Going down the IVA route - Some advice needed

[yellowfrog]

Hi, this is my first post on here, but I've been reading the site for the last few weeks.

Basically, I'm in a whole heap of debt, some of which is historical (built up whilst trying to pay a mortgage and support a family on one fairly meagre income), and some of which is my own doing (drink problem since the break-up of my long-term relationship almost 3 years ago, and impulse buying when I get depressed).

In the main the debt was servicable, or at least it was only growing at a slow-ish rate, until due to a series of almighty cock-ups (none of which they take responsibility for) the shysters at the CSA decided that it would be perfecly fine to take almost £600 a month out of my wages. This then only left me enough money to pay my rent, utility bills and council tax, with nothing to pay the £400-500 needed for credit card and loan payments with, never mind for buying food, getting to work etc. Thankfully, I had some savings which I've managed to live off since January, but they've all dried up now, and the wolf is sat snarling outside my door as I type.

Anyway, now the sob-story is out of the way, I guess I have a few questions.

Firstly, what sort of preperations are needed by myself before going into an IVA? I'm guessing I need a new bank account, seeing as my current bank are one of my major creditors. Can anyone recommend a good bank to deal with? (I've seen the Co-Op bank recommended a few times, what about Yorksire Bank [you get a cheque book and a maestro card with them]?). Is there anything else vitally important that needs doing?

Secondly, how does the IVA affect current financial commitments, things like mobile phone contracts, internet access etc. Is there provision for things like this in the monthly allowance? Are things like CSA payments (which will thankfully reduce to £285 a month in August) taken into account? I see that other people get allowances to run a car, I don't drive but travel to work on the bus. Will this be covered?

Finally, what happens in the event of being made redundant? I'm about 10 days into a 90-day redundancy consultation (with a 33% chance of losing my job), and I'm a bit concerned about what effects the fall-out from that would cause. Would my IVA application still proceed, would any redundancy and pay-in-lieu of notice be swallowed up by the IVA etc.

Sorry about the long post, but I need a lot of questions answering in my head. Thanks in advance for any help and advice.

Gav.

[MelanieGiles]

Hi Gav and welcome to the forum

First of all well done for taking the first step to debt freedom - recognising that you have a problem which is not going to get away and dealing with it in a responsible manner.

The next step ought to be taking advice specifially from an insolvency practitioner, who will be able to explain fully all of the options available to you and detail the advantages, disadvantages and implication of each one - remembering that an IVA is merely one solution available.

Next you will need to focus on some housekeeping, and the setting up of a new bank account is sensible if you have debt with your existing bank. If there is no debt, then you can keep your current account.

With regard to your ongoing payments for mobiles and the internet, these will continue as normal as will your CSA payments. The reduction in the amount you are paying to the CSA from August, will free up more disposable income to make available to your creditors.

If you are made redundant whilst in an IVA, or are under threat of redundancy now, it is worth awaiting the outcome of those consultations - however a short payment holiday would seem to be appropriate if this was to occur once the IVA is established bearing in mind that redundancy monies are paid as compensation for loss of office and should be used for the purpose of income replacement until you found alternative employment.

Carry on posting your questions on the forum, but note that this cannot be a substitute for detailed advice directly from an IP with regard to your own specific set of circumstances.

[elizabethr]

Hi Gav and welcome - I have only been on here a couple of months but have found it invaluable, supportive and non-judgemental. I am just in the process of sorting the IVA route out, have gone with Melanies team, done I & E and now sent paper work off. I was posting on here for a while before I decided what was best and took the plunge - now like everyone else probably says I wish I had done it sooner. It was good to prepare though so no surprises. My bank, Barclays, will become one of my creditors so I have opened a new account prior to stoping payments to creditors. I have gone to Lloyds TSB and have a current account with debit card and cheque book. I also opened a savings account. My husband has moved too as he is in the same position. I made an appointment and just said I felt like a change. They did credit check so do it before going into default. I was then able to change salary in and dds going out well in advance.

[yellowfrog]

Thanks for the replies, Melanie and Elizabeth, they've been very helpful.

I have one more question that I've thought of. I noticed on the FAQ pages that you're generally only considered for an IVA if you have 3 or more creditors. Currently I have an overdraft and a credit card with my high-street bank, and a loan and a credit card from an internet bank. Does this count as 2 or 4 creditors?

[michael.t47]

i have done the same elizabeth
gone from lloyds to alliance
lloyds 1 of my major creditors

[MelanieGiles]

It counts as two creditors with four sources of credit - so it meets the criteria for proposing an IVA on that basis alone.

[yellowfrog]

Hmm, just worked out exactly how much I owe, and it wasn't a pretty site :S (About £5k more than I thought)

Anyway, I've booked tomorrow off work so I can open a new bank account and start sorting things out. Melanie, I'll probably give you a call at some point during the day. I've done a spreadsheet with all my current outgoings on it, so I'm well prepared.

[plasticdaft]

Hmm, just worked out exactly how much I owe, and it wasn't a pretty site :S (About £5k more than I thought)

Anyway, I've booked tomorrow off work so I can open a new bank account and start sorting things out. Melanie, I'll probably give you a call at some point during the day. I've done a spreadsheet with all my current outgoings on it, so I'm well prepared.

Possibly the best decision you have made in a long long time.

[Soulgrowth]

Hi yellowfrog

Just wanted to say congratulations on making the first, very sensible, steps to addressing your debt situation ... and don't worry we all know that feeling of our debt being considerably more than we thought it was ... mine eventually amounted to £178k [:(]

You are definately doing the right thing ... keep in touch with the Forum as we are all here to support you along your journey.

All the best

Debbie

[MelanieGiles]

The worst bit generally is writing down everything - how much you owe and how much you have coming in and going out - but it is the right first step forward to finding a solution.