them to get all the information together i am bound to it now without incurring cancellation charges.
Its a shame but debt is and only once this goes live i will feel better and stress free paying 1 amount over the 5 years than 7 different people and constant worry and stress of plans being changed
Sara (Debt Camel) says
No you aren’t bound before the meeting has been held.
This may be a seriously big mistake to make.
Please talk to National Debtline on 0808 808 4000 – they are open Saturday mornings.
If it takes a few months to save up the bankruptcy fee you will Still be much better off paying that.
And it’s possible you may qualify for a DRO in May when the rules are likely to change if National Debtline say your spare income is actually under £100 a month… In a DRO you pay a few of only £90 and then there are no monthly payments at all.
Graham says
I am self employed and started my Iva mid 2018 and everything was fine for a while, things started to deteriorate in 2019 and then at the beginning of 2020 of course, Covid hit. I have not paid it in a year, as I have not been able, and my circumstances have changed – my monthly outings are a lot higher not really leaving anything spare each month.
Probably going to fail my Iva next month. Where do I go from here?
Weatherman says
Hi Graham
If the IVA fails, as you probably know, you’ll still owe the debts (minus the payments you did make towards the debts during the course of the IVA, although some of your payments will have gone towards the Insolvency Practitioner’s fees).
So you’ll need to find another way to deal with these debts. The best thing to do is to speak to National Debtline who can go through your options: call them on 0808 808 4000. From what you’ve said you might be eligible for a Debt Relief Order (unless you own a property?), which would cancel your debts after a year – but National Debtline can talk you through things in greater detail.
Sara (Debt Camel) says
As you are self emplyed, Business Debtline are good people to talk to.
It may also be worth talking to your IVA firm and asking them if your IVA can be “completed on the basis of the payments made to date” – ie it would be completed not failed. This would be unusual normally as you are less than half way through the IVA but because of coronavirus it may be that your IVA firm would be happy to propose this to your creditors.
M says
My iva meeting has been approved from the 15th of march 2021. How long does it actually take for it to be on the iva register and updated on my credit file ? Is this instant or will it happen in a few weeks?
Weatherman says
Hi M
It can take a couple of weeks – if it’s not on there within three weeks from the 15th (so early April), query it with your IVA firm. Is there a particular reason you’re asking, or just interested?
M says
Applying for a job which will involve a credit check, if i get the check done before the iva is on my credit file i can work there, if they do it after it is on the credit file i got no chance lol trying my luck!
Ivan says
Has something happened to Hanover insolvency? Thier contact details are all dead, they haven’t taken the DD out of my account, I’ve been trying to contact them but none of the details work.
Sara (Debt Camel) says
I haven’t heard anything about this. If 0161 905 4764 doesn’t work on Monday, let me know?
Simon says
Hi Sara
My friend is 23 and owes just over 10k on various credit cards and loans. He has been recommend to go into an iva. He earns 20k per year and maybe an extra 10k im bonus.
They have said that the bonus doesn’t matter as its not gauranteed but when they look at his payslips at the end of the year do they not see how much he has made over his bask and ask for 50% of it?
Also if he gets another job on say a higher basic of say 28k and no bonus do they ask for the difference as when he started the iva he was on 20k and they based the payments around that as its what he could afford but now he has more money.
I advised him to go bankrupt as he is only 23 ans lives at home so may be a better amd quicker option for him.
Your advise on the is much apprciated
Sara (Debt Camel) says
Any IVA firm that tells him to ignore the bonus should be avoided like the plague. It is HIGHLY misleading.
I am assuming he will have a standard “protocol” IVA.
10% of the bonus will be ignored then he has to pay 50% of the rest to the IVA – so 45%.
His monthly payment will go up if his income goes up – he will have to pay 50% of any increase to the IVA.
It sounds from what you have said that an IVA is a dreadful option for him.
On the numbers you have talked about, he will end up paying MORE than his debts to the IVA as he will also have to pay the IVA fees – at least £3500. He won’t get any debt written off at all.
He will also have insolvency on his credit record. That means he will find it difficult, probably impossible without a guarantor, to rent privately. Does he still want to be living at home in 6 years? Even if his IVA completes in 4 years, his credit record is still wrecked for 6 years.
I suggest he just settles down and clears his debts!
If he can’t manage the monthly repayments, he can get a debt management plan (talk to StepChange https://www.stepchange.org/how-we-help/debt-management-plan.aspx about this.) Then when he get a bonus he can use the whole amount after tax to clear a large chunk of the debt. On those bonus levels he will be debt free in a couple of years and he will have avoided insolvency on his credit record.
You are right that bankruptcy would be quicker than an IVA. And if he has no assets it is generally a much better idea. But he would still be making monthly payments for 3 years and have insolvency on his credit record. So for him it should also be avoided as he has a much better option than any form of insolvency.
I understand the attraction of trying to get a clean start when someone is 23 and has got themselves into a mess. But he has no need to panic, he can work his way out of this without an IVA or bankruptcy.
simon says
Hi Sara
So he does live at home at the moment, his worry is that because his basic is 20k and bonus is around 10k a year but its monthly bonus so say £833 per month, he’ll end up having to pay that towards the IVA people. he said they have been on the phone this morning asking for his tax code.
he says that the IVA will help him financially and then with the bonus he make he will possibly be able to save and pay the whole lot off in 18-24 months time however i have reminded him that this will be on his credit file for 6 years for an IVA or bankruptcy.
