I have just taken advise to start the process of applying for an IVA. I have been advised to stop paying my creditors now. I currently owe £45,700 in various credit cards and catalouges. I am not in arrears although struggle to make the minimum payments each month. So basically is the correct advice as I believe the IVA process can take up to 8 weeks or more so that will be two maybe three in some cases of missed payments. I was going to write to each creditor and explain I am applying for an IVA. Please advise
Yes, it's quite normal to be asked to stop paying your creditors. If you're going for an IVA, then the money you're paying creditors at the moment is really 'dead money' and there's no point. However, if you do have any CCJ's then it's advisable to continue to pay these until your IVA is approved.
I wouldnt waste your time writing to creditors as they will phone and hound you anyways. Put some of the money you would be paying creditors with away for an emergency fund.
Who is doing your iva and did they explain any other options?
Paul
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
Hi
Its is compleatly up to you what to do. I was in your position, not being behind in payments when applying and was scared what would happen if I did not pay. I decided to write to my creditors explain I was in the process of sorting my finances and paid £10 a month to each creditor as a token payment. This made me feel a bit better I did build up arrears and lots of charges but these are all covered in the fianl IVA. Not paying will not go against you in the creditors decision at all. I found by only paying token payments I was able to build up a £1000 contingency fund which Im sure will proove to be really useful during the term of the IVA. Most people will advise having a contingency is a good plan. A couple of my debts went into default whilst waiting for my iva to go through but it was not a problem. Yes the phonecalls and letters start once you miss a payment but you can choose to ignore them as I did or speak to them and let them know what you are doing and give them your IP details and case number if you have one. Well done in makingthe decision, I persoannly feel facing up to everything and making those first phonecalls are the hardest part. The number one thing you MUST do is open a basic bank account if you owe any money IE overdraft/loan/card to your bank or any connected to it as they will use the offsetting rule and clear your wages from your bank account if they so wish. Good luck welcome to this wonderful forum
Once we had decided to go down the IVA route, I set up a basic account and gradually switched over our direct debits/standing orders straightaway and didn't make any payments to our creditors at all - not even token ones. By the time our IVA's were approved, we were behind 2 or 3 months with payments but, as others have said, this makes no difference whatsoever to the success of the IVA. In fact, nearly 2 months after our IVA's were approved, Santander are still adding unauthorised overdraft charges to our bank account even though they will have been informed and had to make a claim. We did receive several phone calls and some of the creditors were more insistent than others. We did write to them initially to advise we were taking advice and then again when we had a Creditors Meeting booked but most of them don't take any notice so you just have to develop a thick skin. Good luck with everything.
Thank you for your reply's, it feels a big weight to be able to finally talk about my situation. Buried my head for far too long. I was advised by citizens advice bureau to use Grant and Thornton's. I have no CCJ's just high interest debt with the normal high street suspects. I have a meeting on Saturday to open a new bank account as my biggest part of debt is with my current bank account lender. I am just going into unknown area, as I have always tried to pay all my debts at the end of the month. But it has got to the point I can no longer do this and survive.
Sandra, firstly I would advise you to take your sirname off your account, just in case you don't want people you know finding out about the IVA.
Secondly, if you have not already signed up with GT, have a look at some of the posts on here from some of their current customers, maybe have a think. There are some very good IP's that post on here themselves and maybe worth considering instead.
Whatever you decide, good luck, it is the best decide I made and suprisingly I am now around half way through mine.
I felt exactly the same as you and it is not nice at first but now I am so happy to have made the decision that I feel I can start living my life as it should be, not constantly berating myself because of what I was paying out on debt. Don't get me wrong I do still feel the need to repay my debts but the interst on my cards was going up the nearer I got to the limits so in reality I feel the creditors gave me no option but to hold my hands up and surrender. It is the best thing I have done in a long time, I was close a couple of times a few years ago and wish I had done it then, might have been sorted by now!! You will get there too and will enjoy the feeling. X
I know I am a good person, I just need to start believing it
Once I made the decision to go for an IVA I stopped paying them. Changed my home phone number. Got no phone calls obviously but got a few letters. It's no big deal if you don't pay them. Been in my IVA since November last year. One regret - I didn't do it years ago.
Hi, I wrote to all my creditors advising I was having financial difficulty, could not make any payments, seeking professional advice and asked if they would freeze my account from interest and charges for 30 days, luckily they did apart from mbna, after a couple of weeks I then wrote to them again advising what my intentions were and details of the iva firm I asked to represent me, I didn't get any phone calls etc apart from mbna, and did not make any payments, whether I was just lucky I dont know, good luck x
I certainly feel more positive after reading your replies. This forum is good source of information. You realise so many people are in the same predicament. I just want to sort this out and kniw I do have a little spare cash at end of month should my daughter need school shoes etc. At present anythibg like that came from catalouges. Thank yoy for taking time out to reply
I know what you mean Slek, my family of 4 now have a £90 clothing allowance per month in our IVA. Prior to our IVA buying school uniforms etc caused us so much worry and usually a bit of begging to the inlaws!
There is no right or wrong answer to this question, it is a matter of personal preference. There are a few options available to you.
1. Work with your Insolvency Practitioner to get an accurate idea of your true disposable income, and then work out fair pro rata payments for each creditor so that everyone is treated fairly
2. Make token payments to each creditor during the setting up process, for example £1 each
3. Make no payments at all during the setting up process
What course of action you take will make absolutely no difference to the result of any creditors meeting so it really is a matter of what you feel most comfortable with. Personally, I tend to recommend that token payments are made, purely as a sign of goodwill. This allows a little leeway to the debtor during the setting up process, in as much as the disposable income that is not being paid to creditors during this stage can be put aside to allow the debtor to have a little buffer, as it were, to start with
It is to be remembered that no unsecured credit can be used during an IVA, and if there is an unexpected bill during the early stages, e.g. new tyre for the car, boiler needs fixing etc then it cannot be paid for on the plastic as may previously have been the case. If there is a little set aside, and that is a good habit to get into during an IVA anyway, then the debtor can start from a position of relative strength rather than relative weakness and be in a much better position to deal with life’s little emergencies head on.
Should the proposal be rejected (statistically unlikely as no IP will put forward a proposal that they feel has little chance of success) then any funds set aside can then be used immediately to fund whatever other options may be available to the debtor, such as bankruptcy, possibly a temporary DMP etc.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
I have written a brief letter to send to my creditors explaining I am unable to make the minimum monthly payment and therefore have taken financial advice and proceeding with applying for an IVA. Makes me feel better that I am not just ignoring the fact that I have missed a payment. An emergency fund would be good though, I dread now if anything should breakdown on me... probably just jinxed myself!!
Anyway reluctant to send any of these letters off until I have opened a new bank account in case my existing bank gets wind of it. Have large overdraft and credit card debt with them.
The contingency fund is a much better use of any payments as it makes no difference whether you pay or not. We stopped well before the IVA was approved, as soon as I had a ref number off Payplan, quoting it along with the name of the case officer when the creditors rang. They eventually left us alone [;)]
