To be nervous about IVA?

[GenieMermaid]

No judgement please.

I work full time in the civil service and I have around 9K worth of debt in my own name consisting of overdrafts, credit cards/payment plans like very/Klarna and a loan. I’ve always been relatively on top of repayments but in the last 3 months or so I’m really struggling to keep up with the repayments of it all and have defaulted on some credit card and Klarna repayments ultimately making everything worse.

I’ve been getting so anxious for a while but have stupidly buried my head. Today I decided enough was enough and spoke to a free debt advice service who went through my options. I’m a homeowner with a joint mortgage, living with DP, 1 DS, and apparently my options are limited unless I wanted to risk our house (which I obviously don’t want to do! Bankruptcy seems far too extreme). They also said a debt management plan would mean I’d be paying back for around 15-20 years with what I can afford!

They have suggested an IVA and although I know my credit score will be wrecked for a few years, and my DP will likely not be happy about it - (yet to talk to him as I don’t want an argument), I’m failing to see what other options I have? I’m just worried about when we need to get a new mortgage after our fixed rate ends (in around 2 years) and if it will effect DP in any way or mean anything negative for the mortgage. I’m very nervous and find it all very daunting.

can you give me your experiences please?

thanks!

Get over to the debt free forums on moneysaving expert, look for a poster called sourcrates ( not me or anyone I know btw)
If you have already defaulted then your credit is shot for 6 years anyway.
You can set up your own DMP, pay what you can afford and after a few years you can offer to settle at a reduced rate.

Have a look at all the options.
With an IVA you will be paying someone a fee to arrange it. Other options may be cheaper.

www.citizensadvice.org.uk/debt-and-money/help-with-debt/dealing-with-your-debts/check-your-debt-options/

Also your share of the equity in your house is not automatically excluded in an IVA (unless you are repaying 100p in the £ in which case it can be excluded). Given the low level of debt you may be better off looking at informal repayment plans with your creditors

I wouldn't do an IVA for 9k,surelt you woukd be better off getting a loan (could be secured against the house) to consolidate your debts then cut of your cards and cancel your overdrafts.

The number of IVA'S has increased massively as they arempushed by debt management companies due to then large fees taken from payments made. I would get a second opinion from CAB or Step Change for example rather than a debit management company so you can fully understand your options.
You also need to talk to your husband ASAP so you can sort this out together, your debt will impact you both.

In all likelihood it will affect some mortgage lenders being willing to lend to you while in an iva and it will be on very unfavourable terms. That said, if you continue as you are and are struggling to maintain your current debt repayments you may not meet the affordability criteria anyway.
£9k is a low amount of debt to be considering an iva (it's about half of the average level of iva debt), but with you being a home owner your options are limited.
You really need to talk to your DH, you mat be able to find another way through this together.
Whatever you do, make sure the debt advice you're getting is from a reputable, free debt advisor - stepchange, MaPS, Citizens Advice.
Good luck.

I wouldn't want to do an IVA for £9,000. The term of the DMP is only so long because of the amount you can afford to offer. On £9,000 even a little extra could make a big difference to the amount of time it would take to repay. Could you have another look at your budget and see if you could manage a bit more?

Sorry you’re in this position OP, it sounds really tough. I know it’s really difficult, but the first thing I’d suggest is that you speak with your DP about this. I think it’s important to be open with him about the situation you’re in and he may have some advice he can give, especially if you’re looking at remortgaging soon. Good luck 🌺

There has been a lot about IVAs on the news recently and they don’t sound good to me. There was a programme on C4 (I think) about debt last night, worth watching but also listening to Money Box on R4 as they were mentioned on there recently.

Watched the dispatches program last night regarding the cost of living crisis. One of the CAB advisors said that they don't recommend IVA's, but the women who had set one up didn't own a home. So different circumstances.
Have you spoken to CAB?

Please look at all possible options before an IVA. I don't know what exactly you do in the civil service, but some jobs mean you have to declare it to work. I have to disclose anything like that to work (and they do credit check me to confirm it as I found out on my credit file!)

Please please only talk to a proper organisation about this - too many of these companies are predatory and will try to sell you an IVA because they get fees when alternative methods are actually far better suited to you.

Christians Against Poverty are absolutely brilliant - you don't need to be religious or even a Christian.

For £9k, I'd avoid an IVA like the plague though.

You need to talk to your DP and come to an agreement about how to proceed.
How much can you afford to pay per month? Could your DP get a 0% finance credit card and move your debt onto that? My DH did similar for me about 8yrs ago and as soon as I could get a 0% card in my own name I switched it I. Obv I made the repayments on the card.

Please watch last night's Dispatches. IVAs are not recommended. Also Talk to your DP. It may cause an argument initially but he may be able to help.

An IVA for 9000 seems a little extreme.. if you were able to get a loan and consolidate it all maybe that would be better? Or move credit cards to 0% balance transfer cards, all depends on whether you'd be accepted for these though. As for the mortgage, once your fixed deal ends you can just negotiate a new deal with your current provider without the need for a credit check, it would only be an issue if changing banks!

Sorry to hear you’re struggling OP. There is a civil service charity which has a free helpline - might be worth giving them a call/looking through their website money resources: foryoubyyou.org.uk/our-services/money-resources

Thanks for all your replies!

Honestly before today I didn’t even know what an IVA was! The person I’ve spoken to today did seem very thorough and professional but maybe she’s just very good at her job!

I’ve been declined for any line of credit I’ve applied for recently including personal loans and balance transfers so I don’t think it’s an option for me atm.

