In 2024 the Debt Relief Order (DRO) rules have been relaxed so a lot more people qualify. For example, the maximum limit of debts in a DRO has now been increased to £50,000 and you can also own a car worth up to £4,000.
Will you now qualify for a DRO? If you are in an IVA, you are renting and your IVA payments are less than about £120 a month, you may be much better off switching from an IVA to a DRO.
In 2024 many people are struggling with their IVA payments because of the cost of living. The option of failing your IVA and having a DRO instead can be very useful. Especially ifyou are early in your IVA and you are not sure you will be able to get to the end.
Contents
Why a DRO is better than an IVA
If you qualify for a DRO, it will be better than your IVA in three ways:
- You don’t have to make any monthly payments in a DRO.
- A DRO only lasts for a year – at the end of twelve months, your debts are written off. So if your IVA has years to go, a DRO will clear your debts more quickly.
- DROs very rarely fail – only about 1% go wrong. A lot of IVAs fail, possibly more than 20%, when people can no longer manage to make the monthly payments.
So a DRO is cheaper, shorter and less risky than an IVA.
When you started the IVA it probably felt like the answer to all your money problems. But if you don’t think you can get to the end of your IVA, it’s better to face up to this now, not try to postpone the decision.
You aren’t alone in this situation, debt advisers are seeing more people wanting help with an IVA they can no longer afford. Often nothing can be done to rescue a failing IVA.
Your IVA may have been sensible when it was started, but a change in circumstances (pay drop? new baby? separation? cost of living increases?) may now be make it hard to afford the payments.
Perhaps a DRO would always have been better than an IVA for you but no-one explained this at the start. Or a DRO may now be right for you because of the change to the rules in 2024.
Cost of living increases mean many IVAs are now unaffordable
Increased food, energy, and other prices mean that in 2024 many IVAs that were previously manageable have become unaffordable.
In June 2022, new guidance was issued by the Insolvency Service – see Help with IVAs if you can’t pay because of the cost of living where I look at the new guidance and the options it now gives you.
In trying to reach an agreement with your IVA firm about this, it will help a lot if you know whether you will qualify for a DRO. If you do qualify for a DRO, one option is to fail the IVA and now get a DRO. But another option is to ask your IVA firm to propose to your creditors that your IVA is completed “on the basis of funds paid to date”. This would then all be over quicker for you than failing an IVA and then having a DRO.
Find out if you qualify for a DRO
As you are thinking about a major change, you must make sure you would qualify for a DRO, not just assume that you will.
Unlike the other main debt solutions (debt management, bankruptcy, IVA) there are some very specific checks that you have to pass to qualify for a DRO. The main ones are:
- your debts have to come to less than £50,000;
- you can’t own a property. This is a strict rule – it doesn’t matter if there is negative equity, if you don’t live there, if it can’t be sold… it will still stop you qualifying for a DRO;
- a car you own must be worth less than £4,000;
- you can’t have had a previous DRO within the last six years;
- you have little spare income (under £75) each month after all your expenses.
The “under £75” spare income is the hardest for you to assess.
Your IVA firm may have said you can afford to pay £95 a month to the IVA – that sounds as though it is more than the £75 maximum allowed for a DRO… but the DRO calculations are different, you may be allowed more money for some expenses than your IVA firm permitted.
As a rule of thumb I would say that many people paying £100 a month to an IVA may qualify for a DRO now. And some people paying more, say £120, may qualify.
If your only income is from benefits then you will always qualify for a DRO (providing you meet the other criteria, eg your debts are under the maximum limit). This is even if you get a lot of disability benefits, because a DRO allows for your extra disability costs.
The best thing to do is to talk to an adviser who can look in detail and say if you can have a DRO. I suggest you call National Debtline on 0808 808 4000.
The answer may be that you don’t qualify for a DRO, but you may have other options the adviser can help you consider. If your IVA is unaffordable but your debts are too large, bankruptcy may be a better choice. A debt management plan usually isn’t – even if would have been better at the start, now you have the IVA on your credit record it is usually best to carry on with it.
Is switching to a DRO a good idea?
If you are told you will be able to get a DRO, you need to decide if it is a good idea to end your IVA and start a DRO.
This mainly depends on how far you are through your IVA.
If you are early in your IVA
If you are having problems in the first half of your IVA you may never get to the end of it, so taking action now is a good idea.
A DRO will be all over in a year and you don’t have to make any payments in that year at all.
The only downside is that the DRO will be on your credit record for six years, but that’s usually pretty minor as your credit record is already very poor because of the IVA.
If you are in the second half of your IVA
When you are over half way through your IVA, a DRO may still be your best move but look at other options first and talk to your IVA firm about these. Tell your IVA firm that you have looked into a DRO and you would qualify for one but you want to know what your alternatives are.
Two possible options to discuss with your IVA firm are:
- reducing your payments to an affordable level. Your IVA firm will be able to reduce them by 15%. If a larger cut is needed, your creditors would be asked to approve this;
- finishing your IVA on a “funds paid to date” basis. This is completing your IVA so your debts are wiped out, not failing your IVA. It would mean you don’t have to pay any more. The further you are through your IVA the more likely this is to be approved – in your last year this should definitely be tried first, rather than failing the IVA and starting a DRO!
You should be wary of your IVA firm proposing things that will mean your IVA goes on for even longer. For example they may say they will accept lower payment if you add an extra year on. Sometimes a payment break of 6 months can work well, but is it likely your situation will have improved at the end of it? The longer your IVA will continue for, the more attractive the idea of stopping it and getting a DRO is.
Also be careful about a reduction in payments – lower will obviously be better, but will you still be struggling? Don’t think lower must be affordable, think how long your IVA will go on for and whether you are likely to get to the end.
How do you change to a DRO?
There isn’t a simple way to switch over. Your IVA needs to fail first, so you have to stop paying. Tell your IVA firm that you are stopping making your IVA payments and that you want the IVA to fail as soon as possible.
Don’t worry that you will get hassled by your creditors when you stop paying the IVA firm. They can’t do this until the IVA has terminated.
It will take a few months to fail your IVA. During this time your debt adviser can get your DRO application prepared so it can go in quickly after your IVA is formally marked as failed.
What happens when an IVA fails?
What happens if you can’t afford your IVA?
Inflation? Get lower IVA payments
Gracie Oddy says
Hi Sara,
Your page is a welcome sight for sore eyes.
I have been in my IVA for 2 years and have a further 4 remaining. I have been told i could be eligible for a DRO now as my owed amount has dropped under £20k.
Would you advise to just continue in the IVA?
I am just concerned as I really want to move on with my life now and buy my first house etc and with this hanging over my head it is impossible.
