IVA advise

[Cantthinkofonenow]

Hi all, I wasn’t sure where to post this.
I rang step change today, I have 6k debt and don’t have a lot of money so I’ve been struggling for a long time so finally gave them a call. They advised me to get an IVA, there were other options but they weren’t appropriate. Has anyone got any experience with an IVA? I was on the phone to them for a good 2 hours going through everything and they gave me lots of information but I’ve read other threads on here about people being against them.
I’ll have to pay £100 a month for 6 years, this is a much more manageable option for me and my credit score is ridiculously low at the minute anyway so I’m not worried about that. What have your experiences been like?

This is rubbish.

I completed a 6 year IVA in July 2021 after paying 100 per month for 6 years with no breaks, no late payments, and I had considerably more than 6k in debt (thanks to exH)
I didn't holiday abroad, but I took my DCs to Cornwall every year, we ate out when we could and I now have a clear credit score, and have just secured a mortgage on a 350k property.
IVA isn't about taking all dispoable/extra income, it's about demonstrating commitment to paying what you can afford consistently, and I did that.
My IVA was 6 years instead of 5 as I was renting and didn't have a property to do equity release in year 4 - the first IVA I had never told me that was an expectation and I failed at end of year 1 when they said they expected equity release.
It's been a godsend for me honestly.

They explained this to me but can’t fully remember. Is this similar to an IVA?

Just to clarify, why does 6k not seem IVA worthy? Wondering because that’s been mentioned a bit. Is an IVA mainly for really high debt?

Sorry if the questions seem obvious, this is the worst mess I’ve ever been in and I don’t have anyone in real life I could ask

https://www.gov.uk/options-for-dealing-with-your-debts/debt-relief-orders

That page explains it. You can go up the menu and read about IVAs as well.

But like I said earlier, SLOW DOWN. You don’t currently seem to fully understand what you're getting into.

Go back to Step Change if you need to talk it all through and understand it better. Real Step Change. When I google Step Change debt the top three results are all debt management companies, not Step Change at all.

I was on the phone to them for a long time I asked them a lot of questions and I felt quite confident until I started reading threads on this subject. I’ll ring step change again first thing in the morning and see what they advise

I could burst into tears 😭

Yes, an IVA generally wouldn't be recommended unless you owned your home and had £20k+ of debt. The fees make it not worth it and it's only recommended if you want to keep your home. Sadly unscrupulous operators chasing these fees try to trick people into inappropriate IVAs, which have to be voted on by creditors, so you'd hope that they'd vote against a clearly inappropriate proposal.

If you don't have assets it's likely a DRO or a simple debt management plan would be appropriate, but before you do anything you need to put together a sustainable budget that includes room for a modest amount of leisure spending, an emergency fund and sufficient groceries including sundries like lightbulbs, batteries etc because it's common for people in debt to skimp on these things to try and keep up with debt repayments, when what you're supposed to do is meet your normal expenditure and then your creditors have to make do with what's left.

Have a look at moneysaving expert and go through the advice about setting a budget, and also about what solution is best for you.

www.moneysavingexpert.com/loans/debt-help-plan/

Hi, I am close to entering an IVA myself, I have a few questions if anyone could please help. My debts amount to 17000 I am a non home owner, no major assets, work part time. One of my debts is a joint liability, with my partner. (If is some old council tax arrears). If I do the IVA I am aware they can still chase him for his share, which he’s accepted but does anyone know how much this will be for ie - the whole of the total or just half? I asked the company arranging the IVA but they had no clear answer. I am also wondering if the IVA is a good idea since I’m not a homeowner , I am not interested in a DMP due to the length of it & the fact there’s not full protection from creditors & council cannot be included. I am also interested to hear back about the comments about the invasive / strict budgets etc. Is it really that bad? The public register is a little off putting to me.

Any good or bad experiences with an IVA? Please help! Ps can we cancel it before the creditors meeting? Can’t decide what to do for the best. Thanks in advance.

To the Op it sounds like you are at the least being incorrectly advised. Please make absolutely sure you speak to stepchange or the national debtline and be certain that they are not a commercial company with a very similar name. An IVA does not sound like the best solution for you.
to Harry Harley please take advice from the same organisations usually an IVA is only used to protect property. With regards to council tax you would need to take advice but very careful to get full and accurate advice.

Thank you. I will make some further enquiries

Second the recommendation against an IVA for @HarryHarley24, without significant assets, there's rarely a reason for an IVA except perhaps if your career would be affected by bankruptcy (most aren't). £17k also seems a low amount.

Read my post above for links to advice. It could well be that a DRO is the best solution for you. I don't know about the council tax question as that's a special case that is treated differently to credit card debt. But you might be able to find information on MSE.

On the matter of budgeting, I had an IVA about 20 years ago and the budget was quite generous if you were used to scrimping on everything to keep up with debt repayments as it was supposed to be sustainable so you could cover all your costs without borrowing, eg you could have a modest emergency fund and a lot of occasional bits and pieces you might need to buy such as batteries or light bulbs could be counted as groceries so you could include a good amount where it was easy to live on less unless you're a typical Mumsnetter who regards daily blueberries and organic protein as basic essentials so a way of freeing up money for other things.

