Many people in an IVA are currently struggling because of the large rises in bills and prices in 2022.
The Insolvency Service has now issued Guidance to support the IVA protocol. (That is confusingly laid out – look for the section headed 60) Guidance to support the IVA protocol for existing protocol compliant IVAs: 26 June 2022.)
This sets out what extra help IVA firms should provide because of cost of living increases. The IVA Protocol Standing Committee expects large numbers of IVAs to get reduced payments.
This extra help is there for people now if they ask for it – you do not have to wait until your next annual review.
Contents
New guidance – Reducing payments & a restriction on extensions
The Guidance says:
It has been agreed that reductions will generally be accepted by creditors of up to 50% of current contributions, or £75, whichever is higher.
This is a big improvement on the standard IVA terms and conditions, giving a lot more flexibility.
But there is one important exception – your IVA firm will only propose a reduction where they consider the IVA will be “sustainable”, see below for what will happen in this case.
When IVA payments are reduced, it’s common for the IVA firm to want to extend the IVA to make up for this. The Guidance says an extension should not be for more than a year, and it should not extend the IVA to more than 7 years.
This is good news, as some IVA firms have recently been suggesting a two year extension in some cases.
When the reduction being proposed by your IVA firm is within these guidelines, this should just be accepted by your creditors. You don’t need to worry about this.
Some people will need a larger reduction
How much your payment needs to be cut depends on your situation. For example someone with a long car commute will be paying a lot more in petrol.
If your £280 IVA payment needs to drop to £110, that is more than the 50% drop in the new guidelines. Here your IVA firm may suggest that you need to extend the IVA by more than a year. But I think you should object if the extension would make your IVA over 7 years long – that is unreasonable.
With these larger reductions, your creditors will be asked to approve the variation to your IVA by voting on it. This is a common procedure and your IVA firm will explain to your creditors why it is proposing this variation.
Unsustainable IVAs
Will your IVA fail?
The Guidance says that the Committee would not consider payments of less than £50 a month to be sustainable. And your IVA firm may consider a payment of only £75 to not be sustainable.
Here your IVA may fail, leaving you back with your debts and very little or no spare income with which to pay them.
But 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. Which would obviously be the best option for you…
Will your IVA firm agree to complete your IVA on the basic of funds paid to date?
The Guidance lists a lot of factors to be considered in deciding whether a settlement on the basis of funds paid to date should be proposed. You should read the list. But that may not give you any feel for whether they apply to you or not.
The following are my thoughts on when an IVA should be treated as settled, not failed. They assume that you have £75 or less to pay a month:
- if you would currently qualify for a Debt Relief Order, then your IVA should be settled now
There is no point in making your IVA fail and you have to apply for a DRO – it will not generate another penny for your creditors.
If you are renting and owe less than £50,000, check the DRO criteria now and talk to National Debtline on 0808 808 4000 about whether you qualify. You may have been told at the start of your IVA that you aren’t eligible – still check now as the DRO criteria have changed, your situation has got worse, and some people were given incorrect information about DROs at the start. - if you have no assets that would be realised in bankruptcy (eg a house with equity, car worth over £2000), then your IVA should be settled now
Same as (1), there is no point in making you apply for bankruptcy after your IVA fails. - if your only asset is a car that is worth less than £8000, then your IVA should be settled now
A car that is worth say £5000 would normally be sold in bankruptcy and you would be given a small amount to buy a cheaper car. But your creditors would not get any benefit from this as the Insolvency Service takes the first £8000 raised to cover its own costs. - if you have significant assets, the closer you are to the end of the IVA, the less reasonable it is to fail it
If you have been paying your IVA for 4 years, you have done your best over a long period. It isn’t your fault you can no longer continue. The fact you may have had equity to release isn’t relevant as that simply isn’t going to be possible. - if your situation will clearly improve soon, then it’s unlikely your IVA will be settled
I mean real improvements, not hoping that prices fall.
What to do if you need a reduction
Talk to your IVA firm
The new Guidance is provided for when someone asks for a review of their payments because of prices increases. So you have to ask for this review.
Unless your annual review is only a few weeks away, don’t wait for this and try to struggle through. And don’t borrow money to try to keep yourself going.
It’s a good idea to gather your evidence together before talking to your IVA firm. Bank statements will help, but you may have had a recent letter or email about your rent or mortgage going up that isn’t yet on those statements.
For most people the largest changes are:
- energy bills;
- petrol;
- groceries.
But you may also have had a lot of smaller changes such as council tax, water, mobile contacts, broadband contracts etc. Make a full list of these. This is your chance to get your problem resolved, you don’t want to miss off a few smaller things that together add up to £25 a month.
When you are getting a review done now, in summer 2022, you also want the fact that your energy bills are very likely to increase by roughly 50% again in October to be taken into consideration. You don’t need to wait for that to happen – this is clear enough that your IVA firm should include that raise as well.
Do you have any better options?
A payment break is often proposed when someone tells their IVA firm they are in difficulty. But there is no sign that bills and prices are going to start dropping anytime soon. So that is unlikely to solve the problem.
I know some people have been asking their families for help, either to pay the monthly amounts or to settle the IVA early. Here it makes sense to see how large a reduction you can get from your IVA firm first. If you can get lower IVA payments, a smaller settlement offer from your family could be accepted.
What if your IVA firm will not agree?
First, don’t assume that you will have problems! You may be very worried and stressed. And your experience of annual reviews may not be positive. But just get a list of your expense increases and contact them asap.
But if problems arise, here are some suggestions:
- If your IVA firm says you can afford to pay more than you think, your first step should be to talk to a debt adviser and get them to help you draw up a budget and discuss any points your IVA firm made. Phone National Debtline on 0808 808 4000. Then, armed with this, go back to your IVA firm. The longer it is until the end iof your IVA, the more important it is that you get a reduction to a figure you feel you can live with.
- If your IVA firm wants to extend your IVA by more than a year, or to over 7 years, remind them of the Guidance and put in a complaint.
- If your IVA firm says they can only reduce your payments by 50%, you can ask for a larger reduction. This will have to be put to your creditors to vote on, but there is no reason why this shouldn’t happen.
- If your IVA firm says your IVA is unsustainable and they will not propose that it is completed on the basis of funds paid to date, ask them to explain why not. Tell them if a debt advisor has said that you will qualify for a DRO. Explain why you think they should agree to this.
You can make a formal complaint in writing if you think they are being unreasonable.
Or insist on a proposal to complete your IVA being put to your creditors – your IVA firm will tell the creditors why it doesn’t think this should be approved but you can ask for your reasons to also be put forward.
What happens if your IVA does fail?
In the end, if the worst happens and your IVA fails, then you are left back with your debts. See What can you do after an IVA fails which looks at the alternatives.
In addition to the five options there, if you think your IVA firm has been unreasonable in failing your IVA and you have no reasonable prospect of making any debt repayments, you could also ask your creditors to write off your debts.
More than a third of IVAs fail
FCA tries to reduce IVA mis-selling
Could a Debt Relief Order help you?
Martyn says
Thankyou so much for this Sarah!
This would directly affect me, as my IVA has been difficult to stump up despite me persevering to stay with it.
Sara (Debt Camel) says
Let me know how you get on!
jb says
Is there any similar information for people on a debt management plan?
Sara (Debt Camel) says
No because there is no need for DMPs – IVAs are legal contracts that have strict rules about when they could be changed – those need to be relaxed.
DMPs are informal arrangements, they can be varied at any time by any amount. So no Guidance is needed.
All the DMP firms should listen to your problems about your expenses going up and work to get reduced payments in place to help you manage. If your DMP is no longer viable, they will talk through if you have any possible insolvency options.
See https://debtcamel.co.uk/dmp-payment-too-high/. Talk to your DMP firm and you have problems getting them to lower your payments, leave a comment there.
Joanne Patterson says
Hi Sara,
I’ve been waiting for this review.
I’m 4.5 years into an IVA and have taken the 9 payment breaks over that time so it’s a most added another year on. Xxxc
IVA start date march 2017
Est completion now December 2023
I’ve had a review in March and they suggested I should try and maintain the £290 month (lowest if can go without consulting) even though my bills have gone up ! I did agree because they said my creditors would ask to add another 12 months !
However I also own my own home with equity so I also have to do that come May 2023 and they will likely add another 12 months taking me to 2024!
If I contact them to half my payments would they say that’s an acceptable amount to keep paying and not agree to fail based on what I’ve paid already ?
Thank you as always Joanne
Sara (Debt Camel) says
how large are your payments at the moment? £290 and they didnt drop in March?
How much do you think you can afford? taking into account energy bills going up another 50% in October?
Joanne Patterson says
Yeah they are £290 and didnt drop at all in March – they said to try and avoid having to go to the creditors as its likely to add another 12 months – I told them then I would not be happy with that at all so said we would try and manage even though after the review he said surplus was £220 (I am with Step Change).
My review included the increase in energy prices but my mortgage has gone up again as I am on a variable, food increasing all the time and energy due to rise again, car insurance gone up since then by £5 month, school meals going up in Septemeber 10p meal just for starters.
Sara (Debt Camel) says
ok then if all you can afford is 220, that is what your payment should now be reduced to.