Also, the IVA my term was for 6 years, does this stay on your credit file 6 years from the finish date or from the start date?
Thanks
Gracie
Sara (Debt Camel) says
You might find this useful: https://debtcamel.co.uk/end-iva-change-to-dro/.
How much are you paying a month to your IVA? Why is it for 6 years, not 5? How much were your debts at the start, because they don’t usually fall much in the first couple of years.
Has anything big changed in your life that you are now thinking of moving on and buying a house?
Gracie Oddy says
Hi Sara,
I’ll have a look at this article now. I’m just getting to the stage now where i’m 30 with 2 children and would like to be putting my money into a house thats mine instead of a rental.
My IVA is £130 started feb 2015 and has gone up every year it started at £100 a month. My debtors wouldn’t agree to 5 years it had to be 6.
Thanks
Gracie
Sara (Debt Camel) says
It is a pity you didn’t choose to go bankrupt rather than an IVA two years ago
You could talk to a debt advisor such as National Debtline 0808 808 4000 about whether you would qualify for a DRO, but on the figures you have given it sounds as though you may not :(
Zara says
I have an IVA which is currently suspended as i lost my job, i had my IVA for 1-1.5 years when this happened. I start a job soon (role is initially for 1 year with a POSSIBILITY of extension). I spoke to the Insolvency company & they suggested i consider an DRO but i am concerned as i know some employers can refuse job applications or i might end up losing the job i have been offered recently. Is a DRO worse than an IVA from an employers perspective? Also, i had to go to Court when i had the IVA to have my address details removed, would i need to go through the Court again if i take out a DRO. The judge may not necessarily agree to remove my address (even the judge who dealt with my case was initially reluctant to do this) as although my request for this was due to domestic abuse, the abuse happened 13 years ago but the perpetrator doesn’t know where i live & i want it to remain that way.
Sara (Debt Camel) says
If you could be more specific about the job you have been offered, that could help.
If your IVA company is suggesting a DRO, then you should take this very seriously. They wouldn’t be saying this if they thought you had a reasonable chance of completing your IVA.
In DROs addresses can be withheld. I would hope there wouldn’t be an issue with this as you have already had this accepted for your IVA.
Zara says
My job will be working in the civil service. It doesn’t involve handling money so I was surprised there were so many questions regarding insolvency/bankruptcy when they were carrying out pre-employmnt checks which i passed.
Would i need to go to Court again if i took out a DRO in order to have my address removed or will this be done automatically? Also, as i wasn’t made aware by the IVA company at the time that my address would be on the insolvency register, they paid the fee to hire a solicitor so i didn’t incur any cost, I have no idea how much this would be, I know the DRO itself would cost me £90. The judge took some convincing before authorising the removal of my address. I really don’t want to go through the process of going through the Court again.
Sara (Debt Camel) says
I think it would be good for you to go to your local Citizens Advice and they can help you look at your options. I think you do have to go to court again to get address withheld in a DRO.
But a couple of other alternatives… have you looked at changing your name? Normally this is a pretty drastic step to take, but if you are still really concerned after 13 years, I wonder if this would help? Your name is pretty unusual, which doesn’t help. But in this digital age, it’s hard to be sure nothing will ever appear on the internet that can identify you, so perhaps a name change would be worth it.
Also, I think it would be good first to get an expert to confirm that you would be eligible for a DRO now. And then to consider if you were actually eligible for a DRO when your IVA started. Because if you were, then you could reasonably ask your IVA firm to not fail your IVA but ask your creditors to treat your IVA as completed. Many IVA firms would be reluctant to do this, but yours may.
Zara says
Ok, thanks, i will speak to the IVA company & see what they say.
Christopher says
Dear sir I got a 5000 pound debt I pay 80 pound a month for 5year I only had income state pension and private and housing benefit total income 960 a month . I just revive Irish state pension of 700 pound a month .now of course I stop getting housing benefit and I have to pay tax now about 100..so it it better for me to leave iva or stay
Sara (Debt Camel) says
How long has your IVA been running for?
Chris says
It’s been running for 14 months.
Sara (Debt Camel) says
In that case I suggest you talk to a debt adviser who sets up DROs to see if you can/should switch.
Andy says
Hello,
I have been in an IVA for six months. I think I was badly advised or naïve. I currently pay £120 a month. The IVA is for 6 years.
Since going into the IVA I have moved (private rented property) to be with my partner. None of the debts are hers.
Due to moving etc my outgoings have gone up, partly as I pay most of the household bills as my partner is on a low wage. I also drive over an hour to work – around £15 a day in fuel. This really mounts up over a month. My car is 14 year old, and according to Autotrader is worth around £1100.
Do you think I should look in to a DRO ?
Many thanks
Sara (Debt Camel) says
I think this is worth looking into. As the article says, talk to National Debtline or Citizens advice to be sure you would qualify for a DRO. That sounds a lot for a 14 year old car with probably a lot of mileage?
Andy says
Thanks for your reply.
I have emailed my local CAB and I`m awaiting them getting back to me.
As for the car, that’s the price quoted on Autotrader for “good” condition. However there are many similar cars ie same make/model on their website for under £1000. Its a Mini, and they hold their price quite well.
Sara (Debt Camel) says
Its normal to use the poor condition prices in these circumstances …
Andy says
Ok, thanks.
Dave says
I am looking at going for a DRO but I`m currently 6 months into an IVA.
Will the fees from a failed IVA be added to my overall debt ?
Sara (Debt Camel) says
Probably, but how close are you to the £20k limit? If it’s not close, this may not matter. Have you spoken to a debt adviser to check you meet the DRO criteria? That is the first thing you should do.
Natalia says
Hello,
Im on IVA since Sept 2013 for 6 yrs and it started with £180 and increased in a few months to £193.Since Feb this year I suspended my payments for 3 month with IVA agreement now it seems that I cannot carry on with payments now at all due to decrease in housing benefits and general life cost increase. What is the best option for me in such circumstances ? Can creditors treat me as completed IVA? Never failed my payments for 4 yrs and 4 months.Thank You!
Natalia
Sara (Debt Camel) says
Why was your IVA for 6 years at the start? How large were your debts?
Georgiana says
Hi,
I have my appointment to sign my DRO on 20th July.
I have been for the past 13 months on an IVA agreement, which I used to pay £100p/m. I have asked further support from a local charity, had few meetings with them and evidence was collected reaching the outcome that I am currently entitled to apply for a DRO.The overall expenditure was exceeding the Income by £150
I have sent emails of request of Termination of Contract to the IVA company, called them and still no answer back from them.( will chase them up again tomorrow, as I have been requested to have the certificate on the meeting agreed on the 20th of July.