I recommended step change or payplan with a DMP. although he will get defaults on all his accounts which will also stay on his file for 6 years he could have 1 low monthly payment and call up a creditor every few months an offer a partial settlement like i am doing.
you gave me some great advise when you said that the older defaults get the better they look and i could go for a mortgage as long as the default is 3 years old and been paid off for at least 1 year.
he’s just very worried that the IVA people are pushing him down this avenue over other options like bankruptcy and DMP plans.
his debt is credit cards, loan and over drafts – can overdrafts be included in DMPS? he know’s he will need a new bank.
i think after reading what you said a DMP is the way to go
Sara (Debt Camel) says
with the bonus he make he will possibly be able to save and pay the whole lot off in 18-24 months time
An IVA doesn’t work like that. He will have to pay the bonus to the IVA firm and he will have to pay the debts in full – he cant use the bonus to offer an early settlement.
And he won’t save any money, instead he will pay the IVA fees in addition to all his debts.
Yes a DMP and then using the bonus to settle the debts sounds like the way to go. Even if he gets little off in partial settlement, he avoids the insolvency marker for 6 years and he avoids the IVA fees.
The IVA people will make a lot of money if he signs up with them. It’s in their interest not his!
Yes you can include an overdraft on a DMP. He gets a new bank account and shifts his income & payments over. The old bank will stop adding charges in the DMP.
simon says
Hi Sara
great i thought as much with an IVA, he’s gone through with the DMP plan and is paying around £400 a month off and will try and save his bonus to pay the rest of when he can.
Great advise as always Sara, much appreciated : )
Michelle T says
Have a question in relation to IVA.
Its not for me but a sibling. This is a tad difficult for me – She’s dying currently in vegetated state before she became unconscious she was worried her husband wdnt be able to find the answers he needed. They currently have an joint IVA 3 1/2yrs into it they like many other are using siblings pip & esa to meet the payments on advice – when she dies what happens next. Her estate is currently in debt so iva I believe wd be cancelled & closed – now the problem – sometime in the next 18 mths she is due to receive an inheritance if her estate is finalised before the inheritance is pd does the iva restart
Sara (Debt Camel) says
Very sorry to hear this difficult situation.
Are you saying someone has died, leaving her some money but it hasn’t yet been distributed?
Does she own a house with her husband or are they renting?
Michelle T says
Yes dad died in April. No they rent
Sara (Debt Camel) says
Is there a reason they did not go bankrupt rather than an IVA? How large debts does her husband have? And how large are her debts?
Are you saying they can only pay the IVA with help from other relatives?
I’m sorry to have to ask this, but is it likely she will die soon? Or may stay in this state for years?
Michelle T says
From what sister said IVA was the only suggestion advised in my opinion a DRO would have been a better option but they were never told about it. Debts were approx 12k before IVA started & work circumstances for husband decreased shortly after. They continued to make the pmts using her PIP & didn’t notify the IVA agents of changes to reduce or change the debt repayment method. If she died tomorrow they have no money to pay off debts & her own debts wd normally die with her. As I said the problem is timing – her estate wd be processed through probate before inheritance from dad wd be available. They dont want to fall foul of deprivation of assets for DWP (a seperate issue) nor to have to worry about debt being reopened if/when receive inheritance and they hadnt prepared for it.
As to her condition they removed all support 2 days ago so sadly it’s just a matter of time how long is down to her determination this all seems presumptuous but I cant help them physically so im trying to find practical things to help them with & this is one of two things she was worried about.
Sara (Debt Camel) says
Deprivation of assets – how large is the inheritance likely to be?
The problem here is that it doesn’t matter how long it takes for the estate to be distributed, it is the date of death that matters, and that was when her IVA was running so it will be a windfall for the IVA.
Michelle T says
Depending on whether another sibling attempts financial provision 45k+ this wd be split between husband 2 children. So husband needs to inform iva that inheritance is due however long it takes & once in receipt pay over the amount outstanding on both debts & wd he be required to continue paying iva monthly amount?
Sara (Debt Camel) says
He may think he has a “joint” IVA, but actually legally there are two separate IVAs. Her inheritance will have to settle her IVA. But if she dies and the rest of her money is left to her husband, that would have to be used to settled his IVA. Had she made a will?
Settling an IVA jnvolves paying the debts in full, plus the IVA firms fees. Plus sometimes 8% a year interest added to the debts, it depends how the IVAs were written.
Who is the IVA firm?
Michelle T says
Ouch not sure. Is an iva classed as an immediate debt then.
Thank you for this it’s been very helpful
Sara (Debt Camel) says
You are worrying about the DWP and deprivation of capital? I don’t think that is normally a problem, the executor of the will will normally send the money directly to the IVA firm.
I am assuming here that the will she is inheriting under doesn’t have an insolvency clause, which means the money won’t go to her at all.
I think the husband needs some help with all this. I suggest he contacts his local Citizens Advice.
Michelle T says
Deprivation comes in bc she’s 42 with no will so a deed of variation wd be needed to pass money on to her children – A good lesson for us all we never know what’s round the corner.
Just 1 further thought shd she survive – sadly unlikely – the date of iva completion & all pmts made upto date & inheritance still not paid out what then?
Once again thank you for your help.
Sara (Debt Camel) says
Whoever is looking after her affairs at the moment needs to tell the IVA firm about the inheritance. Now, not when it is paid out.
Issy says
Hi Sara , stop laying my Iva in August , each month they call asking where payments are , I keep telling them same thing I wish to terminate my Iva , so we are in November now still not recieved any termination letter , what can I do , as I want to try for. DRO which I am emigre for ?