However your energy bills would have gone up in April? And will go up again in October? So it may well be that your payments now need to drop more. This should still be ok under the new guidance down to £145.
You can argue that you would be happy for an extra 3 months to be added, but not 12 months because another 12 months will be added on for the equity release.
I don’t see how you can hope to carry on paying much more than you can afford for what is more than 18 months, so I think you have to try to get this resolved.
Joanne Patterson says
I’m going to ring them this week they are always really helpful I find unless your asking them tricky questions about creditors , I don’t think they like to approach them for whatever reason !
Thank you again Sara your always so helpful.
Joanne Patterson says
I have been back and forward with SC and after looking at my outgoings I have definitely allowed myself to stuggle before dealing with this. Anway my payments have gone down to £120 based on increases in mortage, school meals, school bus, fuel etc etc, basically cost of living spiralling, it is being put forward for a variation and waiting to hear for that. If they agree to that that will be easier to manage until the next BoE review and energy cap in oct. My new IVA completion date is March 2024 (was March 2023) with added agreed missed payments over the last 4.6 years – with the possibility of the equity release (extra 12 months) that would take me to March 2025 – 7 years, can they extend beyond that under the new guidance? My mum has told me she doesnt want to see me struggle and I am hoping she may help me try and pay this off (heres hoping)! Thank you
Sara (Debt Camel) says
I don’t think they should extend beyond 7 years. It would be great if your mum can help you pay this off
Joanne Patterson says
My mum offered to help me with this and we offered a FFS following an approved vote to reduce my payments caused by the cost of living increases and never ending mortagage hikes. The meeting took place on 20th and they have all voted FOR my IVA will complete. The relief has knocked me sideways, my 5 year anniversary is March but was extended due to agreed missed payments and the lower approved payments. I jsut wanted to thank you and all of the members who have helped me make sense of it all, and the guidance here has been incredible, I recommend this website often. The work that you do here Sara is a lifeline for many, long may it continue, thank you so much, Joanne x
Thomas says
Hi Sara. If a possible reduction in Iva payments was within the fifty per cent allowed would any extension to the term be enforced? Thanks.
Sara (Debt Camel) says
Yes, the suggestion is if the reduction is up to 50% an extension should not be longer than a year or extend to more than 7 years.
Thomas says
Thanks Sara. I really don’t want my Iva to extend if I can help it. I’m going to try and struggle on until my annual review in October.
Sara (Debt Camel) says
how long does your IVA have to go? are you buying or renting?
Thomas says
Hi Sara. Will be nearly 18 months to go plus another 12 if I can’t release equity. I have a house with equity but I’m 67 years old.
Sara (Debt Camel) says
There is no chance of you being able to release equity at your age.
I suggest that 30 months of paying more than you can afford is not possible. And that paying an affordable amount for 42 months may be better.
Thomas says
Hi Sara. Thanks for the advice. Will need to give it some serious thought. I just thought that if my payments were reduced at the annual review then it wouldn’t be subject to an extension in the term.
Michael Logan says
Hi Sara, who could i contact in regards to being mis-sold my IVA. My IVA was due to expire this month but was extended by another year. My debt was £6300 and i was on the verge of paying the debt in full despite being told i would only be paying over £4000. The IVA being extended for another year means i would be paying an extra £1000 more than my original debt. Please help.
Sara (Debt Camel) says
Why is it being extended?
Carol Ann says
Hi Sara, my Iva finishes in February 2023. This will be seven years paying as I could not release equity.
I am really struggling to pay £227 every month and have even had to borrow money from family to just get through. Do you think I would be eligible to have mine reduced even though I do not have that long left?
Thanks
Carol
Sara (Debt Camel) says
Yes. Ask them now!
Carol ann says
Hi Sara, thanks for the reply. Looking into it more I’m thinking Of asking for my IVA to be completed early. They are not very forthcoming but it’s sort a try.
Thank you for your advice.
Sara (Debt Camel) says
i think you should start off by setting out in details how much your expenses have gone up.
Paula says
Hi Sara,
can we submit a complaint to our IVA Supervisor? We reported to him that we had problems with payments of £ 250, we had a 3-month break in repayment because we already have overdue bills for £ 1000. We have a repayment car and a home mortgage. We are in IVA for 1.5 years. It’s a drama. We are approaching remorgage, and he literally blew us, writing that he did not decide about it. We asked for IVA reduction or termination. Husband’s salary was reduced by £ 800 a month. What can we do. We are looking for help.
Sara (Debt Camel) says
We reported to him that we had problems with payments of £ 250, we had a 3-month break in repayment because we already have overdue bills for £ 1000.
How long ago was this?
We are in IVA for 1.5 years. It’s a drama. We are approaching remorgage,
Do you mean your IVA has 1.5 years to run?
Paula says
A 3-month break in the IVA covers July, August and September. About a week ago we were fighting with our IVA Supervisor. We have the impression that we are banging our head against the wall. Nothing reaches him. We have a 3.5-year-old son. Our IVA was started on 18/01/2020. He did not even try to report to our creditors about our problems. Child Benefit calculated his own way. I am on the verge of collapse.
Sara (Debt Camel) says
Who is the firm and are you actually talking to the Insolvency Practitioner or just Customer Services?
Paula says
Yes, we talked, and we have exactly the confirmation in the e-mails exchanged with our IP. I do not want to give the name of the company here, because I am simply afraid. My husband cannot take a vacation, we cannot even take our son anywhere, we simply do not have money for it. from the very beginning, we were badly guided. Our calculations show that we are in the red every month. For every e-mail about the change of the IVA amount or something, “but you signed” We do not know what to do anymore.
Sara (Debt Camel) says
So now it is essential to set out all your problems. in writing. Making a complaint isn’t enough,. you need to be clear about what you want to happen and why.
If the problems are only caused by your husband’s drop in wages, then the new Guidance is not relevant, but presumably you are also finding that your energy bills, food bills, petrol etc have also gone up? This is what you now need to set out in detail. You need to be saying “we would not be able to pay our £250 a month IVA even if my husband’s salary had not been cut because the following bills have gone up …. list them all, however small. HAs your mortgage gone up. if not, when does your fix end?
If you are on the standard energy variable rate at the moment, you need to point out that that is now expected to go up another 63% in October.
When does your car finance end and at that point will you own the car?
What are the bills that you are overdue on at the moment and will the three month break mean you can catch up or just not go any more into the red?
How large were the debts that went into your IVA? How many months have you paid for so far?
Paula says
Two weeks ago, we sent to IP our expense statement, what and how much. He changed everything, because as he stated “we can’t spend more because there are limits” From January our new mortgage will change from £ 469 to over £ 630. Husband sent an e-mail, he wrote back that he did not decided about it and could not advise on this.We were looking for information on this subject and we know that without his consent,we cannot accept the new offer without consulting the IP,especially the new mortgage offer is higher than the current one we are paying now.Car finance ends at the end of 2024
A 3-month break will not help us,It will be the same or worse.Every 10 of each month we have to pay a mortgage of £469 and a car,that is repaid in the amount of £87 a week,and we lave about £57 a week for everything.We pay a mortgage for two installments per month l,because we cannot afford the repayment when it should be paid once,because we are left without money for the entire week.Our debts were £60000.
75% has been write off if I count correctly l,so we pay £15000 from January 2020.
Sara (Debt Camel) says
if you do not take out this new mortgage, what will happen to your mortgage rate – do you know what the SVR (Standard Variable Rate) is for your current lender and how much higher that is than your current fix?
Kristina says
Hi Kristina,
I have not been able to find out anything definitive on your case but wondered if you would like to put the question on this forum:
https://debtcamel.co.uk/help-ivas-cost-of-living/
I would say: ‘I have been unable to make payments against my IVA (started in 2018) for sometime as my financial circumstances have changed and my only income is benefits. I have been advised by Citizens Advice that I am eligible to apply for a DRO and have approached my IVA provider to try and terminate the IVA. They have written to creditors but it has been 2 months now and they say they have to wait to hear back Meanwhile I have other debts and am being chased for payments which I cannot make. Is there anyway I can speed up the IVA company to terminate the IVA?’
Regards,
Rosemary
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Sara (Debt Camel) says
it’s nice of Citizens Advice to point you here.
What exactly has your IVA firm asked your creditors to do – it doesn’t need your creditors permission to terminate your IVA, but it does if it has asked them to complete the IVA on the basis of the funds paid to date.
Have you stopped making any payments to the IVA? Do you mind saying how large the debts are that are outside your IVA? Who are these debts owed to and have you told them you cannot make payments?
Kristina says
The iva has asked for a funds to date I did call them but they couldn’t give me an answer.yes I stopped paying into my iva as my circumstances changed. I owe to a vets bill and also hmrc .it totals £3000 I have notified them I cannot afford to pay .
Sara (Debt Camel) says
so will you be applying for a DRO even if your IVA is completed, not failed?
How many IVA payments have you missed so far?
Kristina says
Yes I will apply for a dro..I have not made a payment since July last year.
Sara (Debt Camel) says
Then I suggest you contact your IP and say you want the IVA failed now as you have missed more than 3 payments and you want to get a DRO set up to cover other debts as well.
You can also ask Citizens Advice to get on with getting the DRO application ready so the button can be pushed when the IVA is failed or completed. Do you have the £90 for the DRO fee saved up?
