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IVAs, what are they?(11 Posts)
Im in quite a bit of crappy debt, credit cards, two over drafts etc, all from putting myself through a degree and having my baby and not being able to work - DP earns a good wage but we have no disposable income after necesary bills, im desperately trying to keep head above water paying things but the juggling act is becoming impossible with prices going up, and I need to take the pressure off - my friend said an iva? can any one give me advice?
I dont claim any benefit other than CB, we dont qualify for any tax credits, so i would get no help with child care, and have no willing family that could help either
Best place to start is to ask for advice from one of the free services such as CAB, CCCS and the National Debtline. They can look at your financial situation and make some suggestions. National Debtline also offers an online service as well. An IVA may be applicable but there could be other options. Good luck
OnlyWantsOne How much debt are we talking roughly (pm me if you'd prefer). IME an IVA should be considered as a last ditch solution, and only for close to bankruptcy cases.
CogitoErgoSometimes has given some good advice. If you do end up having to take an IVA then I would go off of the CCCS recommendations. Having to pay for a Debt Management Plan is not helpful.
Sorry, I always saw it as robbing the poor!
CCCS are here:
I hope this helps.
I will stress this though, please please please get proper free advice before you decide what is best for you.
I thought I could write to the people i owe money to and explain the situation - that i cant aford to pay them back in the manner that I am etc etc
That is certainly something you can try as an individual. However, you may be more successful if you do it with the help of the free debt advice services. Might give you more clout.
OWO, if you are not working, they will not consider you for an IVA as you ned to be working. If the debt was in your DPs name, hecould apply for it, but as it is in yours you can't.
Sorry you're in such a horrible situation. I have been there myself, it is not nice.
Hope you manage to get some help.
An IVA is touted as an alternative to bankruptcy, and that's exactly what it is - one of the limited options when you are insolvent, as in you're unable to pay your debts as they fall due.
The differences between IVAs and bankruptcy is that an IVA protects your assets, and also allows you to keep offices (such as being a director of a limited company) that you wouldn't be allowed to hold if you were in bankruptcy. Only enter an IVA if you have assets, such as a house, otherwise 9 times out of 10 bankruptcy is a better option!
An IVA is a legal agreement, ratified by the court, between a debtor and their creditors. It usually lasts for five years with monthly payments being made, though sometimes can be a single lump sum payment from a remortgage or redundancy or similar. An Insolvency Practitioner supervises it and is paid to do so (around £1,500 a year is normal) from the contributions you make. The remaining monies you pay in are split between your creditors. Failure to keep up payments into an IVA may result in a petition for your bankruptcy from the supervisor. After 5 years your debts are considered settled, if you keep to the payment schedule and you're free to start again.
You can enter into a Debt Management Plan, which is a less formal version of an IVA - there is no court involved, and the agreement is more voluntary (your creditors do not have to go with the majority). Many creditors are more accepting of DMPs these days and the CCCS can recommend organisations that will help you set these up without taking a huge chunk of your contributions. These can go on for some time, and some creditors can be truly difficult, but the benefit is interest is often frozen until you're in a position to get back on your feet.
The third alternative is bankruptcy, which lasts 12 months and writes off all your debts (much as with an IVA) with the exception of student loans. If you are able to you may be asked to pay contributions for up to 3 years and any assets you have may be realised for your creditors - in most cases this is a property or a particularly valuable car. There are some restrictions, regarding applying for credit or being a director of a limited company, but these last for just a year. If you're really struggling and have no assets to protect it's probably far more sensible to do this, draw a line under your indebtedness and move forward without the stress of debt hanging over you.
well DP is a solicitor so obviously he is terrified of any thing involving bancrupcy
but at the moment we are just keeping our heads above water, but i have no income at all other than CB and I have about 6 grand debt, credit card, over draft etc which Ive been living off of
Ok, I don't know how possible this idea is but:
Have you thought about getting an evening job? Even if it is just stacking shelves at Tesco or somewhere? I know that finding work in this climate is hard but if you could just get something to repay the debt whilst agreeing a debt management programme with the companies may help. For 6k I expect most companies will allow you to make smaller payments if you can show your income and expenditure and a plan.
If the debts are in your name alone, then any insolvency arrangement you enter into won't affect your DP.
Given that they're quite low (even though they feel high) an IVA isn't appropriate as they're only for people who owe more than £15,000, and you need to be able to make payments every month for 5 years. Also, it seems quite drastic to go bankrupt over such a small amount.
One route that is possibly open to you is something called a Debt Relief Order - they're for people who are unable to pay their debts, have debts of less than £15,000, assets of less than £300 and disposable income of less than £50 per month. It's like bankruptcy-lite and the information is www.bis.gov.uk/insolvency/personal-insolvency/dro-debtors if you want to find out more. It can be done online through the CAB or CCCS and will write off your debts.
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