A new job was advertised at my work place which comes with a salary increase of £4000. The likelihood of getting this job is high however, it will be conditional with additional travel expense, further private tuition which I will need to pay for.
A bit confused on best course of action and I feel reluctant to contact the charity as the person that deals with my case is on her Annual Leave and to be honest, embarrassed of keep asking questions.
Can I kindly ask for your advise further.
Many thanks,
Georgiana
Sara (Debt Camel) says
I’m sorry but you do need to talk to the person setting up your DRO about whether you should apply for this job.
Rachael says
Hi,
I have an IVA which I have recently been struggling to pay. Payplan who are managing my debts have suggested I try for a DRO. This sounds like a better way for me to go but I was wondering if Payplan will be able to get information from the DVLA about me? My daughter was receiving PIP and bought a car with this money. As she hasn’t got her licence yet, it was put in my name and she pays the insurance. Can they find out about this car and then force me to sell it, even though my daughter paid for it and has the bank statement to prove this?
Thank you
Sara (Debt Camel) says
The car doesn’t sound like a problem to me. You are not the beneficial owner of the car if your daughter can show she bought it.
Are Payplan offering to do the DRO for you? They do have some people approved to set up DROs. If you talk to one of them they should be able to confirm this.
Angela Belshaw says
Hi
I have been paying an IVA for three years. I cancelled my direct debit last month as they were looking double the amount because I was awarded PIPS.
I went to CAB and was told I shouldn’t have been paying IVA as my debts were £10.000, I am in rental property and my car just worth £500. Maybe DRO would have been better for me.
I wrote to my IVA to explain that I was not willing to pay the increased amount and as year they have not replied.
It will be now 2mths from I cancelled my DD. I really don’t know what to do as I feel the DRO is my best option, but also seems a waste that I have been paying IVA £85 per month for. The last 3 years.
Any help/advice would be much appreciated. Thank you
K J says
Hi I have been in my IVA for 2 years i was asked ro pa7 84.00 a month based on my wages. I now earn around 1800 after tax but my previous years payslips show an extra 600 a month to pay for fuel and travelntime so Im not really getting this just reemburising what I was paying out. Now I am due my renewal year and they Re stating that I need to pay 400 a month based on my wages. I DONThave 400 a month regardless of what it states. Help do I apply for. Dro or do I bite the bullett and go bankrupt
Sara (Debt Camel) says
it sounds as though your IVA firm is being unreasonable – it isn’t “overtime” if you are paying for fuel. Though being paid for travel time probably is.
I don’t know if you qualify for a DRO now – i suggest you contact National Debtline on 0808 808 4000 and say you can’t manage the IVA and ask if they think you could have a DRO – until you know the answer to that you can’t decide what to do.
Kimberley Hutchinson says
Hi I’m currently on an Iva with step change been on it for 1 year in September this year. I am currently looking for part time work, if I’m successful in my job hunt, I would be earning an extra £600 a month but I would be paying extra in fuel and need to pay rent of £350 a month as no help with housing costs would my Iva agree to this. Thanks Kimberley
Sara (Debt Camel) says
You are in an IVA at the moment but not working? You mention rent, so I assume you don’t have a mortgage. Was their a reason you chose an IVA originally rather than a DRO?
Peter says
Hi, I’m on IVA for six months and paying &170 per month, my debt is slightly over 10k , but also I have to pay £200 per month to my partners family ( they did lend me &5000 and we have a written agreement ) but this debt wasn’t written under IVA and they weren’t interested about it, so it’s coming out of my monthly wage and there is no money left for me after paying everything, I’m really struggling and find it so depressing , I missed an IVA payment this month because thought about bankruptcy, I didn’t now about DOR since today , I don’t own the house but have a HP agreement on my car which is worth a lot more than £1000 ( £270 per month, 30 months left to pay) I need my car and I know I won’t get any other because of my poor credit score and I’m not able to save for anything. Can you tell me about my options as I can’t live anymore like that, Am I eligible for DRO with HR agreement? Thank you.
Sara (Debt Camel) says
“this debt wasn’t written under IVA and they weren’t interested about it” do you mean the IVA firm knew you had this debt before they set up the IVA and ignored the debt and the repayments you were making?
Peter says
Yes, I told them about my private loan and told them that I have an agreement but they said it’s in some different category and can’t go under the IVA but also it’s not showing as my outgoing.
Patrick says
Been in iva few months struggling making payments but find hard to live on wishing I tried for dro from start not sure if I qulify owe under 6000 no assets or home been citzen advise but said they are not qualified or have expertise stuck what to do
Sara (Debt Camel) says
So the first thing is to check if you would meet the rules for a DRO. I suggest you phone National Debtline on 0808 808 4000 and explain your situation. When you know about the DRO you can make an informed decision about your options – and National Debtline can talk about the pros and the cons of each.
Emily says
Hi, I have been in my IVA since 2017 roughly, I pay £120 per month and they have requested another £100 per month which I feel I can not afford. I always have differnt things to pay for each month for instance my lease car goes back in december I need to get it serviced and a paint job on it otherwise I will get a huge bill when it goes back. Plus I need to save for a deposit to get a new one otherwise I will not be able to work as I need my car to get there. I like to leave at least £50 in my account for emergencies which they do not understand. I dont know how much I have paid and how long I am in it for I seem to request the information and wait for a call back but they never do they just send me demanding emails. I have been suffering with depression for atleast 5 years and it’s the worst it’s been due to money worries. I feel stuck and I dont know what to do, I feel like it’s never going to end and I’m not seeing the light at the end of the tunnel, I just want it to be over as its running my life. I need advice to what to do next as I feel I’m just explaining my situation and being ignored and then they still demand. I just want to pay what I can afford and that’s that. Please help.
Sara (Debt Camel) says
Can I ask who your IVA firm is?
Was your car lease ending discussed when you took out the IVA?
Are you buying or renting?
How large were the debts going into your IVA?
Shannon says
Hey I’m currently 10 month into an iva at £120.
I’ts a joint iva with an ex partner that doesn’t work or have any income thus he cant help make payments. The debt totals under £6000. I am on benefits myself and seem to be struggling to make payments as other unexpected debts have appeared which the iva firm will not take into consideration. Would I qualify for a Dro ?
Sara (Debt Camel) says
Are you renting? Do you own a car worth over £1000?
Julie says
I have an iva but need to camcell because i am in middle of a DRO how do i go about it
Sara (Debt Camel) says
Do you mean your DRO was already underway when the IVA started?
Or that while the IVA was going you have set up a DRO?