Kristina says
Hi I have informed my creditors that I can’t afford to make any payments due to change in circumstances. The iva company are doing a funds to date. But they cannot give me any more information when I called them my debts are totaling £12.500
Kristina says
Thank you I will contact them right away..no I don’t have the £90 to cover the dro
Sara (Debt Camel) says
Then this would be a good point to start saving that up. And do talk to Citizens Advice – it can often take a couple of months to get a DRO set up.
Joanne says
Hi Sara,
I have penned a letter to my IP Practicioner, I have tried to cover all of your points – I have had to post over a couple of reply’s to cover it all!
I am writing to you as a worried single mum about my current situation and my IVA.
Back in 2017 I separated with the children’s father and he left me with overbearing debts that I had no way of paying and no offer of support for our children. I was advised to speak to StepChange after almost falling fowl to a rogue IVA company and finally got the support I needed. My IVA started in March 2018 and has been successful for almost 4.5 years. I have taken payment breaks when needed to cover car and boiler costs.
Even through the pandemic whilst others struggled on and I am proud of myself for that but nobody could predict where we find ourselves now and moving forward.
In my last review I did advise that my outgoing costs were going up and the additional income was coming down, I was advised to still show the additional income at a rate that would allow me to only reduce my payments to the 15% threshold of £290, I was advised that going lower than this would mean my creditors would have to agree to the change and they would likely ask for an extension. I did say that I thought this would be unfair as the cost of living is something outside of my control but I also did not want to keep adding time on its already a huge strain on my financially and mentally.
Joanne says
part 2:
I am now at a point where the additional income has dropped even further due the fact customers are spending less as the cost of living affects us all but my daily costs are still rising and my situation is worsening.
My IVA was originally due to complete in March 2023 this will extend to Dec 2023 to cover the agreed payment breaks. If (most likely) because there is a “bankruptcy / insolvency” marker on my mortgage I cannot re-mortgage then this will be extended again by another 12 months taking me to almost 7 years of the IVA. Following the guidance recently issued about IVA’s and the cost of living crisis the guidance is not to extend beyond the 7 years. I would not qualify for a DRO or DMP.
I do not want to FAIL my IVA I am almost 4.5 years in and I have done my absolute best over a long period of time often struggling and it isn’t my fault that I now find myself in this situation. My priority has always been to complete this IVA and move on with my life and be able to keep my children in their family home, the fact I have equity isn’t relevant as I can’t re-mortgage anyway and to force me into bankruptcy would be unfair given I have maintained my IVA for such a long period of time.
Joanne says
part 3
Given all of the above, I would like to ask for your help to get my payments below the 50% to allow me to do this successfully or complete my IVA based on funds paid to date, I understand that creditors will need to vote to accept this change. Given that my income was inflated in my last review to keep my payments in line with the 15% threshold I am already struggling.
A payment break wouldn’t be suitable as there is no sign that bills and prices are going to drop anytime soon so will not solve the problem.
My circumstances are not likely to improve based on the fact that I am salaried and my additional income has continued to decline whilst my living costs are continuing to rise. I am extremely worried about the cost of energy prices in October which they are now saying these will be higher than originally predicted even at the 40% that means at best my direct debit will increase by £87.50 month and will rise again in January.
I have attached a budget planner which was used in for my last review March 2022 and summarised the increases I have already faced and will face going forward.
Sorry its been a long letter Sara :)
Sara (Debt Camel) says
I think from what you have said that looks like a good letter.
I suggest changing this:
I would like to ask for your help to get my payments below the 50%
to be specific about what number you need the payments to be reduced to in order to be able to cope with the expected October energy price rise.
Joanne Patterson says
Hi Sara,
So I have had a response back from IP. Ive read it a couple of times and I think it might be a pretty standard response.
They have told me based on my current circumstances if I want to try and maintain the current payment (reduced at the max 155 already) I will have to earn more or spend less. They have upated my budget with some of the figures but only added £19 onto food which doesnt even fall in line with the current inflation rate – I was already at the max expenditure for food. They have calculate my surplus at £55 more than I had. The updated budget doesnt even take into account energy increases that are coming! They told me I cant include that as it hasnt happened yet.
They have advised next step would be to apply for a variation ( I am 4.6 months in) its not guaranteed 75% have to agree but I thought under new guidance they should agree if the payments are to be 50% less? I have calculated a surplus which is £10 lower than 50%.
As previously stated IVA completion date March 2023 with missed payments over time its Jan 2024 – what chance do I have of asking them not to add another 12 months?
Thank you as always x
Simon says
Hello, my parents are currently 3 years into a 5 year IVA. They have missed the last 6 months payments of £320 and are in danger of breaking the IVA.
They have had letters telling them they will need to pay the last 6 months off within 28 days or they will look to sell the house which they currently own. Is this correct?
The debt they owed in full was around 22k and have been told the iva company will look to do a quick sale to get the money paid off.
I was in an IVA myself years ago and broke it off as I didn’t want to be in it any more but I owned nothing and I just ended up paying off the debt to the companies myself.
Surely that’s what will happen? The debt just goes back to the creditors right?
Sara (Debt Camel) says
why have they been unable to pay – the rising cost of living or something else?
Simon says
Mam was already retired, dad rented due to ill health but they are 68 and 71 respectively.
They have always been able to pay the bill through pensions but have ha to help their other son out with many of his bills.
They are able to afford the normal monthly fee going forward and the IVA will be up in 2.5 years but they have been told if they don’t pay the 2.7k to get their payments up to date then the house will be sold.
Does that dound right to you?
Sara (Debt Camel) says
They can’t just not pay their IVA to help their son out.
It seems to me to be unlikely that their bills havent gone up a lot since the start of the year. Could you help them make a list of this? Because they are entitled to help with that, so it may be that they need to argue that case and accept their IVA will be extended for a year.
Simon says
That’s pretty much what they have done, been paying their other sons debt off and not there own…..crazy I know!
So could they speak to the IVA company again and maybe look at getting the payments down and then of course have it extend for another year?
But is what they said right about them(the IVA company) being able to sell the house to pay the debt off? Is that how it would work?
Sara (Debt Camel) says
An Insolvency Practioner running an IVA has wide powers if the debtor has breached it – and they are more likely to use them if the breach was deliberate. They need to urgently try to reach an acceptable agreement with their IVA firm.
Nicky says
Thank you for this information. I am about to have the creditors meeting to approve an IVA through Creditfix. I did try to cancel it to do a DRO instead, but I could see they were just going to make it difficult for me. Would I have to declare any or all of my ‘cost of living payments’ when I get them? I am currently on ESA and PIP.
Sara (Debt Camel) says
Is your only income benefits?
Do you own a house? Or a car worth more than £2,000?
If you are eligible for a DRO now you should tell Creditfix you do not want this IVA set up and get a DRO. Who is the Insolvency practitioner listed on your IVA documents – I can give you their email address so you can email them directly and say you do not want this to go ahead.
Don’t sign up to a lot of hassle and stress and monthly payments for 5 years just because it seems a bit easier at the moment. One third of IVAs were failing at the start of 2022, before the cost of living started shooting up.
Nicky says
My insolvency practitioner is David Rankin at Creditfix. I do not own a house or a car. My only income is from benefits. Living in Housing Association flat. My creditors meeting is due to take place this Friday the 26th August 2022, and I have already paid £90.
Kind regards
Sara (Debt Camel) says
ok I should also have checked you don’t have car on finance? and that your debts total less than £30k?
if the answers are no and no, then it sounds as though you will qualify for a DRO unless you have already had one in the last 6 years.
You can talk to National Debtline on 0808 808 4000 about whether you are eligible for a DRO. Normally I would suggest doping this before telling creditfix to stop the creditors meeting, but as the timing is getting tight you may want to do both at the same time
Your IP’s email address is david.rankin@creditfix.co.uk. You need to email him to say you beleive you are eligible for a DRO and so do not want the creditors meeting to proceed.
Nicky says
Hello Sara.
I sent 3 emails yesterday to my account manager at Creditfix, my IP David Rankin at Creditfix, and the customer services at Creditfix asking them to please cancel my IVA before it goes to the creditors meedting on Friday 26th August 2022. As expected they have ignored my emails and sent me a reply to say that at this present time everything is progressing as they would expect, and that they will contact me once they have an outcome on Friday.
I did contact National Debtline, and they have been unable to ascertain yet, due to form filling, whether or not I will be suitable for a DRO.
Nicky says
Hello Sara. Thank you so much for your help. Creditfix came through and cancelled my IVA in time, They went out of their way to help and forwarded me to a company which deals in DROs. My DRO has been approved.
Sara (Debt Camel) says
That is very good news. Of course Creditfix should never have got near to approving an IVA with this, but it is good that you are now in a DRO which is a much better options for you.
I hope the rest of your DRO year goes smoothly.
Vicky says
Hi Sara
Thank you so much for this post and all your answers it’s really helpful at such a dire time for most families.
We have an Iva, was set up January 2021 – we pay £395 per month but our expenses/bills have gone up significantly and we are starting to struggle again this is before the next hike in energy prices lands in October.