Sara (Debt Camel) says
Send them a written complaint – email is fine. Say you told them in August you want to terminate your IVA and go for a DRO, tell them which debt advice agency has confirmed you are eligible for a DRO. Point out that the Insolvency Service has said in Dear IP 133 and 138 that Insolvency Practitioners are obliged to ensure that an IVA remains an appropriate debt option when it has been started.
Who is the IVA firm?
Issy says
Hi Sara the iva firm is Financial Support Systems .
Sara (Debt Camel) says
ok, let me know what reply you get to this?
Also have you had it confirmed by a DRO adviser that you are eligible for a DRO?
Nigel says
Hi. My iva is going to be cancelled because I have an overdraft. The iva was set up in 2018. They told me to open an account for the payments to be made from. I’ve never missed a payment. On the yearly review they have control over the amount. They never told me that I couldn’t have an overdraft. Surely they can see the account was overdrawn since the middle of 2019. They said they will terminate the arrangement with in the next few days. I rang them yesterday but couldn’t get to speak to the supervisor team. I don’t have any money to clear the overdraft. What should I do. Thanks
Sara (Debt Camel) says
oh! lots of questions, sorry…
so the overdraft is on the account they told you to open?
how much is it at the moment?
has it been building slowly, so if they had told you in the 2019 you could have easily corrected it?
what has been happening to your payments at the annual reviews – have they been going up? have they been taking account of extra costs eg petrol, council tax, energy prices?
how large are the debts that went ito the IVA and how much have you paid to date?
Simon says
I am considering a 1 off payment IVA. I currently have a DMP which will take 40 years to repay. My mum left money in a trust for me but I have no direct access to it. If I could get money released from the trust to make a one off payment, would I be free as soon as the payment is processed? I do not have enough surplus income for a standard IVA. I owe approx £60k and am paying £120 a month. Thank you (in advance).
Sara (Debt Camel) says
An IVA takes a few months to complete, it isn’t instant. And it will remain on your credit record as a form of insolvency, preventing you from getting a mortgage at an OK rate or from renting privately without a gurantor for 6 years.
Do you have assets to protect?
How much is in the trust? Do you get any income from it?
That is a lot of debt, if you could say how it has arisen and how long ago, there may be some other options.
Issy says
Hi Sara I asked my Iva to terminate my Iva in august , in November I received an enrol saying the termination process had begun , they also said £5675 of debt had been paid also £1000 nominee fee and other fees , still waiting for actual letter and breakdown is this normal ?
Sara (Debt Camel) says
Did they get back to you in August or September to ask any questions or tell you what was happening? Who is the IVA firm?
Issy says
No nothing at all , just an email in October with a formal breach and then options for me to carry on , company is FFS Financial Support Systems
Sara (Debt Camel) says
So missing 3 months payments is a formal breach. Did you respond in October saying you wanted the IVA terminated?
Issy says
Hi yes Sara been telling them since August , they Havnt been very co operate since I told them I wanted to fail the iva
Sara (Debt Camel) says
is your plan to switch to a DRO? Have you talked to a debt adviser who has confirmed you would be eligible for a DRO (I am not doubting this but you do need to know this)? You can start the process of applying for a DRO now, so the application is already to go when the IVA has formally failed.
The time taken to fail your IVA is annoying, but you aren’t paying the IVA are you, so at least you aren’t struggling to do that.
Issy says
Hi Sara so I’ve received my letter of termination, they have taken almost £4000 for fees ? Really sickening as they gave took almost nearly tge sane as they paid to my creditors, don’t really understand all tge breakdowns of what they have paid as it’s confusing, are these fees normal as I was never really made aware of high fees or would never have entered into Iva , I’d rather my creditors that amount of money !!
Sara (Debt Camel) says
No they don’t explain at the start how much money they make – if they did, you might wonder whether actually you have any better options…
I responded to your previous complaint over on this page: https://debtcamel.co.uk/iva-mis-selling/comment-page-1/#comment-468417
Neil says
recently received a large back pay from work, dating back to December 2020, as I’m a key worker I shouldn’t of paid extra for that period upto july21, however I was advised I had to pay 1/2 of my back pay as I received it in November 21, although the back pay was for period dec 20 – July 21 – have I been advised correctly?
2 – I roughly owe 2400 on my IVA, I want to make any offer to end this early as I am now topping up my iva by 150 per month due to pay rise, I was thinking of offering 1800 as full and final payment, do you think that would be accepted??
Sara (Debt Camel) says
I was advised I had to pay 1/2 of my back pay as I received it in November 21, although the back pay was for period dec 20 – July 21
I don’t think that is correct.
Who is your IVA firm?
I roughly owe 2400 on my IVA
Is that the total of the payments you expected to make to the IVA less the payments you have made?
Have your expenses also increased, eg bills? Have they been taken into account when setting your new monthly payment?
James says
Hi I have now received my completion certificate for my IVA and have sent it to my creditors who are all updating my credit file
One creditor has been very awkward and is now asking the following – We do require the full insolvency pack, alternatively please send the creditors list. – are they entitled to this? To see all my creditors? Isn’t the certificate of clearance sufficient? I gave them 28 days to respond with a reason why they wouldn’t update my credit file and they wrote that to me
Sara (Debt Camel) says
Tell your IVA firm what is happening. Who is this creditor?
Helen Mills says
Just need a bit of advise if possible. We have a secured loan back in 2016 for 65 k, this was towards our business but had to guantee personally. We have been paying £750 a month since 2016 paid off £50k. I have received statements saying closing balance 71k…. I know we had payment break 3 months during covid, but how can this be. Any ideas on what to do. ….
Sara (Debt Camel) says
You can ask them for statements for each of the years since 2016 – that should show what has happened.