Or that you are in an IVA and you are talking to a debt adviser about having a DRo but it isn’t yet underway?
Samantha says
Hi I was looking for some advice on whether I could sell my car and still do a DRO? I’ve just been through StepChange due to my income reducing as I’m now unemployed and have no surplus income they recommend a DRO. I currently own a car that is worth less than the £1,000 threshold to do the DRO but I’m considering whether to sell the car as I’m not sure I could afford it now, what are my options when considering the sale of the car? Could I still do a DRO or would the money from selling my car impact it?
Sara (Debt Camel) says
If you cant afford the running costs and don’t need the car, it could be a sensible move.
But you need to talk to StepChange about this – it could affect your DRO in two ways:
– it would give you more money that could potentially take you over the £1000 assets limit. But if there were any essentials you need, some of it could be spent on that. StepChange can talk about what would be acceptable.
– it could also increase the amount of money you have every money as you aren’t paying for insurance, petrol etc. But then you may have extra transport costs.
Isabel says
I pay £512 a month for my IVA, I have nothing left over after all my outgoings. I feel I should have gone bankrupt instead as feel very trapped. I’m looking to change my job but would get a pay cut, I’d also need a car to get there so my outgoings would suddenly be more. If they’re only prepared to give me a 15% reduction I’d still be worse off. Can’t do a DRO as owe over £20,000.
Sara (Debt Camel) says
When was your IVA started?
Since then has your income dropped or your expenses gone up?
You don’t have a car at the moment?
Holly says
Hello Sara,
This might be a long comment, but I wondered if you could give me any advice.
I am currently in an IVA with payplan and I am 2 years into my IVA, with 3 years remaining. With the ongoing COVID19 situation, I am no longer able to maintain the IVA payments.
I am considering going for debt relief order and letting my IVA fail. I have been emailing my case worker back and forth but she seems to keep skipping over the DRO, I don’t know if she is doing this on purpose? because maybe she doesn’t want it to fail because I guess they get money from my payments? – I could be completely wrong on this.
I am earning way less than the agreed £800 in my original iva agreement and the £200 a month payment is just too much. I have been asking my parents to help me out as I didn’t want the hassle or embarrassment to have to ask again for reduced payments (plus they only extend the iva) or the hassle of having to change things or the agreement. The past four months I have earned £484 in May, June £570, July £416, Aug £526
The last month has been my worst month, I only earned £277 and this month may be even worse. My new expenditure is this :- Mobile phone £75 Board lodging £300 Housekeeping £125 Toiletries £25 Hobbies/leisure £30, I have cut out many things from the old expenditure and as you can see, some months I can’t even afford that, and that’s not even including any payplan payment.
Sara (Debt Camel) says
Do you expect your income to go back to pre-Covid-19 levels in the next year?
Are you living with your parents?
Emily says
Hi Sara
Great reading thank you for sharing this on your site. I’m in my IVA, and I’ve got less than 2 years left of my 5 year term. Never missed a payment and all was well until I lost my job due to COVID.
I pay a huge amount each month: £570. This went up earlier this year due to a pay increase I received.
My total debt came to £36k (including IVA fees), in 2017. The agreed amount payable to creditors was £28k. Today, I have paid over £19k into the IVA. I was made redundant from a high salary role in a niche department in a sector which has been hit by COVID and seemingly unable to reinstate this level of income. I did not receive more than 6 months in my redundancy package and am concerned about my ability to earn at this level. I’m in rented accommodation, no dependants and need to understand what I should be approaching my IP with at this point. I’m almost out of money and have not been able to get a job (any job) that I’ve been applying for. I’m keen to get out of this on time and don’t want it to fail/bankrupt as there is only 2 years left.
Sara (Debt Camel) says
I suggest you talk to your IVA firm about your options. One is to take a 6 month payment break now and see if you can get a job in that time. If you can’t at the end of it you can ask your creditors to agree that your IVA should be closed on the basis of the funds you have paid to date.
(I will say that it is a great pity you didn’t go bankrupt originally – If you had, at this point it would all be over, no more payments to make, nothing to go wrong. But here, of course you don’t want to go bankrupt if there any other options.)
Richard Byrne says
just a slight word of caution in all of this (moving from an IVA to a DRO), if you are in an IVA which has a ‘post completion trust’ (contained in an unmodified R3 standard conditions IVA or an unmodified Protocol Standard Conditions IVA) it looks like the trust survives the DRO, which would mean although the DRO wipes out the debts in the DRO there is a theoretical possibility that they still exist in the trust and if that is combined with those IVA’s that have windfall clauses it looks like the trust would still need to be paid. the trouble with the post completion trust is that it tends to follow you around.
Sara (Debt Camel) says
I agree windfalls may be problematic but they are unusual, now that PPI is pretty much at an end. But if your choice is an unaffordable IVA or a DRO with a small chance of losing any windfalls later, it’s not a hard choice, is it?
Richard Byrne says
Please dont misunderstand me I am not for one minute suggesting that you should stay in an IVA if it is unsuitable for you but as you know windfalls are not just about winning the lottery it can include a redundancy payment, a tax rebate, selling your home and making a ‘profit’, receiving compensation from an accident, inheriting anything, taking an early cash sum from your pension (post 55), making a pension misselling claim (or any kind of claim), a settlement in a divorce, a one off bonus and so on. So I am not sure that they are that uncommon or will be in the years to come.; don’t get me wrong I’m not suggesting its a reason to stay in an unsuitable IVA but ideally you should try and sort the trust out if you are going into a DRO, otherwise you haven’t really escaped the IVA. I think the windfall clause is usually thought of as a theoretical thing but it isn’t, it’s very real and with things like realisation fees being taken from that windfall it can be a very costly part of an IVA (even after the IVA has ‘ended’).
Christopher says
Hi, I’ve been in an IVA for 1yr the total owed is just under 10k the duration of the IVA is 6 years. Would you say a DRO would be good to go for ?
Sara (Debt Camel) says
The important question is, would you qualify for a DRO? If you do, then only 1 year into an IVA it would definitely be a good idea to switch.
10k of Debt so you are easily under the DRO 30k limit.
Are you renting or buying? You cannot have a DRO if you own a house.
Do you have a car worth more than 2k?
How much are your IVA payments? Are they affordable or is it hard to manage?
Milo says
Hi
I have debts of 24k and just lost my job, our home is in my wife’s name only which is mortgaged and has been for a few years as I was a stay at home dad. Would this bar me from a DRO? Or would bankruptcy be the better option?
Sara (Debt Camel) says
First, were you paying all the debts before you lost your job? Or did you have problems then? And are you likely to get another job soon/in the next year?