I called the company – Freeman Jones a couple of months ago. They advised against a reduction due to not satisfying the creditors. We are due a review now and I am concerned that we are going to struggle. Our bills have already increased by £500 per month, that’s mortgage/ gas electric/ car fuel/ food.
Any advice would be really welcome.
Sara (Debt Camel) says
Can you say how large the debts are in the IVA?
Vicky says
Hi Sara the debts are around 230k due to massive shortfall in house price on an investment property we bought years ago. We had to give the keys back to the bank because we were really sinking and it was the leftover debts that were causing us considerable mental health issues.
Sara (Debt Camel) says
ouch.
Your mortgage – is that at a high rate at the moment? And it’s variable?
Is there much equity in your current house?
do you mind saying how old you are?
Vicky says
Awful I know! We’ve just fixed luckily before the last Bank of England increase but it is now £200 per month more than when we took out the Iva. Theirs possibly 80k equity.
I’m 38 my husband is 39
Sara (Debt Camel) says
So you have two problems.
First the reduction to half the current IVA payments that is mentioned in the article above… “It has been agreed that reductions will generally be accepted by creditors of up to 50% of current contributions” your IVA is for such a large amount and the creditors are already getting a very low return that it may be that this will not be acceptable in your case.
Secondly if your expenses have already gone up £500 a month with more to come with higher energy bills, it is hard to see how a £200 (50%) reduction in your IVA would be enough to get you through this.
Vicky says
Exactly. Don’t really know where to turn 😢
Sara (Debt Camel) says
I suppose you could look at getting your IVA firm to propose to your creditors that you sell the house, pay half the equity realised into the IVA and the IVA is completed.
Your creditors would get more than they would have if the IVA had completed as it was originally proposed. And they wouldn’t get much more if your IVA fails and they make you bankrupt.
Sara (Debt Camel) says
NB you cannot sell the house without your creditors agreeing beforehand on this, or ALL the equity you realise would have to be paid into the IVA.
Vicky says
This seems like a huge step. I think we will speak to them and take it from there. Thanks for your help
Sara (Debt Camel) says
ok, but if your IVA is going to fail, then there is little point in postponing the big decision. You need to be talking to someone who knows what they are talking about, not standard customer services. It may be a good idea to email your Insolvency Practitioner.
Vicky says
We are still making the payments and will continue to do so but will have to significantly reduce our food bill in order to do so. To become homeless with 3 children is really not an option, we will speak to the insolvency practitioner and take it from there. Thank you
Sara (Debt Camel) says
If you keep half the equity you won’t be homeless… and you are young enough to rebuild your finances. I am worried you will have very difficult and stressful year and then it will all collapse…
But talk to your IP now and also see if the new Prime Minister does anything that will significantly improve your situation before making a decision.
Vicky says
Thank you I understand. Does it make any difference that the IVA is only in my husbands name, as all the debts were in his name?
Sara (Debt Camel) says
In that case you can definitely argue that if you sell the house you should keep half the equity. If your IVA fails and a creditor makes him bankrupt (worst case) you would still get to keep half the equity when the house has to be sold.
Paulina says
Hi Sara
I have a question: Does this New Guaidance to Support the IVA only apply to England or also to Scotland, Wales
Thank you
Sara (Debt Camel) says
It applies to Wales.
Scotland has different insolvency options and an IVA is not one of them.
Paulina says
We have been in iva for almost 2 years, we have deferred repayments for the next 3 months, our Supervisor does not cooperate with us at all. We have been asking him for 4 months to reduce payments, or to close iva on existing payments. He does not receive anything. We do not know if we can refer to the New Guaidance protocol or not.
Sara (Debt Camel) says
Are you in Wales?
Have you been communicating directly with your IP or via customer services?
Can you say some more about your current situation – are you buying or renting? do you own a car? what are your current IVA payments supposed to be?
Paulina says
Englend,I asked because someone told us that our company iva is registered in Scotland, but we checked and there is Manchester, at least this address is given.
We are in touch with our IP all the time, but he seems to be ignoring our situation, his own pocket is what counts for him, not our situation.
We are already in arrears with over £ 1500 bills. The second time we have a break in repayment for another 3 months, but it does not make sense because we can’t pay off anything. We have a mortgage and we are in the Help to buy program.We have the car on loan for over 2 years.We are looking for help, because it is getting worse. We have a 3.5-year-old son. We do not know who to go to for help. We are already slowly giving up. Our IP does not even present our situation to our creditors.He only replies to our e-mails that he can suspend the repayment or reduce it by only 15%.
Our monthly repayment is £250 and its too much for us.
Sara (Debt Camel) says
Can I ask how large the debts are in your IVA?
And how much equity there is your house (your don’t own the government’s help to buy part)?
Paulina says
Mortgage 140 thousand, our deposit 10 thousand (5%) and help to buy 40 thousand (20%). We do not get paid help to buy, because due to a pandemic my husband lost his job And this way we lost our savings, there was not much of it, but…
We have to start paying HTB either next year or from 2024, we need to review the documents.Our house is now worth around 245,000
Sara (Debt Camel) says
And how large are the debts in your IVA?
Paulina says
About 60 thousand
Sara (Debt Camel) says
So you are in a difficult situation and the new Guidance only offers limited help.
You were from the start making quite a low contribution to the IVA for the size of the debts that went into the IVA.
You can complain to your IP that he should propose to your creditors that your IVA payment can be reduced by half – that would involve the IVA being extended by a year.
But it sounds to me as though you would struggle to pay £125 a month for 4 more years, plus an extra year in lieu of equity release – your arrears on bills are already alarmingly large and you have already had payment breaks. Your IP may say this is not sustainable.
It is unlikely your creditors would agree to close the IVA on the basis of payments made to date. I have listed the most likely reasons in “Will your IVA firm agree to complete your IVA on the basic of funds paid to date?” in the article above. Your creditors have actually received very little and your IP will have had most of what you have paid so far. This is not halfway through the IVA. And you have an asset – your house.
It may be that your IVA simply has to fail, leaving you back with those large debts. One option is to let the IVA fail and sell the house and try to settle the debts as cheaply as possible.
If you have to start paying on the HTB portion next year, then that will make your position considerably worse. At that point, and with rising mortgage rates on your mortgage when the fix ends, you may have no option but to sell the house at that point, in which case it may be better to do it now.
You must find out now when you have to start paying for the HTB – this is an important part of your financial situation and you need to know it now while you are having to take difficult decisions.
Another option is to get your IP to propose to your creditors and you should sell the house now and pay into the IVA some of the money raised, leaving you with 15% of the value of the house as equity, and for the IVA to be completed at that point. This would then be proposed to your creditors for them to agree.
I think it would help you to go over all your options in details with a debt adviser. I suggest you phone National Debtline on 0808 808 4000. There may be something important in your situation that you havent mentioned that could change the options.
You CANNOT sell the house while you are in the IVA without your creditors having agreed how much mioney you can retain – if yoiu do all or almost all the money would have to be paid into the IVA.
Paulina says
Thank you Sarah.
I have a few more questions about the IVA.Is it true that our IP may close the IVA on the grounds that in the era of rising inflation and prices in grocery stores, we spend e.g. £ 800- £ 850 a month for food, etc. and we should £ 600, which is not reported, before signing the contract. Family 2+1.
And how is child benefit calculated? Because I receive £ 87.20 for my son a month and so it is credited to the account no more, and our IP enter £98 in expenditure and income form.
Sara (Debt Camel) says
in the era of rising inflation and prices in grocery stores, we spend e.g. £ 800- £ 850 a month for food, etc. and we should £ 600, which is not reported, before signing the contract.
Sorry, are you saying that you were spending £800-850 a month but the IP only allowed £600 when setting your IVA monthly payment?
The Child benefit amounts – I think your IP was converting the £87.20 which you get every 4 weeks to a monthly equivalent. Which should have been c £95. So £98 is a little bit too much.
Paulina says
When our IVA was launched, we were spending around £ 500- £ 550 a month on food. We have recently found out that it is so stipulated by law that the IVA allows for food, toiletries and cleanings we can spend up to £ 600 (family 2 + 1)Now, when inflation goes up, prices of everything as well as food etc we spend around £ 800- £ 850. It’s not our fault. We can’t stop it, we see what’s going on in the stores.Our IP allowed us to pay a maximum of £ 725 for food, toiletries and cleaning expenses a month or else they would terminate our contract.Nobody informed us that the monthly budget of the 2 + 1 family was £ 600. We were not informed about most of the things.My husband’s earnings dropped from £ 830 to £ 642 a week. We have overdue bills. Sale of the house is not included because we will be left with nothing and will be left homeless. No one will rent a house to a family with a child and two dogs.How are we supposed to talk to our IP when he doesn’t care about our situation? We can cry on the phone as we have a tragic situation, but he doesn’t seem to care.No one informed us at the beginning about the drawbacks of IVA, about the worse side, how it really is.
Sara (Debt Camel) says
We have recently found out that it is so stipulated by law that the IVA allows for food, toiletries and cleanings we can spend up to £ 600 (family 2 + 1
Not any law I am familiar with.
Sale of the house is not included because we will be left with nothing and will be left homeless.
you would not be left with nothing if your creditors will agree to you keeping 15% of the value of the house. You would have enough to be able to pay a years rent in advance – that gets over most creditors not wanting to rent to someone with an IVA on their credit record.