You have asked about this on a page about IVAs. Although in theory any debts can be included in an IVA it is EXTREMELY unusual for a secured debt to be included.
Often with stupidly expensive secured loans the only realistic options are to either remortgage with a mainstream lender to clear the secured loan or to sell the house.
Simon says
Hi debt camel,
I have recently set up a lump sum IVA which cost me £15.000. It was accepted by all creditors and I’ve been told will last 12 months. Some money has been left in trust for me to receive after the 12 months. Will I have to pay 40% tax on this? I’ve looked at many online articles and am confused by what I read.
Your previous advice about the IVA was accurate and helpful.
Do you know anything about this issue?
Many thanks in advance
Sara (Debt Camel) says
I’m sorry but I can’t give tax advice.
Simon says
Hi Sarah,
Thank you, I understand.
I really appreciate the advice you previously gave. I had never heard of a Lump Sun IVA and this allowed me to make an offer which was accepted by all creditors. It was approx 25% of the total debt and once complete will allow me to make a fresh start without having to wait 5/6 years.
There is a huge amount of helpful information on this site and you always replied to my questions quickly.
Thank you so much! Within 12 months I will be debt free and can start rebuilding my life.
Jack says
This was a really wonderful post. Thank you for providing such valuable information.
Sara (Debt Camel) says
A message left by an IVA led generator, hoping you will Click on their link, which I have removed….
If you are thinking of an IVA, don’t believe the ads you see on social media, they don’t mention the huge problems that often occur and are sometimes simply lies. Instead talk to your local Citizens Advice or phone National Debtline on 0808 808 4000. IVAs are good debts solutions for a very small number of people in 2022 and are being mis-sold to tens of thousands.
Mark says
Hi Sara,
Firstly, thank you for setting up this website, it’s got so much useful information that has been a great help.
My query comes from a recent check of my credit report. It shows that I have 2 credit cards which are in default, one with Arrow Global and one with PRA Group.
I have an IVA in place so I’m confused as to why these would be showing? (I haven’t taken out any credit since the inception of my IVA).
Do you have any suggestions?
Thanks
Mark
Sara (Debt Camel) says
Do these look like two credit card debts included in your IVA? If so, the original lender may have sold them.
Mark says
After googling the two companies, it looks like the debt was sold to them.
Will this be negatively impacting my credit score and should my IVA have prevented it from happening?
Sara (Debt Camel) says
I know those two companies buy debts, that doesn’t mean they have bought two of your debts. You need to be sure they were two of your debts that were in the IVA, not someone elses debts that have ended on your credit record by mistake.
If they were your debts that have been bought
– this is normal in an IVA. Not against any rules.
– it won’t impact your credit score. The lenders that sold the debt should have marked it as satisfied with zero owing and the credit scoring system only counts one default here, not one from the original lender and one for the debt collector who bought it.
Mark says
Thank you,
How do I confirm that they are my debts that have been sold? Is it a case of contacting the IP?
Sara (Debt Camel) says
First do they look like a possible amount? If one is for £300 and one for £9200 and all your IVA debts are in the £1000-4000 region then this doesn’t sound likely.
Then I suggest emailing the debt collector and saying you have found this debt on your credit record and you don’t recognise it and see what they see.
The IP is unlikely to know anything if the debts re been sold recently.
Jay says
Hi Sara,
I am becoming overwhelmed with the interest of debt I have accumulated over multiple lenders, both loans and credit cards and overdrafts, I have been exploring my options and spoken to both stepchange and Money Advice, the latter telling me an IVA seems my best option, I have 32k of debt and after doing the income and expenditure with them they have said I can afford around £250pm, I’m currently paying £1,000+ pm to my debts from a income of roughly £2,200pm.
My concern is surrounding my job, I’m in the security industry and I believe bankruptcy is a big no no, I think a DMP would take me around 10 years to complete so I feel an IVA is best suited to help me, I don’t own my own home I rent, the landlord has given me assurances the property is mine for life to rent, my job feels secure for the next five years with the likelihood of progressing up a genuine reality, is an IVA what you’d recommend? What main issues should I be aware of other then my credit score being ruined that will affect me?
Thanks,
Sara (Debt Camel) says
What did StepChange recommend? And how much do they say you will be able to afford each month?
I’m in the security industry and I believe bankruptcy is a big no no
Are you sure?
Are you sure it is any different from an IVA?
So far as I know SIA registration is a check on criminal offences, not any form of financial check. The SIA only checks your details with Experian to confirm name and address, see https://www.gov.uk/government/publications/sia-privacy-policy/sia-privacy-policy.
Many security industry employers screen to BS7858 standards. This requires 5 years of address and work history along with a credit checkAfter you have started work there is a requirement to disclose any CCJs or insolvency arrangements. Those insolvency arrangements would include both bankruptcy and an IVA.
If your employer made this check on you at the start, you would have to inform them about bankruptcy or an IVA. If you change jobs a new employer making this check would see bankruptcy or an IVA on your credit record.
Katie says
I was wondering if you could advise me with some IVA help. I entered into an Iva in November 2018 with a debt total of £6066. One of my creditors (provident) contacted me in 2022 to let me know that they have become bankrupt in December 2021 and they are closing my account and I would not have to make any repayments to them and they will be wiping it off my credit file. This creditor I owed a total of £1400. However I have contacted my IVA to inform them of this and they said I still have to continue to pay my IVA, which I understand but surely the creditor who has closed my account and taken themselves off my credit file surely would be taken off my total repayments towards creditors? The IVA company has kept this creditor and the total amount owed to them on my client portal and my total amount owed still includes this creditor. This creditor has taken themselfs off my credit file. I have emailed my IVA again and they have not responded to my email enquiry.
