IVAs- Have you ever had or known anyone who has taken out and completed an IVA

[citronella]

It seems like a viable option for me as I owe ALOT of money still even though I have been on a debt management plan for about 4 yrs. I don't own my home but I have a (low paid) job. It would take me another 18yrs on my current plan to be debt free but 5yrs on an IVA. However, I do know that my credit rating would be seriously affected after (I'm sure it is already and I am not planning on getting any credit in the future although a small mortgage could be a possibility in 10yrs or something) but I am interested in knowing how others have fared if they have got through an IVA from start to finish.
TIA

Hello Citronella

I am a debt advisor and lots of my clients do succesfully complete IVA's but it does require commitment. You have to pay in a % of any overtime and bonuses and complete annual reviews to see if you can pay in anymore to your IVA. But as you say most IVA's last for 5 years if you still to the terms of the agreement.

How much debt do you have? and how much are you currently paying into your DMP?

Hi keli,

I have about 29K atm but HMRC have recently come up with that I owe them about 6k from 07/08 and 09/10 which wasn't correctly taken through PAYE. I am currently paying £150pm (Started at £700pm then dropped to £150 about 18months ago due to redundancy but I have never missed a payment in the last 4yrs since it started. The DMP has annual reviews as well. I work part time now, receive CTC and HB at them moment.

If you have been on a DMP your credit rating will affected now, an IVA will affect your credit file for 6 years, the same a bankruptcy would.

It is going to take a long time to clear your debts in a DMP, as you are claiming HB and CTC's, your income is liable to change so if you were to enter into an IVA and your income were to change or your tax credits / HB reduce (as they keep saying) you would be in a difficult position and possibly have difficulty paying your IVA.

Have you considered bankruptcy? IVA's and Bankrutcy are both formal insolvencies - the difference is your pay an IVA for 5years, but in bankruptcy you are bankrupt for 12 months and possibly could have an income payments order for 36months in total - but any income payments order (IPA) will be less than a payment into an IVA.

If you have benefits income such as HB an IPA is unlikely.

The important thing is that you get all the information and make the best decision for you x

Thank you Keli. With bankruptcy what difficulties could I face as a discharged bankrupt? Again, I am not looking for credit but possibly a small mortgage in the distant future but in what situations would I have to declare that I had been a bankrupt? Job applications? Housing applications? Would I have to tell my current employer and landlord?

If you are asked on an application form whether you have have entered been insolvent or bankrupt you have to answer honestly - that is the same for IVA or BR.

Insurance forms ask and if you are looking to rent from an agent they will credit check you and sometimes they may ask you for a guarantor - again the same IVA or BR.

These problems can be overcome - there are insurance companies who will provide insurance for those that have become insolvent in the past - and you can always rent through a private landlord.

My view is better to have a tenant with no debt than a tenant who has £30k of debt to service! many private landlords dont care as long as they get their rent.

IVA or BR will show on your credit file for 6years - they fall off automatically after this time as well as any defaults you may have. A mortgage may be an option after this time and there are steps you can take post IVA or BR to clean up your credit file.

Bankruptcy is no shame.... it is there to help people make a fresh start

Thank you so much Keli for your advice. Maybe Bankruptcy is the way after all. I already am renting and have a fab private landlord. I have always paid on time and there is no reason why I wouldn't. It would be more likely to be hard if I still have unpaid debt for the next 18 yrs. One last question if you don't mind. I drive an 8yr old car which is probably worth about £1500-£2,000 do you think that would be taken away as part of the bankruptcy?
Oh and who do you approach to start bankruptcy proceedings?

If your car is of modest value and you can show that your car is essential for work and the get the children to and from school you should be able to keep it.

Get a value for it as if you were selling privately and use this valuation on ther bankruptcy forms - it is probably lower than you think.

before going bankrupt if you have not already you should open a new bank account to a bank who you do not owe any money - see the Co op cashminder account.

Have a look at www.bis.gov.uk/assets/bispartners/insolvency/docs/publication-pdfs/guidetobankruptcy.pdf

You need to complete the forms or go to the CAB for help with this and you need £700 but you will probably get £175 off due to your HB and TC's.

I suggest you stop paying your DMP - save the money or see if you borrow it off a family member

Sorry for the slow reply.
Thank you so much for your advice, Keli, it has been very helpful.