Of course this is not what you want. But you have to look at what is possible.
It isn’t clear to me that you can afford your house when you have to pay for the HTB part as mortgage rates are rising even if you did not have any debts or an IVA at all…
That is why I have suggested going through everything with National Debtline.
IVAs have many drawbacks. But what other option did you have, with 60k of debt, that would have been better… apart from selling the house?
David says
Hi Sara, my wife receives 369.60 attendance allowance. In regard to the cost of living increase a lot of this is being swallowed up in increased expenditure. We pay 110 a month to IVA Hanover. Does this AA benefit act as income now for the iva as it is not taken into consideration at the moment. We should finish Iva May/June 2024. Thank you for advice.
Sara (Debt Camel) says
Has she just started getting this? What other income do you have?
Are you buying Or renting.
David says
Ah thank you Sarah for taking time to look at this query. I did miss your reply, apologies. However good news is IVA now cancelled and we both have DROs. So relief for that. AA money not applicable in regard to income for either IVA or DROs. In fact expenses for a DRO very realistic and really match spending. Again thank you. You certainly help many people. Oh Hanover passed us to the Financial Wellness Group who were superb, Samantha and Mike really moved it along. All done within four weeks from start to finish. All creditors accepted the situation and IVA removed from insolvency register with DROs replacing. 74 years young and no more credit going forward for either of us which has been part of our lives for 50 odd years. We realise that this is a new start and having been involved with overspending on credit cards, it is a huge relief to be free.
Sara (Debt Camel) says
That sounds a good resolution for you both.
Monica says
Hi Sara.
I have some question for you about IVA,I hope I can ask question here for a specific answer.My friends here been in IVA since January 2020.They have a house in mortgage,one child.They are pay £250 a month for IVA.Now they have second break in repayment.I would like to know how much they would have to pay at once for the IVA to be completed.It would be a donation,not a loan,because I know it can’t be.
Who decides on shopping expenses?Is it mainly about grocery shopping.Do creditor decides how much they can spend per month?Especially now,when inflation is rising and the prices in stores also.
Thank you for answering.
Sara (Debt Camel) says
How large were the debts that went into their IVA?
When does their current mortgage fix end?
Monica says
About 60,000.From what I was told,the current mortgage fix end in December this year.From January they will be paying around £640,they are now.paying around £500.
They want to have a second child.My friend was pregnant,but unfortunately 3 weeks ago she had a miscarriage.When she found out that she was pregnant,she experienced stress related to the situation with IVA and everything that was going on.
The last time they contacted their IVA Supervisor,he wrote to then that creditors have their rules and cannot spend as much as £750 a month on groceries,otherwise he will terminate their contract.Could this be?The prices in the stores are increasing week by week.On the simplest products you can see how prices go up They calculated that they spend about £870 a month on grocery shopping per month.
Sara (Debt Camel) says
That is a lot of debt – there are rules about reducing IVA payments because of inflation as the article above explains. But it would have to be approved by their creditors.
re groceries, I have to agree with the IVA firm. £870 is an extremely high figure. They must be able to reduce that significantly. IS there a lot of alcohol, cigarettes aor takeaways in there? See https://debtcamel.co.uk/cut-food-bills/.
They could propose that their IVA is completed now if someone paid the rest of the £250 a month for as many months as would total 72 in all – I can’t guess how many that is as it depends on how long the breaks have been.
Monica says
Can they appeal to their IVA Supervisor to reduce the monthly installment to 50%?Will he agree to this and does he have to agree?
So if someone wanted to pay off the rest of the IVA,it counts £250 x for the rest of the months that were left?Is that correct?
No there is not alcohol,cigarette or takeaway.None of the above.
Sara (Debt Camel) says
They can Ask.
But the supervisor would have to think their revised expenses showing they can no longer afford the £250 were reasonable. Plainly he doesn’t thing their groceries are.
There is no formula that will definitely be accepted for an offer to close the IVA. What matters is if the current payments are affordable. And how long the IVA has to go, which in the case of a house with equity would nomrally be to the end of the 6 year point, extended for any breaks.
That amount could be rejected. Or a smaller amount may be accepted.
It may be better to work on getting that large groceries bill down and then revisit the question in January when it is know what the mortgage will increase to.
Billy says
Hi Sara,
So I am in final year of an IVA and I currently only pay £130 into my IVA. My wife does the same.
I have just had the final year review and no secured loan or equity release was possible.
I have an interest only mortgage that has gone from £249 to £475 in 3 months and now with news today of further rises imminent I can no longer make my IVA payments. I have already borrowed a few hundred pounds from family to pay the last payment and that cannot continue.
I am absolutely gutted that the IVA should have come this far only to fall at the last hurdle.
My last resort would seem to be to ask the IVA firm to complete the IVA in view of my payment record (only missed 2 payments because of covid) and with 12 payments to completion.
Do you think it would be a reasonable request?
Sara (Debt Camel) says
yes I do. Let me know how this goes?
Billy says
Just thinking about this.
What if I apply for the settlement/completion and they say no. Could they fail the IVA from their end due to lack of ability to pay that I’m admitting to?
I mean would it be better to borrow the 12 months remaining about £2600 from family (if I could)?
Sara (Debt Camel) says
they cant fail an IVA if you are paying it.
If they say they won’t propose it is completed now on the basis what you have paid so far, they say they could reduce the payments – that would lessen the amount you had to borrow off family to get through.
Joanne Patterson says
I couldn’t find a reply option for my previous thread, So I am waiting for reply for my variation to get my payments down to £120…it’s been about 2 1/2 weeks since they put it forward, since then the BOE rate has increased and they have just announced there may be an urgent meeting given the news today about the £, on a standard rate mortgage , letter is in the post already fir the first increase which will be approx £30, this is literally never ending isn’t it ? I don’t even know what to say to my IP at this point ! Do you think I should wait for the decision on the variation first ? I feel stupid going back so soon!
Sara (Debt Camel) says
the variation – is the term being extended?
Joanne Patterson says
Not sure, they did say thats what they may come back with which I could challenge given that Ive got to do the equity part, not a definite but a maybe I am still waiting to hear back on the decision.
Sara (Debt Camel) says
I think this point – while you are waiting for a variation and when interest rates are may be about to be hiked again, it’s probably better to wait.
how large are the debts that went into your IVA?
Joanne Patterson says
They were approx £40k (left with everything when we split) IVA since March 2018 with a few payment breaks over the last 4.5 years.
Joanne Patterson says
Good news my variation has been agreed and payments now £120 from £190, I dont think there is any conditions (extra months added) as I think it would say that in the email and would have to be agreed by me. Since I submitted my request there have been 2 interest hikes so my mortage is going up..its never ending isnt it.
I dont know if you know but SC have now put forward a mass “variation agreement” due to the cost of living down to a mimum of £50 per month and will be signing off variations (subject to evidence on costs increasing for the individual).
So my next step is a FFS offer for remainder of the term (19 months – it should have been 10 months officially but it includes the agreed missed payments I have taken) my mum is going to pay this for me to help me.
Do you think I have a good offer? I did read that a good offer was the final amount minus 3 payments to allow time for that to go through the process. Thank you
Sara (Debt Camel) says
sorry I missed your comment.
If you mum can afford this, then I would hope your creditors accept it.
If you really can’t (because with mortgage rate going up you probably can’t afford to repay her) then ask SC to reduce your payments again?
Slav says
Hi Sara.
I have a purely theoretical question about the early termination of an IVa through a full repayment. We are 17 months in IVA, the second time we have a break in payments for the next 3 months.We calculated that we would have to offer around £ 13,000 to pay off, but unfortunately the family is able to help us in the amount of around £ 10,500.Be honest, would this smaller amount be enough to end IVA earlier?My wife and I are already mentally exhausted, we are still arguing, our marriage is suffering, our IVA Supervisor is deaf and blind to our requests and emails.We have no money for anything, the debts of the accounts are rising We have a house, but please do not suggest to sell it to pay off the IVA,We will be left with nothing And it is not true that we can rent something, because we know well that no agency will rent a house in such a bad credit store, and then we will not have anything left after selling the house.Thank you for your replay.
Sara (Debt Camel) says
how large are your monthly payments?
how large are the debts that went into the IVA?
the mortgage – is it on a fixed rate? if it is, when does the fix end?
A “full repayment” means repaying your debts in full plus the IVA fees – my guess is that that is not what you meant. you meant that the remainder of the IVA payments would be c 13k?
Slav says
£260 monthly payment
£59 thousand when we apply for IVA
We are paying £497 for mortgage from January we are going pay £642
We are in IVA from January 2020 now we have a 3-month break in repayment for the second time, it does not give us anything, because unfortunately we cannot overpay any outstanding bills.We are looking for advice, help from someone who could advise us sensibly how much to propose an amount to pay IVA earlier. The family can help us in the amount not exceeding a maximum of £ 11,000.
We’re exhausted. Our life and our marriage suffer from it. Everything I earn a week goes for food and current bills. We don’t smoke, we don’t buy alcohol. We don’t order take-out, because my wife cooks herself.I haven’t been on vacation for over a year, because I can’t afford it. Christmas is coming, we don’t have a penny, and I will have a 3-week holiday break at work.We have a 3-year-old son. Wife would like a second child very much. I have read that our creditors can agree to a smaller amount due to high inflation, food prices, bills went up.