The house – you say it has been in your wife’s name for a few years. Does that mean it was in joint names before that? When the house was bought, did any of the deposit come from you?
Tracy says
I am currently in an IVA since march of this year I think my debt was £26000 and I pay £160 per month for 6 years….6 years because my husband owns the house. Unfortunately my marriage has ended so I will be moving away and so my wages will now have to cover private rent and all bills… would I qualify to change over to a dro
Sara (Debt Camel) says
I’m sorry to hear this. Yes letting your fail and then getting a DRO may be a good way forward for you, it will depend on the details.
Have you got somewhere to move to so you know roughly what the bills will be? It can be hard to rent privately when you are in an IVA unless you have a guarantor.
Gilson says
Got an iva paying 300 it’s now gone up to 530 I did say they have check it wrong can I go for a dro instead
Sara (Debt Camel) says
Is this your first IVA annual review?
Has your income cone up a lot since you started the IVA? Have you asked them to explain why the payment is going up so much?
Can you say some more about your situation = are you buying or renting? domyou won a car – worth how much? is any of your income from benefits?
Was the £300 affordable or already a struggle?
Debbie says
I have been in an IVA since Aug 2019. I pay £79 a month. I believe I had debt of around £8500. Rented. No car.
Since then I had a house fire in 2020 and moved into a new place oct 2020, I now live with my partner (I did not originally), still rental. I had a baby sept 2020, so now have 2 kids. As of aug 2021 I am now unemployed as I am a carer for my mum (on carers allowance)
I haven’t actually informed my IVA of these changes. Which I realise is a breach of my agreement and will now set about informing and doing a new I and E form.
Do you think I would actually be better going for DRO at this stage or trying to continue with the IVA
Sara (Debt Camel) says
That is a lot of changes. Have you not had annual reviews?
Debbie says
So my first annual review actually was due when I had the fire, I didn’t end up replying and they just sent me through saying I had completed it with no changes … so I just carried on paying as was.
My second review has been due now so I need to do it – but I’m wondering if the IVA is actually my best option or if I should have gone with DRO in the first place (that I didn’t know about) and if that’s actually what I should have instead.
Debbie says
And for the first review I hadn’t had any changes yet, all the changes are since then.
Sara (Debt Camel) says
I suggest you go through with the review, see what your IVA firm says as they are supposed to tell you if you should switch to a DRO, I wonder if they will…
BUT at the same time talk to National Debtline on 0808 808 4000 now about whether you will qualify for a DRO, this is a key piece of information for you.
Te says
I have been in IVA for 2yrs, but I’m considering switching to DRO due to new rules and struggling with monthly payment. Total debt is 29k, currently pays 154 monthly. Do you think DRO will be a good option to explore?
Sara (Debt Camel) says
Can you manage the £154 a month payments? Are your expenses such as petrol and energy bills going up?
Gilson says
I have been in my iva for 2 years going on to 3 i just had my review my debt was 40k brought it to 26k paying 305 month they now put it up to 630 I told them it was too much they did their calculations again to 530 not sure what is going on I think they want me paying it earlier they just dnt want to know i just a better option one payment and am ok things are getting harder next year right now am not paying in my iva see what i can get what is a better option please
No 2nd 300 I can do no problem i rent yes got s car not worth much got a permanent job now was not at work due to covid am 1 years 4 months back
Sara (Debt Camel) says
if you can manage 300 a month without a problem it is unlikely that you would pass the “less than £75 spare income a month” eligibility test for a DRO.
I suggest you should go back to them and ask why your payments have been increased so much as you cannot afford that.
Wendy J Williams says
How can you buy a house on an IVA? Credit ratings are really low and no creditor will entertain you. Whether the IVA is cancelled and a DRO has ended a year later, you will still have this damning information on your credit reference file.
Sara (Debt Camel) says
you replied to a very old comment – you are unlikely to get an answer.
While you have the IVA showing on your credit record you will have great difficulty in getting a mortgage.
Natalie says
Hi Sara,
I’ve had an IVA since January 2022 and then lost my job in Malaysia March 2022. I couldn’t return to the UK for a long time so I’ve been abroad for the past few years struggling. I still maintained payments throughout as my family have been helping. I’m back in the UK now and struggling to find a permanent job. I still don’t have a regular income and there’s increasing pressure mounting as I now have borrowed a lot from my family.
Would a DRO be possible?
Thank you.
Sara (Debt Camel) says
You need to talk to a debt adviser to check you meet the DRO criteria. I suggest you talk to National Debtline on 0808 808 4000
Amir says
I’ve been in an IVA since August/September 2021, and healthwise I’m suffering, I’m paying £120, even when the IVA firm advised me in first conversation, I’d be paying £95. Now having read this article about failing IVA and switching to DRO, seems more applicable to my situation. Salary increase only 2%, but less than rate of inflation, and with fuel and energy supply costs rocketing through the roof. It’s becoming too much for me. I’m seriously considering failing IVA and asking for DRO. Please advise further, next actions in concise bullet points please. Thanks
Sara (Debt Camel) says
Talk to National Debtline on 0808 808 4000 about your situation and how much your costs are likey to go up in April – energy bills, national Insurance, council tax, broadband, mobiles etc.
The most important thing is to establish if you will be eligible for a DRO.
Amir says
Many thanks Sara for your advice.
Lisa says
question her. For one thing I said about the social fund loan, which I was told would be included into the IVA and stopped coming out of UC. I told her that I had been looking online and discovered that social fund loans cannot be included into and IVA. I said that if that was still coming out of my money and on top of that I have to pay £100 per month there was no way that I can afford it. I also told her that I was told to say about the extra board as it would be in my best interests.
She became quite uncomfortable after that and said that she was going to pass me back to that first company to look at other options then. Which I will not be looking at any other options with them at all.
So my question is where do I stand with all this? Is my IVA officially in progress now or is it not in progress until I sign that final document she was talking about, which they don’t seem to have sent through to me yet anyway and I won’t be signing it until I seek further advice? If my IVA is not official yet can I just walk away now and apply for a DRO instead?
Oh, I do have a car too, which I’m really stressing about with the bailiff too as I need it for my youngest as he is on the autistic spectrum. But it’s only worth £500 about.
I have spoken to another company today who thinks that this IVA should not have been set up at all and that I will qualify for DRO. But now I’m really stressed and getting anxiety attacks incase it is too late and that now I am tied into this IVA.
Sara (Debt Camel) says
Hi Lisa, the first part of your comment seems to be missing?
it sounds as though one company suggested and IVA and what to say to get the IVA approved and then passed you onto another firm to set the IVA up – that is quite common, is this what happened to you? Can you say who the first company is and the IVA firm?
