Author Topic: struggling with IVA  (Read 3025 times)


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struggling with IVA
« on: Aug 20, 2009, 08:47:05 PM »
Hi Everyone,

I'm after some advice please..................

I'm not sure what my current debt is but I know that when I started a 'Debt Management Plan' 3 years ago it was a little under £40,000. My monthly payments were £300 per month and the plan would of lasted for 11 years. However, just under a year ago I moved in with my girlfriend and my monthly outgoings went up by quite a bit and I could no longer afford the £300.

So, I was advised to start an IVA instead and, after an assessment, it was decided that I could afford £160 per month and after 5 years the remaining debt would be written off! This suited me and was working well for the first few months then I discovered a problem.............

The £160 per month was basically 'everything' I had left when my outgoings were deducted from my income. It didn't leave me with any cash for things such as taking my kids to the cinema, going for a pint with my mates and so on. So I assumed ( I should of read the IVA agreement more carefully) that I needed to work overtime for such things. I basically thought that any extra cash I earned would be mine. I've since found out that 50% of all extra cash earned should be paid to my creditors.

During the first 3 months of my IVA I decided I needed a new car so I did a lot of overtime and bought the car. I then got a letter from my IVA people asking me for 3 months worth of pay slips. After sending them off I got another letter stating that, due to the extra monies earned, I owed my creditors a further £1700 and, as this needed to be settled by the end of the first year of the IVA my new monthly payments will be £300. Which, as i've already stated, I can't afford! In order to make the £300 payment I had to work more overtime and, because i'm working more overtime, my payments are about to rise again. In order to make the new payments I'll have to work even more overtime and, because of that, the payments will go up yet again. I'm now finding myself in this vicious circle!

I'm having to use my overdraft to get by at the moment but that is rapidly approaching it's limit. I predict that within the next month or 2 I won't be able to afford to pay my rent. I am concidering bankruptcy but not sure that this is the right way to go?

I would be grateful for any advice offered. Thanks


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Re: struggling with IVA
« Reply #1 on: Aug 21, 2009, 05:45:09 AM »
Hi there!

You might feel that you're trapped in a vicious circle, but I think that by approaching your IP you should be able to sort this out.  Bankruptcy is still an option, but if you have already completed part of the IVA term, it seems a shame for it to fail.

You should contact your IP and explain the misunderstanding.  If you have used a majority of the increased sums to purchase a more reliable car that will help to ensure you getting to and from work and receiving an income, I think that the IP might be able to address this in a carefully worded paragaph in an annual report to creditors maybe suggesting no action is taken in this instance and inviting creditors to comment.  It may be that creditors comments will be suggesting the term of the Arrangement be extended in order to pay some or all of the additional money calculated.

I was surprised that an IVA was approved on contributions as low as £160 and even more so that this has now been assessed at £300 per month - is this because you are regularly working overtime and 50% of the increase has been calculated at £140?  I would carefully look at the I&E they have used to assess your disposable income to check that they haven't underestimated your monthly commitments.  If you are regularly working overtime, I would expect that you are doing more miles and that your petrol costs have increased.

It's in everyone's interest to help you conclude your IVA satisfactorily so I would make arrangements to speak to a manager who should also be able to discuss some points about BR so that you can decide the route you want to take.

Good luck!
Angela Rosler
Insolvency Manager  e: [email protected]