Sara (Debt Camel) says
were your IVA payments £260 at the start?
can you add up the total of payments you have made to the IVA so far?
your house – how much is it worth and how large is the mortgage? In January 23 you have a new fix agreed – how long for?
Slav says
Sorry £250 not £260
So it’s start from 18 of January 2020
So far we pay £250 × 17=£4250
Our home is worth around £240k
New fix is for the next 2 years from January 23
Sara (Debt Camel) says
How large is your mortgage?
Slav says
142k
We bought a house with Help to buy program.
As of today there are £142 thousand
Sara (Debt Camel) says
and when will you have to start making paynments on the HTB part?
Slav says
I think from 1 of January 24
Sara (Debt Camel) says
what was agreed at the start of the IVA about what would happen when you had to start paying interest on the HTB part?
what outstanding bills do you have at the moment?
This matters because it is VERY hard to see how you can manage the mortgage rises now and having to pay the HTB as well will likely be impossible. Even if you don’t have to make any IVA payments…
Slav says
Nothing was agreement.I talked to my wife and she doesn’t remember anything agreed, which will happen when we start repaying the HTB program.There is nothing in the contract between us and the IVA company either, it is just taken in the paragraph about the financial history and reason for difficult: WE THNE PURCHASED OUR CURRENTLY PROPERTY WITH THE ASSISTANCE OF 20% OF HELP TO BUY SCHEME AND USED CREDIT TO PURCHASE SOME FURNISHINGS.
Our outstanding bills at the moment are for around £2200. on top of that, there will be a water bill for a long time.
Andy says
Hi Sara,
I’m in an IVA with 12 months left to go, paying £96/mo. My self-employed work ended back in late August and I’ve had to sign on for Universal Credit while I look for something else. I have a disability which limits the kind of work I can look for to some extent. I live with my mum and my only asset is a car worth around £1000 (which my IP has previously agreed is necessary for me under the circumstances).
Would I have a good case to pursue the possibility of asking PayPlan to complete my IVA on the basis of payments already made at this stage? I haven’t missed any payments up to this point and all were made on time. How would I go about asking for this in a way that wouldn’t be abruptly rejected?
Thank you for your advice in advance.
Sara (Debt Camel) says
I think Payplan will expect you to spend some time looking for work. You could ask them for a payment break for a few months to see if you can find a job.
Tammy says
Hi Sara,
Can the IVA revert back to the original debt if you try and settle?
My husband’s brother passed leaving us a lump sum of 20k.
We were told we could settle for 5/9k for year 5/6 but now they have come back with final settlement figure of original debt so over 30k as we have already paid 18k.
Original debt was 41k
Thanks in advance
Sara (Debt Camel) says
We were told we could settle for 5/9k for year 5/6
was this before the IVA firm was aware of the inheritance?
Tammy says
Hi Sara,
Yes it was before.
As the debts were sold off to other company’s after the chairman’s report how can it convert back to original debts?
Sara (Debt Camel) says
the statement that you could settled for 5/9k was made before the inheritance which changes the position. I am afraid your IVA firm is right to say it no longer applies. See Case 3 in this article https://debtcamel.co.uk/iva-settlement/
AN IVA doesnt change the fact that owed the whole original debt, less any payments made to your creditors, until the point where the IVA is settled. So the IVA firm is right to say you have to repay all the debts in full plus the IVA fees… not just the sum total of the remaining payments in your IVA.
The fact the debts have been sold during your IVA isnt relevant – the debt purchasers are going to get a nice windfall from this.
Tammy says
Hi Sara,
Thanks for your response.
The company that now own this debt seem to have no idea,when we call to ask questions they are clueless put us on hold then hang up.
They gave us a final settlement stating we had paid off 18k and then when we called today the figure was 14k?
I have no faith in them that are sticking to the original terms on the chairmans report and dont want to pay the fianal settlement without knowing it is 100% the correct amount.
Can you recommend where we could get advice about this legally that wont cost a fortune.
Thank you in advance.
Sara (Debt Camel) says
“The company that now own this debt”
Are you talking about the IVA firm? Or the creditor of one of the debts that went into your IVA?
Tammy says
The IVA firm,we are now on our third company.
Sara (Debt Camel) says
OK, well legally they do not not own the debts in your IVA.
If you can say who it is, or if you can say who the Insolvency practitioner is, I can give you the email addess of the IP you can complain to.
You are ntitled to ask for an explanation of what the remaining debts are and how they have been calculated.
You could go to your local Citianes Advice or a Law Centre (https://www.lawcentres.org.uk/about-law-centres/law-centres-on-google-maps/geographically) – this would be free. I could give you the name of a solicitor that specialises in insolvency but this would cost money and it isn’t clear to me that you can’t get the answer you want yourself by being presistent.
Colin says
Hi, I have 11 months left on my 5yrs IVA AT £175 per month, so £1925 left to pay, Total would be £10500,, I belive my original dept was £11.942, I got £4.200 from a pension but never though about it affecting my iva, stupid me .If a ask for an early settlement i dont mind paying the extra to get rid of these people. ie paying the £11.942 Can you give some advice on this situation, Much Appreciated.
Sara (Debt Camel) says
Oh dear, this could be a very expensive mistake. I am afraid your maximum liability here is not your total debts at the start, but the total debts plus the IVA fees, which will be several thousand pounds.
Unless your IVA was written so that your pension is an excluded asset, it may well be that you have to opay the whole amount into the IVA.
Did you take any advice on taking money out of your pension?
COLIN says
Hi. no i never though. stupid me. where would i find that detail on the pension being excluded, I HAVENT ACTUALLY RECIEVED THE MONEY YET SO NOT SURE IF ITS TOO LATE TOO CANCEL THAT BUT I DOUBT ITS POSSIBLE
Sara (Debt Camel) says
Talk to the pension firm NOW and say you have changed your mind about the withdrawal.
The pension is VERY VERY unlikely to have been excluded without you being aware of this.
Michelle says
Hi
My husband is at the end of year 4, We are expecting them to ask us to remortgage next year
I don’t want a remortgage I want the extra 12 months of payments
What are the chances of getting them to agree
The IVA is just in his name but we have a joint mortgage and I don’t work so have no income anyway and I owe money on a overdraft paying just £2 a month.
Do you think I can object or would we just get declined as I have no income
Sara (Debt Camel) says
Are the repayments currently affordable?
Is your mortgage on a fixed rate, if so when does it end?
Michelle says
We have just had to reduce the IVA payments from 200 to 170 with the cost of living, The mortgage is in 2 parts 1 part fixed and 1 part variable, its gone up £60 this year already
Sara (Debt Camel) says
That seems a small reduction if the mortgage has gone up £60. Is it enough or are you struggling? Because you can ask for more as the article above says.
When does the fixed rate end?
These questions matter as they affect whether a remortgage or secured loan would be affordable. And they will also reduce what you have to pay in an extra year… the more you can Get the current payments down, the less realistic any remortgage is.
Michelle says
They said we could ask for lower payments but a meeting would have to be held by creditors and they would add another 12 months onto the IVA which I didn’t want to as could potentially take that to 7 years. I really don’t want the remortgage though and read that because its a joint mortgage that I can refuse to this as I’m not bound by the terms of IVA just my husband so it would mean the extra 12 months of payments which would be fine
Sara (Debt Camel) says
did you agree to an RX1 restriction when the IVA was started?
once again, when does the fixed rate end? This may well be a good reason why a remortgage could not be approved.
Andrea MARIE Stewart says
Hello, I received the cost of living payments end of last year. 1 payment of £324 in September and £326 in November. I put £200 aside as I worked out if I was able to keep the first 10% increase of income for each payment and I’m going to call tomorrow to make a payment. I didn’t know if I needed to make a payment as its towards the cost of living? I’m worried now it’s classed as a windfall, even though it’s extra benefits for the cist of living crisis. Can you advise me on this please?
Sara (Debt Camel) says
when was your last review?
are the IVA payments easy at the moment?
Andrea MARIE Stewart says
I haven’t had a review yet. I thought I would but just got a report. Do I need to call them about the government cost of living payments 2 x £325 and do I need to pay back some of it even though its towards the cost of living crisis? Payments are affordable I’ve just had to make differences in my budget
Sara (Debt Camel) says
Well my guess is that you are managing because of the cost of living payments and that actually your expenses have gone up a lot too.
But it’s odd not having an annual review and not helpful – you need to know what is going on. Who is your IVA firm?
Andrea MARIE Stewart says
I’m making payments to Ebenegate. I emailed them regarding changes and they replied to email annual review @Ebenegate I emailed them again and Creditfix replied. I’m very confused to say the least.
Clare Wilson says
We were told by Stepchange that cost of living payments were not considered an extra income in our annual review and that they would not be counting it in the budget form. Our review was in September so our bank statement showed this payment.