If you have not signed a document to tell the IVA firm that you agree to the application, then it should not go ahead.
And most importantly, who did you speak to about a DRO today? You may well be able to keep a low value car in a DRO.
Lisa says
I am a single mother, I have one dependant child and my older son works.
I am just under 10k in debt, c/tax (bailiffs involved). And other debts. I am unemployed.
Now a couple of weeks back I had bailiff at my door. I didn’t know my full rights so I panicked, I suffer from depression and anxiety.
I searched online and called a company for help. I feel like they have mis-sold me an IVA and I’m wondering if I still have time to get out of it.
I was so stressed at the time as regards to the bailiff so I went along with what they was saying and trusted them.
So, they went through options with me and a DRO was mentioned, that’s what I was thinking of doing. They then proceeded to tell me that I wouldn’t qualify as my monthly DI is above £70. Which now, I know was a blatant lie. I just agreed with them, as didn’t know any wiser.
So they said the best way forwards was through an IVA and that was the only way I would be protected from the bailiff. I was so stressed I feel that they played on it to get me into an IVA. They said they had worked out that my DI was £100 a month.
My older son pays me £100 board money every month and they then said to me it was in my best interests to say he pays me £250 board money per month. I asked them, but wouldn’t that mean I have more income? To which they said it was best for me to keep my IVA payments as low as possible. I have all this screenshot for my own evidence.
I was desperate and really low so i signed all the pre-proposal things that were sent through, didn’t read a lot of it as it was all really long winded.
It has been really over the last week I have been looking more into this and have even worked out all my own income and expenditures, which clearly amount to that I have a monthly DI of around £50.
So the company that they passed me to has called me today, saying that the creditors accept my IVA. She said they were sending me a final document through for me to sign, but I started question her about the social fund loan
Lisa says
I’m so sorry Sara my message was so long, I have tried to break it up into parts but I’m unsure if they have gone through.
I spoke to national debt relief today and somebody from mccambridge duffy called me back. He was very helpful and didn’t even need to go thru all my income/expenditure to know I shouldn’t have been forwarded for IVA. But they don’t deal with dro
Sara (Debt Camel) says
National Debt Relief – eeek! They are not authorised as debt advisers. Avoid like the plague.
McCambridge Duffy is a decent IVA firm – it sounds as though they have not set up an IVA for you.
Now you need to talk to a proper debt advice firm that does DROs – phone National Debtline tomorrow on 0808 808 4000.
Lisa says
Hi Sara I think you misunderstood, it wasn’t national debt relief that did the original IVA with me that I need advice on. They were just who I called today for help after I had a call from that insolvency company saying creditors accepted my IVA proposal and national debt relief called me right back, but it came up on my phone as mccambridge duffy. The man there helped me. Just wanted to clear that up as don’t want people thinking it was NDR who set me up for this IVA as it wasn’t. I will mail you more information regarding the company that it was. Kind regards Lisa
Jack says
Hi Sara
Can I ask what happens with lease cars and DRO , I have three years left on my car which is a four year deal . I have been made redundant and have signed on to universal credit . I owe just over £25000 on credit cards and loans and are three months behind on my loan payment but using my credit card to buy general goods for shopping but payments are getting out of control and have only £1000 left of redundancy. I need my car for getting to interviews and other places . Will I have my car taken off me ? Any advice would be appreciated
Thanks
Sara (Debt Camel) says
if you get another job, what sort of income would it be?
Kelly says
Hello Sara,
Many thanks for all of your resources of your site. It’s really much appreciated.
Can you get a Debt Relief Order if you have a shared ownership property please?
I’m currently on a Debt Repayment Plan and struggling with full time work due to mental health issues and may have to quit/lose my job and income soon.
Sara (Debt Camel) says
No, I am afraid you can’t. You can’t own any part of a property. Even if it is in negative equity.
Is your debt repayment plan with a creditor or a debt management firm?
Kelly says
I have a debt management plan with Step Change, paying £550 a month, about £28,000 owed, due to finish in 2026. It’s been running since October 2021. I need to move to a much less intense job (currently working 70 plus hours a week as a single mum with no support). Ideal world I’d have a few month off before moving to something new, but probably unrealistic financially. Anything I do moving forward will probably be much lower paid. Just trying to figure out the best way to manage the debt moving forward. I am aware I can let Step Change know of my new circumstances when they do change and lower the payments, but that will likely lead to a very long DMP. This might be the best solution, but would like to know if you think there are other options to consider. Thank you.
Sara (Debt Camel) says
70 hours a week is not sustainable as a single mum. Even if you didn’t have any mental health problems. Can you cut your hours in your current job immediately?
As you say, you can get the DMP payments lowered. A lot. The DMP will take longer, but there isn’t an easy option for you.
It is possible that an IVA may be an option for you… but I suggest you should get a much less pressured job and see how that goes for a a year – be very certain how much money you to pay to an IVA. And that yopur budget can survive energy bills and everything else going up. And that your mental health recovers so you feel confident you are in a long term sustainble position – an IVA when things may change is dangerous as too many of them fail.
But one other thing – 28k is a lot of debt. Was any of this high cost debts? Expensive loans? Did credit cards or catalogues increased your credit limit to a level that was unsustainable? Were you constantly in your overdraft every day of the month?
C says
I’m currently 20 months into an iva and I’ve been struggling for a while now but they won’t reduce my payments. My iva is £100 pcm original debts 7k, 10k with iva fees. If I was to let my iva fail and go onto a DRO(will check I’m eligible first) I had no idea about DROs. When a DRO starts will it start a new 6 year mark on my credit file or go back to when the debt was defaulted at the start of my iva?
As well as the above, would my iva fees (if not yet paid) be included in the DRO?
I really appreciate your advice, I’ve been reading as much as I can on your site and comments but couldn’t find an answer to this.
Thanks.
Sara (Debt Camel) says
When a DRO starts will it start a new 6 year mark on my credit file or go back to when the debt was defaulted at the start of my iva?
It starts a new 6 year period. Annoying, but when you are less than 2 years in, it is pretty much a no brainer to switch to a DRO if you are eligible. If you are struggling now, this will get even worse in October when energy prices go up again by possibly a third. the chance of your IVA completing doesn’t sound good.
I suggest you take advice about a DRO as soon as possible.
would my iva fees (if not yet paid) be included in the DRO?
In practice unpaid IVA fees just seem to disappear. But if the IVA firm says you do owe them, then yes, they can be listed in your DRO.
Martin says
Hello there,
I have just received my 3rd annual review from a 6yr Iva, with the general rise in prices I can no longer afford my payments. Also 3 months ago my Creditfix balance went from 20+ thousand to 7 thousand. What are my options please?