Sometimes if your income and expenditure is tight, the smallest change can result in your IVA failing as you struggle to pay your IVA and you having to go bankrupt anyway as you have found natashaBee.

people have lots of perceptions about bankruptcy and always know someone who has a horror story, but if you take advice and know what to expect it really is the best solution for some people.

Really glad it worked out for you and you made a freah start

I did it for a bit but I wish I'd just saved the time and gone bankrupt sooner than I did. Good luck, it's dismal being stressed out over debt.

Meant to say - it's never held me back much - I kept my same bank account and have even now managed to get some credit (catalogue and a card) but I don't use them for credit, more to repair my rating as I will never get into debt again. Mortgage is probably an issue, although not sure - I've been with my bank 10 years, never screwed them over and haved paid in a decent salary for a year so that might go in my favour if we tried. Worse case scenario you need to wait (is it 6 years?) for it to be wiped off your record. Best thing I could have done, in the circumstances.

In my job i wish sometimes people would take my advice and go bankrupt rather than spend years and years on a DMP or enter an IVA which would probably fail!

Of course there are circumstances where an IVA or DMP is right solution for that particular person and many many examples of them being completed successfully. Some people are just badly advised

Bankruptcy/ IVA or default notices all stay on your credit file for 6 years and automatically fall off after this time

IVA's now allow for a 10% fall in payments but anything more than this you need another creditors meeting for approval.

10% isnt very much though if you are paying £200per month - only £20 and that doesnt get you very far these days!

I have an IVA and will PM you OP if you'd like to know about how mine is going so far (am slightly concerned re anonymity and would prefer people not to know everything about my financial situation )

Thank you all so much for your comments. NatashaBee and MarriedtotheMob it is really helpful hearing your personal real life experience. I don't think I could have gone bankrupt before as up until a year ago I still owned a house. It is sold now because of divorce but I always tried not to be in a situation where I had defaulted on my mortgage. So now that I no longer have a property it would make more sense. It's just so scary trying to make the right decision and not shoot myself in the foot and leave myself and the children in a really tight situation as far as day to day living is concerned.
QED what do I need to do for you to "PM" me?

I can send you a private message - just wanted to see whether you were interested in my wafflings first :) I will send it later when I am not being interuppted by small children :)

Hello keli5325, I was hoping to get abit of advice from yourself if that is possible please. I entered my IVA in July 2006 for 5 years and I have finially got my certificate dated 8th March 2012 to say I have now completed the IVA and it is all finished. Can you tell me if it is possible for me to get a mortgage now or is it advisable to wait a little while longer? Also I have abit of confusion to when my credit rating with start to go good again, as when I entered the IVA they told me it would be 6 years from the data I entered it, but only last year the company said it is 6 years from the date I completed it? Really hope you are able to give me some guidance please.

Thank you

Hi Fee1980

Congratulations on completing your IVA :-)

The 1st thing to do is check your credit report and check to see if it all correct. All defaults should have been entered before your IVA or the date it went through.

If you find some defaults registered after your IVA approval you need to write to the creditor asking them to update your credit file, you may need to send them a copy of your IVA documents or a print out from the Insolvency register.

An IVA will stay on your credit file for 6years from the date of approval and will not automatically fall off so you may need to send a copy of your completion cetificate to update this.

Sometimes a creditor in an IVA might refuse to change the date of the default notice. If this happens you can write to the Information Commissioner enclosing your IVA documentation and the letter from the creditor refusing to change the date of the default notice.

I hope this helps

I took out an IVA 3 years ago. Didn't know if it was a good idea at the time but was running out of options. I racked up far too much on credit cards trying to gt a company off the ground. Then took out a loan to consolidate the cards, then another etc etc. You see the pattern? Next thing I was getting bombarded with letters and I just buried my head in the sand. Ignored them all until one day I got a court summons and then I thought I better get this sorted out, as the stress was getting too much!

I contacted a couple of charities, www.stepchange.org being one of them and another debt advice company www.iva-advice.co. The charity were ok but a bit mis-informed to be honest, not very enthusiastic about helping me either, felt like it was a bit of a run of the mill to them. The debt company were far better, gave me options and made me feel a lot better. They sent an advisor out to my house to go through everything we had discussed over the phone as well, which I thought was good! Once we did the paperwork it took about 4 weeks to get setup. I still got letters and calls but they eventually died down.

If I could give any advice I would say don't go with the first company you speak to, shop around and get as much info as possible first.