Alan says
7 payments to go + 5 payment break payments for completion of a 5yr IVA… currently paid to date £30k monthly payment current £739 & 5 payment break payments due of £595…would I be in position to ask for a paid to date settlement? Due to cost of living rises over last 12/18 mths ?? Opinion required
Sara (Debt Camel) says
how large were the debts that went into your IVA?
are the current £739 payments ok, hard or almost impossible?
Allan says
£56k finding it very hard with cost of living right now ….eg since Jan 2022 mortg gone up by £300 pcm gas/elec up by £180 pcm food cost gone up by £200 pcm the list goes on
Sara (Debt Camel) says
that makes the current payments sound unaffordable so something has to happen – either MUCH lower payments or completed on the basis of funds paid to date. (I am assuming you haven’t had a good pay rise to cancel out a lot of those).
has your IVA firm talked to you yet about equity release?
Allan says
No not heard from them since last annual review at end of last year …should have ended payments in Aug 23 …but have 5 payment breaks to clear up when had 4 months off work with broken leg so had to take break as no bonus while off sick … when will they approach me as no chance of getting remortgage at current climate but not wanting this carrying on for another 12 months at these very high payments ..should I wait for them or go for paid to date attempt now
Sara (Debt Camel) says
I think you should contact them now. But before you do, go back and work through every bills increase you have had over the last and write them all down.
Sarah says
Hi Sara
My IVA company requested a variation meeting to request my IVA be settled on the basis of funds paid to date due to cost of living under the new guidelines. I have made 15 payments into the IVA I was inially informed I was not eligible to have a DRO however I was informed by debt line I would have been eligible. The creditors have rejected this proposal, is it worth appealing to arrange another variation meeting rather than now applying for a DRO to effect my credit file for a further 6 year as the creditors won’t recieve any further dividend either way?
Sara (Debt Camel) says
Who is your IVA firm?
it may be simpler to just get on with failing the IVS and have a the DRO. Th3 IVA has destroyed your credit record for the rest of the 6 years any way, so a DRO now only extends that by another year or two. If you try to get another variation meeting and that fails you have just wasted another few months.
Karen says
Hi Sarah
We are 4 years into a 6 year Iva. Our annual review is due this month. Our mortgage has gone up by £800 per month then obviously food/energy bills and council tax have increased. We have met the payments so far by working overtime to make ends meet. Obviously both working 60 plus hours a week isn’t sustainable or guaranteed income and I worry if either of us needed time of sick we just wouldn’t meet these high repayments.
What do you suggest?
Sara (Debt Camel) says
I suggest you ask for your payments to be reduced as you cannot manage the current amount of overtime.
Donna says
Can anyone advise please?
My husband and I have a joint IVA , 5 years is up in August 2023. Original debt was £43000, we pay £620 per month and by August will have paid off more than £38000. We have been contacted by Select askjng us to release equity. After a few valuations as we did not agree with theirs (due to lots of work needing to be done as we haven’t been able to afford to do anything whilst paying the IVA) they want us to take out a second charge of £15,000 over 5 years at 12%.
We have struggled so much especially this last year with cost of living, interest rates etc. we have an interest only mortgage so were hoping to pay more off this once our IVA was finished.
Do you think it would be worth asking our IP to complete our IVA after the 5 years or pay another 1 year . I really don’t think i can do this for another 5 years. What was supposed to be a way of getting our of debt , we will be back in debt again with this loan.
Sara (Debt Camel) says
is your mortgage currently at a variable rate? if not, when does the fix end?
is the £620 a month affordable at the moment?
Sara (Debt Camel) says
ok, you need to go back to the IVA firm immediately (like tomorrow) saying you are in significant difficulty at the moment and need your monthly payments reduced, and this is likely to get worse next Thursday if the Bank of England, as expected, increases rates again.
Ask for your payments to be reviewed in the light of the this, as you have struggled through but cannot manage any more. Say you want the review to take account of expected interest rate rises in the next year.
Getting your current payments reduced will reduce the amount of extra you can be asked to pay in any secured loan.
Donna says
Ok thank you , I will ring them in the morning. Should I ask for them to consider completing the IVA due to the amount we’ve already paid or shall I just ask for a reduction at this stage.
Sara (Debt Camel) says
I think you should ask for a review. If that determines that you can pay little or nothing, then ask for the IVA to be completed.
Let me know how you get on!
Donna says
Thank you , I have asked for a review. We have to provide bank statements and evidence that payments have changed. I will let you know what happens.
Donna says
I’ve sent our bank statements, payslips and expenditure and our IP is going to speak with Select to see what they say. Out mortgage payments have gone up £280 in the last 6 months alone without all the other increases with cost of living etc. She also said that if they went to the creditors at this point they would tell us where to go! She said she will be in touch soon so hopefully we’ll have some more news soon.
Sara (Debt Camel) says
Ok so that suggests that your monthly payments should drop to 340 or less. And that’s before any rate rises resulting from the Bank of England meeting tomorrow.
Did you supply evidence of othe cost of living increases?
Did Select go through an income & expenditure statement with you?
The options from here are
1) select come back with a proposal to release a lot less equity.
2) select say that isn’t possible and so you have to make another years payments at the lower level
3) depending on the interest rate change on Thursday, you push for your IVAbeing completed t the end of the 5 years with no extra year.
Donna says
I told them that my husband’s income had decreased significantly since we took out the IVA, fuel and food costs. Select did go through an income and expenditure with us , its shows a deficit of nearly £400 this month, but they still say that we can afford the loan. I have sent them exactly what has come out of our bank this month and he is going to have another look at it. When i mentioned the BoE interest rate possibly going up again and how that would be worse for us he said ah it wont be by much anyway!
We will see what our IP says when she gets back to us. Our next payment is due 10th July, she said to ring if we have difficulty paying it and hopefully we will have had a review by that time.
Thank you for all your help and advice.
Sara (Debt Camel) says
Select did go through an income and expenditure with us , its shows a deficit of nearly £400 this month, but they still say that we can afford the loan.
In that case I think you should also email Select and ask them to explain how they think the proposed loan is affordable because the I&E shows a large deficit at the moment. Point out that the FCA says that lenders should “Make sure your approach to taking on new borrowers takes account of the financial pressure they may be facing and the impact on their expenditure.”
Donna says
Hi Sara
I just wanted to give you an update. We continued to speak with the IP and they finally agreed to a variation meeting. It took 10 weeks for them to arrange their proposal then a further 28 days before the variation meeting.
We finally had confirmation yesterday that the creditors agreed to complete our IVA on funds paid to date.
The relief is unbelievable I’ve cried, laughed and danced around. It feels so great after such a worrying year. It has honestly nearly broken me.
I want to thank you for your help and advice these last few months, you have been a wonderful help with honest, frank advice.
Now we will concentrate on building savings and our debt free future.
Thank you so much 😊
Sara (Debt Camel) says
excellent – a shame it has taken so long and been so stressful but you have got there in the end.
Kate says
Hi i wanted to know how to cancel a recurring debit card payment to IVA company. I just want iva to fail then set up payment plan for debts as they only 3000 and it be quicker and cost less me paying it off myself plus i cant do overtime as iva will take more. So to get debt free quicker as still have 3 and half years left i want it to fail stop paying. Just cant cancel recurring debit card payments. Bank said to report card lost then get new card will this work. Thanks
Sara (Debt Camel) says
How large were your debts at the start of your IVA? Did the IVA firm explain the option of a debt management plan to you?
Who is the IVA firm?
Just cant cancel recurring debit card payments.
You can cancel a continuous payment authority over a debit card. This is what the FCA, who regulates your bank, says: https://www.fca.org.uk/news/news-stories/continuous-payment-authorities-it-your-right-cancel.
If your bank wants you to report the card lost, well that is OK providing the IVA firm doesn’t ask for the CPA to be transferred to the new card.
or phone the bank again and quote what the FCA says and ask to speak to a manager.
Kate says
My debts at start of iva were 5600 but ive been paying 100 a month for 18 months 2 large debts totalling 1600 were in dispute dont owe them also iva had refund for 2 debts due to heing misold but the money gone into iva also as want to overtime i know this will increase monthly payments or extend length of time. U want to go with step change do DMP pay the 3000 off quicker so can start actually keeping extra income. Thanks i contact bank again
Donna says
Ok so Ive just had a phone call from Select again and after them checking through the figures again and me telling him again and again that we could not afford this, he said we would have £150 spare at the end of the month , which according to my figures we wont. I asked what will happen if and when the interest rates go up again and he said he would ring me back. Anyway he has finally agreed to go back to our IP and suggest no equity can be released. I will wait to hear from them now.
Donna says
Hi Sara
I have telephoned my IP yesterday to say that we would have difficulty paying the payment due on 10th(tomorrow).I explained that we would have difficulty paying it, we could pay it but then would struggle to pay the rest of the bills for the rest of the month. I said i was terrified of the IVA failing this close to the end of the 5 years so was unsure what to do. They advised us to not pay it Monday and to fill in another income and expenditure form for them. This shows a deficit of £100 without taking into account the £620 for the IVA.