Sara (Debt Camel) says
Do you know how much you have paid into the IVA so far? Are your current payments affordable? Have there been any breaks or will it end this November?
Katie says
I have currently paid £5055, I’ve had two months of payment breaks back in 2019, bringing my final date now until Feb 2024. My current payments was affordable until the cost of living crisis, with the cost of food and energy prices going up it doesn’t give me much disposable income at all!
Sara (Debt Camel) says
ok so this debt should be removed from your IVA, but it will make no difference to you – it will just mean that your other creditors get paid a bit more.
If it’s hard to make the current repayments, you can ask for them to be reduced, see https://debtcamel.co.uk/help-ivas-cost-of-living/
Natasha says
Good morning! I am currently on IVA. My admitted debt was on £5172 and I was told a lot of it will be written off and that this is my best option. I was in really bad place mentally, which now I am being finally diagnosed with mental health condition and I do have an explanation for bad financial decision in the past and debts. As I was completely devastated at the time and just wanted some piece I agreed to an IVA, as I was told about debt being written off by government and that this the best and my only option, I did not question it.
I now started to realise to I could be mis sold IVA. My debt was £5172, I will be paying almost £9000 towards IVA over 5 years. Do you think it is reasonable to complain? Also, there was a debt added under my name, which is not mine. They added £2046 to my name, I complained, but all I am getting back from them is “we do not pay any contributions towards this creditor”.
What would be your advice? I am really stressed and not sure what to do and what are my rights.
Sara (Debt Camel) says
how long ago was this IVA started?
are you renting or buying?
do you have any assets such as a car worth over 2k?
Natasha says
IVA is from 2020.
I am private tenant.
I do not have any assets, in fact every month I am struggling financially.
Sara (Debt Camel) says
How much are you paying a month? has this been increased during the IVA?
are you struggling because bills, food etc have increased?
Natasha says
Thank you for everything so far.
I started with £90 in 2020 and now paying £168.
I am paying £168 a month, however due to my current diagnosis I am seeing psychiatrist privately and pay for medicine and prescription. That is £300+ monthly.
Also, cost of living went up – rent, food.
The yearly statement that I received from them 02/2023 says that my total debts/creditors are £7872.33, but that includes barclaycard which is not mine! If I delete the debt from Barclays card the amount is 5826.33. Fees for IVA are almost £4000.
Main problem that I have is Barclaycard debt added under my agreement which is not mine. I complained to IP they said “we do not pay any contributions towards them. There is no mention of barclaycard anywhere in my credit reports and I never ever had anything to do with Barclays. I contacted barclaycard and asked them to issue me with a document that says that this debt is not mine (awaiting reply).
From what it looks like none of my debt will be written off at the end of my IVA, that’s why I am thinking I could be mis sold IVA and there could be better solutions for me.
I am not sure what are my rights in this situation and if there is anything that can be done right now.
Sara (Debt Camel) says
So if you can get confirmation from Barclaycard that you do not owe them any money, that debt should be removed.
Is the £168 a month affordable at the moment?
You may well have had a better debt option at the start of the IVA. But there is no easy route to claim mis-selling. So the question is if you have any better options at the moment as this IVA has only 2 years to run. Do you have other debts now that are not in your IVA? are you behind with any bills?
And your IVA company will probably not take into account the £300 a month for provate medical bills and costs.
Nick says
I was shocked to learn that having an undeclared IVA can void your home insurance. Perhaps this needs to be highlighted?
Sara (Debt Camel) says
That does sound like a shocking case. I hope the man took his complaint to the Financial Ombudsman. It isn’t clear to me why being in an IVA (or any other form of insolvency) has any relevance to an insurance contract
Chris says
I about to do an IVA, I live with my and son 21 and daughter 16 and wife. I have no financial ties with my wife and I’m not on the mortgage, she has financially disassociated me.
The company I have chosen is The Advice Centre Group, they told me to say that I am living in a house share, I am worried about this, could this be setting me up to fail down the line, I do a job. That requires a DBS check not financial, I worried by lying it could be fraud and I’d get a criminal record.
My debts are £14000 high interest loans and credit cards, with the usual Capitlal One, Vanquis etc.
I have a car on HP £25000 (£5000 is interest) now £18000, I need the car for work as it’s in my contract, this has been added so that it’s protected, and that I will need to change in month 44.
My creditors meeting is next week, do you think this is the correct decision?
I also have a phone bill of £300 a month that will drop to £80 in 6 months, this is not on my IVA debts list as I still require this, I have chosen to come out of my pension contributions for 6months to pay for this, do I need to inform the IVA company?
Sara (Debt Camel) says
I would say run a mile from any IVA firm that advised you to give a misleading description of your circumstances. Tell the IVA firm you do not wish to proceed.
Talk to StepChange instead – they can do an IVA if one is suitable but they will also talk about your other options.
One option is a DMP where interest will be frozen and there you can also look at making affordability claims- winning any will really speed up the DMP.
What happens when your car finance ends – will you own the car or is there a balloon payment? What does the IVA firm say you will have to do then?
Chris says
It’s a HP, they say I can refinance in month 44. I will own the car.
Sara (Debt Camel) says
So is there a final payment to make in month 44?
If not what will you need to refinance?
Refinancing in an IVA can only be down at a horrible interest rate eg 40%. IVA firms don’t tell you that…
Chris says
No car will be paid in full, I would like a new car but will wait until month 60. But they said I can get a new car in 44 because it’s a requirement for my job.
Sara (Debt Camel) says
You will not be able to get a new car on finance at a half way reasonable rate until the IVA is off your record. Is this essential for your job?