The MSE debt help forums have good discussions about setting a sustainable budget that will be accepted by the insolvency practitioner. I think it's called DRO and living with it.

I've just arranged one for someone. None of this was mentioned and we were on the phone two hours.

@notatinydancer because it's not entirely true, unless you try to hide something from your supervisor or have unrealistic lifestyle aspirations.

When I had an IVA, there was the initial budget setting, which as I've already said, was sustainable and relatively generous when you're used to years of robbing Peter to pay Paul and prioritising debt repayments over normal living costs. There was a reasonable amount of slack in the agreed budget so you could spend a bit less on groceries to free up money for occasional eating out for example. We managed a few short trips away too.

There was an annual review where I had to send an updated income and expenditure statement and if my surplus increased, eg due to a payrise (but you were also allowed to account for increases in council tax etc) I had to increase my payment so they took 50% of the increase in surplus - so if my budget showed that the amount I had available to pay towards the IVA increased by £100 pm, I had to increase the payment by £50, meaning I had an extra £50 of disposable income.

But it wasn't particularly invasive or restrictive, I was never questioned on expenditure and no 'needing to ask permission to buy something'. As long as you make the agreed payments and sent your statement in each year, they left you alone.

But for the OP and @HarryHarley24, unless they're in a career that would be ended by bankruptcy, it's unlikely that an IVA is in their best interests.

I can also recommend payplan as mentioned above.
When I took my job I had to declare my debt management plan to them and was all fine.
Not sure if I would have been ok with IVA or bankruptcy.
My previous job definitely didn’t allow bankruptcy so consider what you may want to do in the future too job wise.

If you think about it:
your debt - approx £6k
your monthly payments - £100 over 5 years = £6k
when you factor in the fees you pay (approx £4k) that means only about £2k gets paid to your creditors.

In a DMP you could pay 100% of what you owe in the same time frame.

With a DRO you would not pay anything and you would be debt free in a year. The only criteria you don't apparently meet is you have to have available monthly income of less than £75 BUT because you are not that much above that, it is not unlikely that your advisor has helped manipulate your income and expenditure to make you fit an IVA.

I'm sorry but it does sound like you are being scammed.
If you had contacted Stepchange directly they would not have passed you over to National Debt line and they would have seen you through the whole journey themselves.

Stepchange and National Debt line are 2 of then most often impersonated debt charities by scammers. Even if the telephone numbers seem to match they can be spoofed so they look legit.

Yes, an IVA generally wouldn't be recommended unless you owned your home and had £20k+ of debt. The fees make it not worth it and it's only recommended if you want to keep your home

This is incorrect btw. Probably less than 20% of IVAs are homeowners.

There is so much misinformation out there about IVAs it's no wonder scammers take advantage, and it's not helpful to the people for whom IVAs are genuinely the best option for them.

OP please look on gov.uk as someone above mentioned, there's some good factual info on there from a reliable source, although it's not always easy to navigate!
Don't just click on the top results of a Google search!

I am on a Debt Management Plan with PayPlan and it’s been really good. They negotiate with your creditors and for me they have managed to get interest and charges frozen. I pay a fixed monthly sum to PayPlan who then share it between my creditors. Every year I have a review of my budget to make sure I am paying what I can afford, and I’m allowed holidays etc within that.

it was for a lot more than £6k but the relief once I entered into it was enormous as it felt as though there was light at the end of the tunnel. They were really kind and empathetic also, even when I was crying down the phone! I’m now nearly half way to paying it all off and I feel really proud. Happy to advise more about the process if you want to DM me?

Sorry also to mention that you can make overpayments on top of the monthly amount also, if you got a bonus or similar.

Info for previous poster regarding joint debts, you are both jointly and severally liable for the WHOLE amount, not half, so if one person enters an IVA or such, the other person is pursued for the whole amount

I would not be doing an IVA for 6k of debt, the fees would be around that amount, I be looking into a debt management plan

IVAs I find are only really good for protecting assets and jobs where there is a large amount of debt

I had an IVA years ago as I had ended up in a lit of financial trouble through my divorce (among other things XH had a gambling problem and stole my credit cards to use on online sites). It was the best thing I ever did. Made payments every month over 5 years and no-one ever asked me what i was spending. I went on holiday, paid for a wedding and a number of other things in that time. Yes, my credit rating was bad for another 6 years but that finally ended.

PS 6k doesn't sound enough to be taking out an IVA for. My credit card debt was 150k. I ended up paying around 45k on the IVA.

If it’s a joint debt, then only your half should be entered on your own IVA, if your partner is not entering their own IVA, then it’s down to them to sort their half out. All your outstanding debts will be entered as one amount, which you should clearly check, it will be in the documents you sign. The only way your Supervisor would be aware of your spending would be if one of your creditors were to ask them to look into it, but basically you agree to a certain amount of money each month for so many years, then the debt gets written off.

joint debts are NOT halved

Just because a minority of IVAs were for homeowners doesn't mean that it was an appropriate choice for the other 80%.

If someone like the OP owes £6k what benefit do does she gain by adding £4k of IP fees for her to pay back too?

Instead of the IVA, she could pay that back in the same amount of time with a DMP. Or a DRO if she meets the criteria, which is quite likely.