The lady I spoke to said as we own 2 rental properties we could sell one to release the funds, I thought you couldn’t sell while in an IVA, but I dont think there is much equity in them anyway to be honest as we bought when the prices were quite high. They are supposed to be for our children when they are older so don’t really want to be forced to sell them. They were in negative equity when we started the IVA . Anyway she said that she wouldn’t really be able to go to the creditors and ask to complete now as we have these properties etc and said do I really want to risk them saying id have to pay another year on top of the year instead of the equity release year( so 7 years in total), and maybe just to try and struggle on as we are for another year. Another option she mentioned was to pay final amount of around £8000. I said we couldnt ask anyone for this much.
Sara (Debt Camel) says
So tell me about these rental properties.
What are they worth – check current prices. How large are the mortgages. Are the mortgages fixed rate, if so when does the fix end? How profitable (mortgage-rent) are they a month at the moment?
I am sorry but you may well have to sell at least one of them unless they are still in negative equity. So you have to establish that. Will there be any money left after paying the costs of selling.
Your own financial position is very far from safe, your own mortgage is interest only, wanting to keep those two properties “for your children” is just fantasy.
You cannot take on a ludicrous secured loan. And opting for another year of unaffordable IVA payments is going to be a disaster as well. Your IO mortgage payments will be continuing to rise.
Donna says
The properties are both interest only, one mortgage is £80,000 and the other is £82,000. Both are worth about £100,000. I understand what you are saying about selling and If we would have been in this position a couple of years ago i would have sold if id known we could but as we are nearly 5 years in, to sell now , (6 months notice to tenants needed as well) i feel we would be better off just struggling for another year. And maybe asking family to help to reach the monthly payment.
The rents now are more or less the same as the mortgage so we are not making any money at all from them. I just feel in fear all the time of something going wrong, its horrible.
Sara (Debt Camel) says
Well the mortgages will be going up a couple of times more in the next 6 months, so you are going to be losing money every month? It just takes one tenant to stop paying and you are facing a disaster with the time to evict them.
It’s up to you if you want to get family to help you limp through the 12 month IVA extension. But do the maths on base rates going up to 6.5% to see how much your own mortgage and the BTLs mortgages may go up.
Donna says
Sorry had to do this in 2 messages
I got the feeling she was trying to manipulate me into sticking to the amount we are paying now for another year instead of asking the creditors to complete now due to funds already paid.
Should we push them to ask the creditors in the hope of completing now? If they said no would we then have to pay another 2 years? Also should we pay tomorrow or leave it until they get back to us?
Sorry so many questions, i feel we see so near yet so far. Im mad with myself for struggling for so long but also with the company as every year they’ve seen our bank statements and payslips so must have known we were struggling but just emailed to say to continue with the same amount. This is the first time they’ve asked for an income and expenditure since the beginning.
Sara (Debt Camel) says
don’t pay tomorrow because you can’t afford it. Find out how much equity there is the rental properties. you cannot negotiate with your IVA firm or have anything sensible to put to your creditors unless you know the facts.
Kate says
Hi Sara
I asked for my iva to be terminated. I already been in touch step change and seems DMP best option and pay back over less time. I wondering what will happen to a firm called Liberay legal that the IVA advisor said they have to try to see if have any PPI claims or mis sold unafforable lending. Do they stop once IVA terminates as it was IVA advisor then Anchorage chambers that said i have to allow them to looks for compensation. Sorry i just worry bout everything.
Sara (Debt Camel) says
if they carry on then any claims about debts in your IVA are likely to be settled (if upheld) by reducing the debt. Which would be good for you, wouldn’t it?
Kate says
If iva terminates wont they stop though. As it was IVA advisor firm that said i have to let liberay legal look for claims. So far in last 9 months no claims. Also can they suddenly charge me for legals fees if iva ends. I just worried
Sara (Debt Camel) says
They may, it depends on the terms of your IVA. I suggest you ask the IVA firm once the termination has gone through.
No they shouldn’t charge you, any costs have to be paid from your IVA.
Sophie says
I wondered if you could help?
I am in a joint IVA – currently nearly 4 years in. When it was set up it was for 6 years ( no equity/ not home owners).
With my mental health being affected by work I have had to change jobs resulting in a wage cut over over £550 a month.
My current joint payment is £300 a month.
With this drop it leaves me unable to pay the IVA. I’m worried if I ask for a drop they would extend a further 12 months to 7 years!
What’s the likelihood of ending early?
Sara (Debt Camel) says
Before your wage drop, were the payments affordable? Or were you already in difficulty because of the cost of living rising?
Sophie says
I had already had a drop because of the rising bills but only a slight one. My gas and electric has luckily been in a fixed tariff but that ends Feb 24 so will double.
Sara (Debt Camel) says
The fact your energy bills will be going up a lot (can you estimate how much) in February is very important – you do not want to go through a massive amount of stress now trying to negotiating a lower payment if that is going to be too much in February.
(The current prediction of the energy price cap is that it may drop 5% in October and then go up about 5% in January… those numbers could change a lot but using the current price to guess what your bills will go up to in February is your best approach.)
Will you realistically be able to make any IVA payments from February? worrying about your IVA being extended comes second to actually being able to exist on the money you have left?
Sophie says
I would estimate that it would increase by over 100 a month.
Sara (Debt Camel) says
ok so how much do you think you can realistically pay a month now? and that will drop another £100 in February?
Sophie says
I could pay around 50 a month.
That would be by reducing food bill to hardly anything, my husbands income has also decreased as he is self employed.
Sara (Debt Camel) says
so to be clear, that is £50 across both your IVAs?
how much has your husband’s income dropped?
sophie says
Over the course of the last 2 years post covid by over 140 a month.
Yes around 50 for both, I was wondering if I could offer a final settlement ( If family are willing to support? )
Sara (Debt Camel) says
So you can pay very little now and this will drop to nothing from February.
I think you should tell your IVA form this now and provide evidence of your wages and your partner’s income dropping, and any expenses increasing.
I think you should ask for your IVA to be completed on the basis of the funds paid to date as there doesn’t seem to be aby way that you can continue making even low payments for the reat of the 6 years.
See what they say. Take this a step at a time.
Anuje says
Hi Sara
My partner with individual IVA has sadly passed away. This was third year of 5 year IVA. The original debt was 24K. About 7K has been already paid for
IVA of 12K agreement. I am very new to all these and don’t know where to start
My questions are:
Are the pension funds considered the windfall/part of estate and included in IVA closure amount?
If the original debt is demanded will they also ask for any interest rate over the last 3 years?
How high are the typical fees added on to original debt by the company and IP?
Is it better to ask them to terminate the IVA or in case of IVA failure, deal with creditor(s) separately and negotiate by taking financial help from willing relatives? In this case is it sensible to offer full amount of 24K minus what has already been paid?
Are there any advantage to speak to IP directly, rather than through the company who arranged the IVA?
Sara (Debt Camel) says
I am very sorry to hear that. It can be hard to think about money at such a time.
Can I ask if you and your partner had a mortgage? Did your partner own a car or have one on finance?
Who is your IVA firm?
Ken says
Hi Sara,
I’m looking for a little bit of advice. I entered into an IVA in January 2021.
Like a lot of people I had Amigo on my file and I was assured that Amigo would be part of the fixed monthly payments but they were in fact still going after my guarantor for the £395pm. I was informed by my IP that they couldn’t stop that from happening and the large part of me entering an IVA was because of Amigo, other debts came in around £4k and Amigo was over £8K. I only found out that my guarantor was liable after I had signed the papers and started the IVA.
Is this correct?
Also I called my IP yesterday to discuss a lender on my file which I was not aware of and as it turns out it was added 22/05/2022. This was in fact someone else’s debt that I was paying for the last 2 years!
How do I go about complaining and what should I expect to hear back from them?
Sara (Debt Camel) says
Is this correct?
yes it is correct. Your IVA firm should have warned you about this before the IVA started.
Has the IP agreed to remove the debt that is not your from your IVA?
Ken says
They have agreed to remove it but how do I go about making sure they retrieve the funds they’ve sent to the creditor and how can I be sure they are sending the monies where they should go? Am I able to aske them for a breakdown of the dividends?
The more I’ve looked into this the more I see they have so far taken their fee of over £3600 while only £2200 has gone towards my debt, when I signed up I was aware of them charging but it was only stated £1750 would be there fee.
Sara (Debt Camel) says
have you made a claim to the Amigo scheme?
Ken says
Yes I did make a claim with the scheme but as my dad was the guarantor I only recieved £30 for mid selling and when I tried to lodge a complaint for my dad it wouldn’t allow him to make a claim
Sara (Debt Camel) says
your dad would have needed to make the complaint. Do you have proof that you tried?
Mr Lee says
Hi & big thanks for this!
I started my IVA in Jan 2023, since then our family has grown from 4 to 6, we had a baby in December 2023 and my 15 year old son from a previous relationship moved in with us 3 weeks ago, it’s left us a little stretched, we also need a bigger house which will further increase costs.
I am only 2 years in, I’ve had several payment breaks and I’ve paid circa £3500 out of £51000, that said, after speaking with stepchange & reviewing my budget, they have agreed to submit a request to settle on funds paid to date, I have my fingers tightly crossed, my meeting of creditors is due to go ahead on June 20th, I am very nervous, but our surplus is 0, my vehicle is only worth around 2k and I am currently only £500 over the dro cap.
Thanks
Lee
Sara (Debt Camel) says
Fingers crossed this is agreed.
If its rejected come back and we can chat about options?