Chris says
Hi yes it’s essential for my job, I have spoken to my wife and she’s going to get me out of this mess, she has a good job with lots of disposable income. I’m going to phone the IVA company this morning to cancel as it has a 14 day cooing off period and also I’ve not had the creditors meeting yet. Do tin think they’ll try an pull a fast one. Maybe charge me fees?
Sara (Debt Camel) says
They shouldn’t. If customer services say you can’t pull out now, you need to send a very strongly worded complaint to the Insolvency Practitioner Adam Southard, email adam@advicecentregroup.co.uk
Chris says
I sent this complaint to Adam last night after finding his email address, he has apologised and cancelled the IVA, thank god! He said that he is investigating this and calls are being listened to.
I am in Debt but never missed a payment, I’ve managed to free up some money and now have £500 disposable income a month, I will start to use the snowball method and clear the credit cards. I will still have full control of my finances and I can now sleep at night, and feel a weight has been lifted.
It’s frightening how quickly you can make the wrong decision when feeling overwhelmed, instead of taking a step back and assessing things, I went from being overwhelmed asking for loan but coming out with an IVA, going from overwhelmed to no sleep, walking out of work and tearing up at every thought of the IVA.
I am relieved and can now sleep at night. Thank you for answering my posts, I do appreciate it.
Sara (Debt Camel) says
I hope this goes well for you. Your instincts were good that you were being rushed into an IVA that wasn’t right. If you do need debt help, in future, take it slowly and go to a reputable advice agency such as a local advice agency or National Debtline.
Tom says
I am currently 6 months away from paying off my 5 year IVA with CreditFix. There have been no missed payments, no issues from either side and all has been fine so far.
However, I have received a letter today saying that I am to use my house equity to pay off the final payment (this is in the contract, but I felt it was sold to me as a more voluntary solution when I signed up on the phone).
I live with my partner in a house which has easily more than £5000 equity so its likely the mortgage company will probably approve it.
The IVA is solely in my name and not my partners and she is not fully aware of it as I took it out privately.
1- I am worried that I am going to be forced into re-mortgaging the house against my partners will. If it can’t be re-mortgaged (because she refuses when finding out), then is it as simple as Creditfix just adding the 6th year on for me? or will there be other repercussions?
2- Will re-mortgaging mean a new mortgage contract created for us both- therefore changing our current fixed Mortgage payments and introducing new higher ones (we signed our mortgage deal just before the cost of living/rates went sky high)
3- I don’t understand why I have to re-mortgage the properties equity for tens of thousands of pounds (85% of it) when I only have £1900 left on the IVA plus £3000 fee’s (Creditfix have stated the final cost will be around £5000)
If you have any advice for me, that would be amazing. Many thanks
Tom
Sara (Debt Camel) says
So your partner didnt sign an RX1 form at the start of your IVA?
How much equity is there – as your partner owns half of it, not you. Her half cannot be touched.
I only have £1900 left on the IVA
do you mean the last 6 months payments add up to 1900? So you are paying about 300 a month?
Your mortgage – what rate are you currently paying and when does your fix end?
Is your house shared ownership, where you also pay rent? Or a Help To Buy? Either of these are special cases.
Tom says
Hi
– No, my partner had zero involvement with the IVA. No signatures etc. But I did have to give her name when I joined the IVA as its a joint mortgage and they said it was mandatory.
We have ‘around’ £100,000 in equity. Currently owe £120,000. House is worth about £220,000 (possibly more).
– I have been told today that if I want to pay one final lump sum, it’s- 8 X £238 (=1904). A Further £2856 to pay (1 extra year added) and a £300 charge for early payment fees.
-I can’t find paperwork RE fixed mortgage rate however it ends in 2026. It’s comfortable for us but I’m worried that releasing equity will mean a new contract and they will put it up by hundreds which would be unaffordable and could be disastrous for us both.
– just a joint owned home. My partner pays mortgage with her money and I pay for bills.
But we are both named.
Sara (Debt Camel) says
How large were the debts that went into your IVA?
When does your mortgage and how old are you? How much is your current mortgage payment?
Tom says
Total debt going into IVA was £18’000 although I questioned it at time as they literally lumped every single thing they could find in my account, into it. Unfortunately I was to unconfident/inexperienced with it all to argue. They said they wouldn’t be able to pass/allow the IVA otherwise so I went with it. I was told bankruptcy would be the next option and that would be terrible (made it sound very doom and gloom).
I have just turned 40, same with my partner.
Mortgage ends around 2050 (can’t remember if it’s 25 or 30 year mortgage as not currently able to access paperwork (not at home today)
We pay £650 per month for mortgage. My partners money pays into the house account ( for the mortgage and some bills) and I pay £300 into the same account to help to. I’ll add more if I have it spare.
If freeing up equity means a new mortgage contract in today’s current price market, I’m worried we’ll be hit with an £800/£900 per month payment rather than our £650. This would render us unable to stay. The house is old as well so needs a lot of maintenance (roofing, windows, doors, drainage etc) so would not be a good timefor us. ( I could be snowballing with the worry though )
Tom
Tom says
Just to add to previous message – I’ve now been told that I have an appointment this week with a mortgage broker to check equity and they have the legal right to contact my partner to ask her to agree to release equity. They’ve said if she refuses then it’s a ‘break of the contract’ and that will be very bad for me. I’ve explained its still nothing to do with my partner so surely it can’t be a ‘break of contract’ but they are saying because I stated we live together, then she’s now involved which I don’t like.
tom says
Have just finished having a lengthy discussion with the credit company / Broker who have said that i MUST continue forward with the equity release attempt, and this means that they MUST have my partners bank details, income, payslips, her house contributions and she MUST agree to the release of equity in the house otherwise its a break of my contract and i will end up in a really bad position. They have said This could lead to forced bankruptcy etc.
