can just about afford an IVA, but for how long?

[flo]

hi,

i'm in a lot of debt and trying to decide whether or not to try for an IVA. I think I can just about get enough surplus income to offer a 25% return to the creditors. The trouble is, it would be a real squeeze and I don't think I could last the full 5 years on such a tight budget. The light at the end of the tunnel for me is that I am very likely to get a big payrise in 6 months, which should provide me with an extra 200 pounds per month, if not more. If I agreed to such a tight budget originally, would I then have to hand over the full 200 pounds per month payrise, so I would be no better off despite the welcome pay rise. I see why it wouldn't be fair to increase my household expenses from say 350 to 550 to take the whole payrise myself, but would I be allowed to keep half?

I heard household expenses have been capped at the same level for about 10 years but food inflation has been rocketing recently, so am particularly worried about agreeing a low figure for a full 5 years.

flo

[rockbottom]

HI Flo

welcome to the forum, im sorry i cant answer your question but someone will be able to so just hang in there, could you post sowe more details about how much you owe and to whom, also is this payrise set in stone, you shouldnt really enter an IVA if you dont think you can manage the payments quite comfortably, is it an option for you to maybe speak to your creditors reduce your payments with a dmp until you get your payrise, youve come to the right place for advice and support.

all the best
rb

[MelanieGiles]

Hi flo and welcome to the forum

These days you do not have to squeeze budgets to ensure you can offer at least 25p in the £, as the current protocol beween a debtor and their creditors is not supposed to operate with benchmarks.

You should certainly not enter into an agreement that you would struggle to pay from the outset, but if you know that you are due to be getting a payrise this can be factored in - of course a payrise is not a payrise until it has been actually offered and implemented into your pay packet!

At the end of the day, you ought to discuss the expenditure allowances with an IP to see what you would be allowed to spend under current guidelines - as compared to what you actually or would like to spend. If you feel that you are not prepared to live to that budget for the next five years, then an IVA is probably not the right solution for you.

[Viki.W]

Hey flo, welcome to the forum. You really need to go through your income and expenditure with an IP to see if it could be affordable for you. There are other options, the IP will discuss these too. Keep posting, you're in a great place for support and advice. Viki X

[flo]

Hi all and thanks for the replies,

I owe more than 110k to 20 creditors in total so I don't think the DMP would be an option from what I've read but I could be mistaken.
My partner also has 5k of debt to one of the same creditors.

We currently have a household income of over 3k but the payrise isn't guaranteed at all. I was just trying to simplify things as there should soon be more money coming in and less going out!
My partner is part-time, so a move to full time would increase our total income. Childcare costs will reduce in a year when our son goes to Primary School. I'm also trying to secure some regular overtime in the meantime which could also bring in an extra 200-400 per month.
And I'm studying for a professional qualification which could bring in an extra 200 per month within a year if all goes well.

Is it possible to propose an IVA that adds up to a total of 25% (or possibly less as Melanie suggests) in line improving income as described, but starts low, for example :

300 per month in 1st year
600 per month in 2nd year
700 per month in 3rd,4th and 5th years

I assume that payments are reviewed each year, so the first review could give an amount of more than 600 but not less, and so on.

I know I need to discuss this directly with an IP but don't know where to start as the guidelines says you need to talk to at least 3 !

flo

[MelanieGiles]

Yes it is possible - but you would need to ensure that you could afford to step up the payments in the second and subsequent years.

You don't have to speak to more than one IP firm - but most people on this site tend to recommend this so that you can compare the standard of advice given. Have a look at my Blog on "Choosing an Advisor" for some tips and things to look for and ask.