I know I need to speak to DP, and I will, just working up to it! I was in a similar position a few years ago (but for around 4K (had these for years since being a student) and he took out a loan in his name to pay them off and I am still paying him back per month. So I know this won’t go do n well. I’m not completely reckless with money but it’s a combination of just not bringing enough in, being terrible at budgeting, and all little unnecessaries I have stupidly bought have added up! I would just love a clean slate and the chance to be able to budget properly without having to rob Peter to pay Paul.

I have actually just got a promotion this month and am just waiting for documents to be finalised. So my circs will improve a bit. I work for an IT department within the CS so I don’t think an IVA would be something that would effect my job. But I will definitely do some more research before committing to anything and also watch dispatches! It’s interesting to know that 9K is not usually an amount worth entering into an IVA for.

I have an Iva it's in its 6th and final year.

It's been a long slog . But I had 39k of debt . Bankruptcy was t an option for me due to work .

Now it's in its last year I'm very much looking forward to the end and being debt free . But I do think they're a rip off - you pay what you can afford so if you get a pay rise or earn overtime you can wave goodbye to a proportion of it . My iva provider didn't even try to get the equity from the house in the final year .

I think my options were very limited so I try not to dwell now its almost over .

My credit rating is about half what it could be - I'm hoping to rebuild that over time when this thing finishes.

On thing that really irks me is one of the debts was a joint 20k home improvement loan - even though it's joint the rules are I'm liable for the full amount and then so is my ex - so they count that 20k twice . I'd get absolutely all the advice you can first .

IVA isn't a bad idea if your dmp repayment term is 15 years and you have a home to protect, if you feel the budget you have completed is accurate and won't be changing for the better it's better to go for this option and get it over and done with rather than let the debts remain for years.

they don't affect your ability to remortgage with current provider, you just may not get the best rates. The fact you would default on minimum payments if you go in a dmp will also impact your credit rating and rates available at remortgage.

did you have your potential change in circumstances job wise accounted for when you did your budget? If not, ask them to calculate how this would impact your dmp repayment term.

citizens advice certainly do recommend Iva's in certain circumstances because they send them to the provider I work for. By the way, I've worked in debt advice (all options, not just iVA ) for one of the biggest free debt advice charities for 15 years

Try Step Change, really helpful. Good luck.
(Must say though, don't EVER have any more credit, I never have, it's just not worth it.)

Whatever you do, don't go with a company that only sell Iva's though, credit fix etc. go through maps/ stepchange/ payplan. Christians against poverty and cab don't advise on Iva's because they aren't trained to, they signpost to one of the above. they only do DROs in house and CAB advice about ins and out of what is allowed can be ropey at best

Just wanted to say that despite what people (and the media) are saying, IVAs aren't the devil! It may well end up being the best option for you. You just need to be very careful about where you go for advice and choose your eventual IVA provider wisely.
Stepchange and PayPal are two that provide both free debt advice and a range of actual debt management solutions so they're not incentivised to push you into an IVA if it's not suitable.
Depending on how urgent your situation is, you may consider breathing space www.gov.uk/options-for-paying-off-your-debts/breathing-space, which gives you respite from creditor pressure whilst you get advice and consider your options.

That should be payplan, not PayPal!

When I was 20 I got into horrendous debt like 16k. Was repaying but it was crippling me and I was so anxious about it all. I got debt advice, paid them £250 there advice was to stop paying which I did and it ruined my credit rating as I had excellent credit before them. Within two months they had done nothing so I contacted all the companies myself. They all put me on affordable payment plans. I dropped lucky as it was just after the crash so the new interest rates plus base rates were low. It took me 7 years to repay but I did it and within another year I bought my own house.
Before you do anything contact the companies. Heres the list of who I owed and they all helped.

HsBc
Halifax
Topshop arcadia
Argos

Debt is awful and I really feel for you but there is light at the end of the tunnel.

Hi, debt advisor here at one of the organisations everyone is recommending you speak to. I won't say which to try and keep it less outing.

IVA's are a great solution in certain circumstances but what you have to be careful of is the fees. They have become money makers for companies such as credit fix as they charge you more than is required. Charities such as Christians Against Poverty or StepChange only charge you the cost they have incurred to set up the IVA and not a penny more. Ultimately it doesn't impact you if your IVA completes as the creditors will of just got less, however the companies who charge more tend to be more difficult to deal with if you have a change in circumstances and need to amend the payment, as they don't want to be getting less from it.

An IVA won't directly have a negative impact on your husband as his credit file is separate and protected, however most companies will require that he does a joint budget with you to check that the household expenses are shared fairly. Basically to ensure a client isn't paying everything on their budget, saying they can't afford to pay the debts, but then all the spouses income is spare and free if you get me.

At the year 5 mark you will be asked to attempt to remortgage your property to pay into the IVA, we personally only require you to try with one lender, if rejected (everyone is, we've never had someone able to do it) then you pay for 6 years rather than 5.

The reason why the IVA is likely to of been offered over the DMP is due to what's classed as a "reasonable repayment" and that's anything less than 10 years. As soon as you hit 10 years or over insolvency becomes the recommendation.

However if you are looking to have positive change in circumstances you could always do the DMP for a while, wait to see how your circumstances change, and then if they aren't going to improve enough to make a DMP viable long term, do the IVA at that point.

An IVA doesn't sound right for that amount of debt, nor does a 15/20 year DMP.

Have you done a really thorough review of your joint finances to make sure you're not able to free up enough money to keep you out of debt and also that you're sharing household expenses fairly between you?

What are your relative salaries, how are joint costs like mortgage/bills/groceries/commuting/childcare and other DC related costs shared and how much personal spending money do each of you have each month? Has the debt been run up on essentials or extras that you could do without?

Can you increase your income at all? Even if you did something like a couple of extra shifts in a pub or restaurant each week, you could probably free up enough money to pay your debts off much quicker and without further damage to your credit record.

Have a look at Moneysaving Expert and run through everything that is relevant:

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