The outcome is we BOTH have to agree to release equity in the house which means we would be on a ‘2nd charge mortgage’ and based on what i owe, it would be – Paying our current mortgage of £650 per month and another £120 for the 2nd mortgage in the background provided by another lender which we had no choice in. But this £120 2nd mortgage payment will potentially be for the rest of my 25 year term on the house or until my retirement, which works out at around £35,000 in total! I only owe £5000. He also stated that even if i found a lump sum payment, they still have to go through the equity process and could still fail my IVA as could refuse the lump sum.
I was told categorically on the phone that my partner would not have to be involved at any stage. I also noticed on my assessments that it says the person who originally set up this IVA with me has been replaced by court order by another team leader, so that doesn’t sound right??
Sara (Debt Camel) says
“I only owe £5000.”
That is the remaining payments on your IVA. That is not “what you pwe” – that it the total of the debts that went into the IVA plus the IVA firms fees.
You can object to the IVA firm saying you were never told that your partner would have to agree to release equity and if you had been told the IVA would not have been taken taken out as she won’t agree. Point out she has never been asked to sign an RX1 form.
However at the same time I suggest you marshall your arguments that because of the increasing mortgage rates, you and your partner will be in difficulty when the current mortgage fix ends and that no secured loan should be given now as this would be unaffordable when your mortgage fix ends. to do this you need to find out what the current interest rate is on the mortgage.
Also is the broker Select? If you feel they have been unhelpful, rude or threatening, I suggest you should also complain to the IVA firm about that.
And if someone in the family could raise the money to settled the IVA now, including a 6th year, this would be a very good time to tell the IVA firm this.
Tom says
Hi
Creditfix say i went in with £18,000. I have £1904 left on the contribution payments. £2856 left of fees to them. They say if its paid by another person (a gift) in one lump sum early then it’ll have £300 added on so its £5060 in total.
That would be the debt paid off with no more IVA or creditors contact, from what i understand??
Unfortunately, the select partnership are saying i still have to go through with the equity release check / attempt as its in the clause and the creditors may still refuse to take a lump sum gift, which sounds mad.
Sara (Debt Camel) says
Do you have someone that can offer this settlement amount?
Have you told Select that you think any equity release will be unaffordable when your current mortgage fix ends?
Tom says
Hi
have just spoken with them again and due to having lots of equity in the house they’ve said its a ‘must’ that equity is released. They wont accept the lump sum early payout ( i could get the full £5060 gifted to me) They want the equity as its in their contract. (Of which there is no signature as was done online and have added my partners name onto the RX11 which i didn’t pick up on until last week)
I explained a 2nd charge mortgage potentially being unaffordable in the future and its ridiculous to be potentially forced into a decade+ long new loan with the 2nd mortgage company but they just keep saying ‘its terms & conditions of IVA’
Im meeting with the Select partnership tomorrow as they need to go ahead with their stuff so i think im trapped a bit.
Sara (Debt Camel) says
Have you found out what the current mortgage rate is? And how much more the mortgage will cost you if you have to remortgage at 4%, 4.5% or 5% when your fix ends?
Select cannot offer you a remortgage if it appears unlikely that you will be unable to afford it in the next few years. Whatever your IVA contract says, that does not absolve them from the need to be sure the secured loan is affordable for you.
Kulvinder says
Hi, if I go ahead with an IVA and after the 5 years I am asked to release equity in my home by remortgaging, what happens if my ex doesnt agree to remortgaging? will I then carry on paying the IVA for another year making it 6 years?
Thanks
Sara (Debt Camel) says
You need to tell the IVA firm now that your ex will not agree to release equity so the IVA can be set up as 6 years with no requirement to release equity or extend. Otherwise you may be in breach of the IVA and it may fail in 5 years time. Face this problem now, don’t try to put it off hoping it will be OK
Dan says
I feel I am being pushed into an IVA because Im being told a DMP would take more than 10 years. But the lack of flexibility scares me even though I hope things will get better, we don’t want to put off having children. Halving the time to get out of debt does sound good, I just don’t want to make the wrong decision
Sara (Debt Camel) says
This is often a hard choice, see https://debtcamel.co.uk/hard-choices/iva-dmp/
There are ways a DMP can be speeded up for some people.
– you should NOT agree to any DMP where fees are charged – go to StepChange instead then all your monthly payments go to your creditors.
– read up about affordability complaints, see https://debtcamel.co.uk/tag/refunds/. Winning some can really speed up a DMP as there is less debt to be repaid. But in an IVA, this doesn’t mean you pay less or the IVA ends sooner
– if you situation improves in a couple of years, in an IVA you pay more. Ina DMP you may be able to use some of the extra mony to make settlement offers so the DMP finishes sooner.
Wanting to start a family is often not possible in an IVA. In a DMP, it may mean reduced payments and it will take longer.
Stephanie says
I’ve been in an IVA now for 5 year – they extended my IVA until March because I’d had some commission at work. My personal circumstances changed and I have lived alone with my 6 year old since January – I am in minus figures most months and my ex has to to step in. I can’t rent a cheaper property because I’m in an IVA – I have found some letting agents but they won’t let to me until the IVA is ‘satisfied’ – I have a car on finance (extortionate rates as the only company that would lend to me in an IVA – with my IP’s permission) – I had to buy a car as we returned to office based work after Covid.
in light of the fact that I’m struggling – had to cancel my electric and gas this month and that I’ve made 60 payments already, how likely is it I can get the IVA ended now? How can I approach this with them? I’m trapped in a house I can’t afford now and my ex partner has told me this additional financial help can’t continue from him past Xmas.
