F&F Question

[Von B]

Hi

I was wondering if anyone might be able to offer some advise regarding paying off an IVA early.

I am currently 1 year into a 5 year IVA will One Advise/ ALLCLEAR Finance, which currently requires me to pay £265 per month (or a total of £15,900 approx). Of this figure approximately £4k goes towards supervisor fee's etc. The original total debt was approximately £17k, which was due to a combination of redundancy, poor financial decisions and living above my means.

Essentially the question that I want to ask is it worth paying off an IVA early through the use of other finance?

Obviously I would be unable to get this additional finance, however my father has expressed to me that he would be willing to take out a loan upon my behalf in order to pay off the IVA in one full and final payment. From speaking to my IP it would seem that a figure of a around 11k would be acceptable as a rough ball park figure.

As far as I can tell from this possible scenario it's benefits would be that I would be ending my IVA early so therefore would have a better chance of repairing my credit history in the time it would take to pay off the IVA. I am aware that regardless of when an IVA is paid off it remains on file for 6 years from the start date, however surely it would be better to have potentially 5 years of responsible finances rather than starting again at the 6 year mark when the 'slate is wiped clean'?

In respect of the actual 11k loan I will actually be paying this off rather than my father (i.e. i will give him the money each month which he will then use to repay) so therefore for the period of the loan I will not necessairly be significantly financially better off. However from early quotations I would pay this money off within 3 years and at a similar of even lower monthly repayment rate.

I do have a good relationship with my father and thankfully he trusts me to make the repayments. I am also fortunate that as a Police Officer I am in fixed employment so unless anything serious happens I should have no issues in making repayment.

I am also concious of the fact that my IVA stipulates that a certain amount of my overtime has to be paid if it goes over and above the agreed rate. In my line of work there is a lot of overtime to be had and as such the current IVA agreement is actually a significant hinderence compared to the loan repayment option whereby I keep a 100% of the overtime. There is also the consideration of the fact that my IVA will be viewed negativley if I go for promotion.

My biggest criticsm of my current agreement is that though I find the monthly repayment levels to be fine to achieve, should I have any unexpected financial commitments then the money I put aside each month is put into a savings account can be wiped clean! Essentially creating a cash flow issue.

At the end of the day all I want to do is be in a position where I clear my debts and have a fresh start.However I would like to be in a responsible position whereby I can obtain a low level of credit in future by way of a normal current account, small overdraft and emergency credit card. I don't want to cut credit out of my life as I think that is an unrealistic posibility. However I want to embrace it in a more sensible and controlled manner having learrned from my mistakes.

Sorry for the lengthy post but any thoughts would be appreciated.

[Michael Peoples]

I think what you are proposing is a fair offer. Creditors may receive a higher dividend if the IVA runs it's course given the overtime modification but to get their money now could be preferable. Your job may well be secure but five years is a long time and things can go wrong so creditors will normally accept an early closure.

Speak to your IP who should be happy to propose a variation and hopefully you will be discharged soon. Creditors do normally seek a reason why a debtor offers a full and final and it may be that an existing IVA could be a hindrance to furthering your career. A full and final offer from your father would remove this obstacle and there should be no problem in using your current surplus to repay him. Let us know how you get on.

[MelanieGiles]

I agree - this looks like a very fair offer!