I look forward to your reply,
Many thanks
Sara (Debt Camel) says
What are your payments at the moment?
Are you buying or renting? Do you own a car or have one on finance?
Martin says
I pay £105 per month
I am private renting
I have a car valued at £700
Thank you
Sara (Debt Camel) says
Is there any reason you did not go bankrupt at the start?
“Also 3 months ago my Creditfix balance went from 20+ thousand to 7 thousand. What are my options please?”
Did you receive some refund or other large windfall?
Would now struggle to afford £75 a month? Do you have arrears on any bills?
Martin says
Hello Sara, I got bad advice at the start and when you Google your situation all that really comes up is IVA solutions which appeared a good option, obviously it wasn’t! Also I split with my partner which totally changed my outgoings for the worst (from housing association to private rent) and the general rise in prices. As for the drop to 7k I can’t explain as I haven’t had a windfall or any change in my monthly payments?
I have been surviving on overtime but that has dried up
£75 payments won’t be possible on my flat wage. I don’t currently have any arrears on my bills
Sara (Debt Camel) says
OK then your choices are now are:
1) to stop paying the IVA and let it fail, and apply for a debt relief order, as the article above suggests. This could be a very good option for you but you need to check first that you will be eligible for a DRO – everything you have said suggests you may be but you need to get this properly confirmed. I suggest you phone National Debtline on 0808 808 4000.
2) to ask Creditfix to propose to your creditors that your IVA is completed “on the basis of the funds paid to date”. If your creditors agree (they will have to vote on it) then this would be better for you than a DRO as your IVA is just completed now and clears your debts. I don’t know how likely this is to happen as you are only half way through. But if you tell Creditfix that National Debtline says you are eligible for a DRO this may help.
3) let the IVA fail and do nothing – this isn’t a great option as you may start to get hassled by your creditors.
4) somehow stagger on with the IVA if you can get the monthly amount reduced. If it was only 9 months you might think about it, but 3 more years doesn’t sound feasible.
So I suggest you talk to National Debtline about options 1) and 2).
Martin says
Hello Sara
I’ll phone the National Debt Helpline tomorrow for further advice. Thank you for giving me a light at the end of the tunnel, as my mental health is shot to bits, as I’m on medication and seeing counsellors due to the extra stress this has given me. Many thanks
Sara (Debt Camel) says
do tell National Debtline about your mental health problems, and also Creditfix when you talk to them.
Martin says
I will, it’s a slight relief just getting that off my chest, thank you
Martin says
Hello there,
After looking through my original paperwork my debt in total was £6300 over 6yrs, what would you suggest would be a fair and final offer? As my Mum has offered to help me out if possible.
I have been paying 2yrs at £105 and one year at £130
Thank you
Sara (Debt Camel) says
Have you talked to National Debtline about a DRO? if you qualify for one, then your mum wouldn’t have to pay anything.
Martin says
Hello there,
I’ll go through my figures then get back in touch with National Debtline, fingers crossed 🤞!
Thank you so much
Courtney says
Hello
I am in an IVA. I entered this in December 2019. I pay £100.00 per month. I do not own a house but I have a car on finance. I never heard of a DRO when it was advised to go for an IVA. Halifax pushed back my IVA from 5 years to 6. I want to buy my house, what’s best for me to do? I heard rule of thumb with IVAs is wait three years, this was what a mortgage advisor advised me. Thank you!
Sara (Debt Camel) says
is the £100 a month affordable?
I have a car on finance
when does it end? at that point will you own the car or is there a balloon payment that you won’t be able to afford?
how much is the car worth?
Halifax pushed back my IVA from 5 years to 6.
How large were the debts going into your IVA?
I want to buy my house
is this a council house right to buy?
I heard rule of thumb with IVAs is wait three years, this was what a mortgage advisor advised me.
Wait for three years from when – the date it started? the date it finishes?
Roseanna Foster says
Yes please
Sara (Debt Camel) says
I am not sure what question you are replying to?
Martin Smith says
Hello there Sara
I recently got my 4th year review through. I have taken a one month “breather” but however I cut back (given up my flat to rent a room) this still leaves me with around £60 left at the end of the month. My original debt was £25k leaving a iva payment of £6300. I am halfway through a 6yr iva and really don’t know what to do now? Any help or advice would be greatly appreciated
I look forward to your reply
Thank you
Sara (Debt Camel) says
What is the main cause of your difficulty in the IVA – is it the cost of living increases? or has your income dropped?
Martin Smith says
Hello there Sara
Is it possible to know you qualify for a DRO before failing your Iva?
Many thanks
Sara (Debt Camel) says
yes it is – that is why I previously suggested you should talk to National Debtline. Have you done this?
Martin Smith says
Hi Sara
I have spoken with them but they couldn’t give me an answer whilst I’m in a iva. They did however send out an expenditure pack, so hopefully I’ll hear more from that
Thank you
Sara (Debt Camel) says
go back to them and say you would like to know if you would qualify now for a DRO if it was not for the IVA. Say you need to know this in order to talk to your IVA firm about what your options are.
Martin Smith says
Morning Sara,
You are so helpful, a light at the end of the tunnel,
Thank you so much
Martin Smith says
Hi Sara
The main causes are a small drop in pay (due to National Insurance) and also the general rise in the cost of living.
Thank you
Sara (Debt Camel) says
As your problems have been caused by NI increase and prices, it sounds as though your situation is definitely in the “Cost of Living” reasons.
Read https://debtcamel.co.uk/help-ivas-cost-of-living/. This is new guidance for IPS that came in a few weeks ago. Read it all as background. Read it twice!
The important bit for you is this:
“the new Guidance says that the IVA firm should consider whether your IVA should not fail but should be settled “on the basis of funds paid to date“. This means that, if your creditors agree, your IVA will simply complete, without you having to make any more payments.”
This means that if you have a debt adviser saying that you would qualify for a DRO, then you can argue that your IVA firm should not fail your IVA so you then need a DRO but instead should complete your IVA so a DRO will not be needed.
Martin Smith says
Hi Sara
I cannot get any DRO information from StepChange (as they have lost my information from last week??) I have a budget pack from National Debtline and Creditfix as my review is now due after my “breather” month, I’m thinking I may as well send off both packs and see what happens??
Many thanks
Sara (Debt Camel) says
May as well!
Martin Smith says
Hello Sara,
I have just checked my report and one of debts hasn’t had one payment made against it, ie it has defaulted every month for 3yrs! Any ideas why this might be? My Iva is with Creditfix my report is with Credit Karma.