Sara (Debt Camel) says
What is the car finance rate?
Is your ex paying child maintenance? Have you checked if you are eligible for any benefits?
How large were your debts going into the IVA and what are you paying a month?
Stephanie says
My ex has my child half of the time and because he’s bailing me out every month there is no set figure – he’s been paying at least half my rent!
I get £115 per month from UC – this is really to help with the cost of before and after school club to enable me to work when I’ve got him.
My debt was around 37k when entering and I’ve paid back £11,200
The car finance is with Moneybarn and i believe it’s around 30% – They were the only ones that would help and I had to get permission from Payplan
thanks
Sara (Debt Camel) says
I think you should ask Payplan for your IVA to be completed “on the basis of funds paid to date”. Say you are getting into arrears with energy bills and your ex can no longer afford to help you out.
Ask to be allowed to stop payments now to prevent priority debt problems.
Let me know if you have a problem.
Col says
Hi Sara, my ex whom i have a joint mortgage with has applied for a iva without notifying me, ive just recieved an email asking me to sign a RX1 that she has already signed, my question is if i refuse to sign will she still be able to go ahead with the iva? Many thanks, Col
Sara (Debt Camel) says
What are your plans for the house? And when does the mortgage fix end?
You should Not assume that an IVA is a good option for her…. Let alone you. Read the section in the article above on the problems that occur in IVAs – many IVA firms don’t mention or say it can all be sorted… that isn’t good enough.
Col Roberts says
Hi thanks for your reply, well this is why i dont want to sign the rx1 because the plan was for her to remortgage and get my name off asap as her Dad is paying me my share of the equity himself but i know that with an iva she wont be able to remortgage for 6 yrs so my name will be attached to her and the house for 6 yrs also, so if i refuse to sign the rx1 will that block the iva? Thanks
Sara (Debt Camel) says
You are right that she won’t be able to remortgage in an IVA.
There is no reason why you should Sign the RX1 form. I suggest you tell the IVA firm in writing (and ask them to acknowledge in writing that they have received this) that you will not sign it and will not agree to any equity release in the last year of the IVA.
Whether an IVA firm is prepared to agree to an IVA knowing there will not be any equity release at the end depends on them – and on her debts and how much she can pay each month.
You could do her a favour by suggesting that she takes good debt advice from National Debtline on 0808 808 4000 as her IVA firm may be mainly interested in its fees and not considered her best interests.
Col Roberts says
Great, that is what i will do, thank you. I dont suppose you have any idea how it will effect my chances of getting a mortgage in a couple yrs time whilst still being attached to her mortgage?
Sara (Debt Camel) says
It will make it extremely difficult. Because the lender you will apply to will take 8nto consideration that you are liable to pay the other mortgage as well
Derek says
Hi Sara,
I have just done a DMP review with PayPlan on debts of £29k and this has meant our monthly payment would be £110 and it would take 45 years to pay off. PayPlan are pushing for me to enter a F&F IVA using £6,500 cash which would be donated by my son &daughter. However Tesco have recently rejected an F&F offer for an amount higher than they would receive under this.
Question: Is there any point at all in attempting an F&F IVA given that the largest creditor (35%) has already rejected a higher offer than what they would receive? PP seem to think that this doesn’t matter, which makes no sense to me. I’m very confused as to what a F&F IVA actually does regarding exposure to additional payments – how does it affect assets etc going forward and should I not wait to see whether the other debts are enforceable anyway (CCAs have been requested)?
Sara (Debt Camel) says
How long has your DMP been running? What is your current IVA payment?
How many CCAs have you asked for and what do those debts total?
How large is this Tesco debt?
Are you buying or renting?
Derek says
Hi Sara,
Apologies for my lack of response – I missed your super fast reply!
DMP has been running 18 months. Originally £35k but two accepted F&Fs have now reduced it to £26k, I have £5,800 remaining for a F&F IVA. I am 61 and mortgaged – fixed rate 1.5% until Aug26, £575pcm, hence low surplus for unsecured debts.
Debts are £3k Overdraft, £10,300 TESCO CC, £3k Sainsbury’s CC (both CCA provided),
£5k PRA/Barclaycard, £3k Santander CC (CCAs not provided).
I am classed as vulnerable due to two breakdowns in last 7 years and high antidepressant subscription. I also have Aspergers but work as a software programmer which helps keep stress low (but pays much less than I earned pre-breakdown).
Following insistance from National Debtline I have made a Formal Complaint to TESCO. Despite knowing my background they failed to acknowledge or respond to my F&F for 4 months, finally responding to a third Party (Payplan) on the following day after the third occasion I chased them. ND don’t feel that they have properly considered the offer I made (23%). Not sure how this affects things but TESCO Bank now hold 40% of my debt.
PayPlan say that I can go straight to a F&F IVA – is this so? Is it sensible? What are the pros and cons? Is there any point at all doing this before I have a response on the Formal Complaint?
Many thanks
D
Sara (Debt Camel) says
“fixed rate 1.5% until Aug26, £575pcm, hence low surplus for unsecured debts.”
This is the really worrying bit.
who is your mortgage lender? is your mortgage interest only or repayment? how ling until it finishes?
what are your pension provisions like?
“£5k PRA/Barclaycard, £3k Santander CC (CCAs not provided)”
have you told Payplan to remove these from the DMP?