Any help is always appreciated,
Many thanks
Sara (Debt Camel) says
Just ignore this. It could be a mistake by Creditfix or the lender but it doesn’t matter, what matters is that you get the IVA/DRO resolved. Then when that is done, you can look at making sure your credit record is right for your situation at that point.
Martin Smith says
Thank you Sara
Amir Chughtai says
Hi Sara
I started an IVA, without knowing the difference between this and DRO. I had £23K debts, various, not house owner, living and caring for parents. Working FT, no savings, car value <£2000, currently paying £110, and it the current climate, every penny helps. I’m in a sinking ship. Trying to stay afloat. Please advise if i should fail my IVA, and try for DRO ? . Thanks you. Amir
Sara (Debt Camel) says
How long ago did your IVA start?
Was the £110 affordable at the start but now it not because of price rises? There are new rules that may help you.
Amir Chughtai says
Hi Sara.
My IVA started last year, so it’s 1 year/5. Yes, affordability was borderline before, now unmanageable, and with my age 60, it won’t be easy next 4 yrs either. I still have 1 dependant child. I’ve been in the red last 12 months. Please advise further. Thanks.
Sara (Debt Camel) says
ok so first read https://debtcamel.co.uk/help-ivas-cost-of-living/. This looks at the new guidance from the Insolvency Service on your type of situation – where rising prices mean it is no longer affordable.
In trying to reach an agreement with your IVA firm about this, it will help a lot if you know whether you will qualify for a DRO.
If you do qualify for a DRO, one option is to fail the IVA and now get a DRO. But another option is to ask your IVA firm to propose to your creditors that your IVA is completed “on the basis of funds paid to date”. This would then all be over quicker for you.
So I suggest you do four things now:
1) read that article. read it twice!
2) make a list of bills and prices that have risen. Even small increases of a £1 or £2 a month add up.
3) contact your IVA firm and say you can’t pay the £110 because of rising price. Say you think you may now qualify for a DRO and ask if your IVA can be completed on the basis of funds paid to date. Point out that because of your age and having a dependent child, there is no chance your circumstances are going to improve in the next few years.
4) contact National Debtline on 0808 808 4000 and ask them to say if they think you would be eligible for a DRO. Say you need to know this as you can’t afford your IVA so you need to know what your other options are.
I would do 3 & 4 at the same time.
Amir Chughtai says
Many thanks Sara,
You provide an excellent service.
Martin Smith says
Hi Sara
I’ve spoken to National Debtline and they recommend a DRO, they will be sending a pack out tomorrow, so fingers crossed! Thank you so much for all your help. If I ever find anyone in a similar situation I will be strongly recommending yourself, I cannot thank you enough, many many thanks
Martin Smith says
Hi Sara,
After filling in the budget sheets from my financial advisor they suggest that first I should speak to Creditfix and asking if my IVA could be settled on “Funds paid” in line with the new “Cost of living” settlement, or cancel payments until I get a “Certificate of failure” now this is the point that really concerns me, as I don’t want to bury my head in the sand only for my problems to escalate, your views on this would be greatly appreciated,
Again many thanks for all your help,
Yours sincerely
Mr Martin A C Smith
Sara (Debt Camel) says
If Creditfix will agree to settle your IVA on a Fund Paid To Date basis, this is almost always* the best option for you. Creditfix actually have to propose this to your creditors to vote on, but if creditfix is recommending that this should be done they it is very likely to be agreed.
If Creditfix refuses to do this, then you should tell them you won’t be making any further payments and you want the IVA failed as soon as possible so you can get a DRO set up. It typically gets failed in 3 months. During this time, you can get a DRO application prepared with a debt advisor do they can just press Go when the failure comes through.
* I said almost always. There is an exception if you have built up other debt outside your IVA. Completing the IVA will not clear that – failing the IVA nd having a DRO would include that other debt.
Martin Smith says
Hi Sara,
Thank you once again, I haven’t run up anymore debts and never will again! As I can’t go through this every year. I have filled out my annual review and it leaves me around £40.
Would you suggest sending in the forms with a covering letter or just phone Credit Fix and get the ball rolling, I think the annual review form will add evidence to my case, but you are the expert so I will take your advice,
Many many thanks
Yours sincerely
Mr. Martin A C Smith
Sara (Debt Camel) says
I would phone them now, tell them what you want and say you are sending in the annual review as evidence of this.
Martin Smith says
Thank you Sara,
I’m actually moving into my rent a room scheme from today, so as soon as I can I will be phoning Creditfix, thanks again and please wish me luck!
Thanks again
Yours sincerely
Mr. Martin A C Smith
Manjeet says
Good morning, I am half way through my 6 year IVA, am employed full time and have never missed a payment. I pay £160 a month, my debts are over £30,000, i spoke to the company today as part of my annual review. Cost of living now making it very difficult, i am using a food bank for the first time ever, i am a single parent renting privately and the rent has just gone up. At first the IVA company gave me2 options, firstly to drop my payments to £80 a month but extend the term by 12-24 months or secondly, reduce my payments to £156. He seemed to be pressuring me for an immediate decision there amd then, i said i would have to consider carefully the longer term impact, i then also mentioned to him the mental health difficulties I had this passed year partly relating to my financial situation and he only then told me about the possibility of getting a DRO and said he would get one of their team to contact me. But as i said earlier, my debts are over £30,000 so is this actually a viable option for me?
Sara (Debt Camel) says
If your debts are over 30k, then you won’t qualify for a DRO.
Can you say who your IVA firm is? Because the Insolvency Service guidance is that the term should not be extended by more than a year and should not result in a term over 7 years. See https://debtcamel.co.uk/help-ivas-cost-of-living/ which looks at this guidance.
But even if your IVA firm agrees to decrease your payments to £80 and only extend the IVA by a year, I am worried that from what you say, this won’t be enough. Energy bills are going up another 20% in April and the £400 extra help with electric bills over the winter is ending. If you are already having to use food bank.
Your IVA firm does have another option – they can propose to your creditors that your IVA is completed on the basis of funds paid to date. You are half way through, you have done your best. As a single parent with a mental health problem, you are vunerable and your IVA firm should try to help you.
If they refuse to do that, then I think you should talk to a proper debt adviser (most IVA firms are not debt advisers!) about whether you should fail your IVA and go bankrupt. I suggest you talk to National Debtline on 0808 808 4000 or your local Citizens Advice if you would prefer a to see someone face to face.
Manjeet says
Thank you, your advice was pretty much what i was thinking, i rang Step Change earlier and although they couldn’t get involved because of the IVA she was still able to give me advice….similar to yours
the IVA company is Hanover