Unreliable Car

[john10001]

If you have a small amount in savings, would it make more sense to use that in order to repair your car, get it serviced, new tax, mot, insurance, then sell it and swap it for something similar in value or not much more expensive, but something that is definitely more reliable, and less expensive in terms of tax band, insurance group, fuel economy?

Or would it make more sense to keep hold of the savings and use them to put toward a potential IVA?

[Foggy]

If you have a small amount available as savings prior to an IVA (which is a rarity), then it would make sense to get cars, boilers, cookers etc straight before the IVA. However, if we are talking thousands the creditors might take a dim view.

On the car front -- there is always a risk when replacing a car with a "more reliable" model (even brand new cars break down within days), sometimes it is better with the "devil you know" and getting it checked and serviced with any upcoming repairs seen to.

[UpToMyNeckInIt]

Hi John,

Welcome.

Good advice there from Foggy.

I set aside a small contingency fund, and suggest that you do likewise if you are able to do so.

[john10001]

Thanks guys! My car is extremely bad and it breaks down frequently and often costs an awful low to repair and service. I am talking many thousands of pounds here.

Was thinking of getting rid asap as soon as latest issues fixed, part exchange it in for something similar in price or not much more, slightly newer, slightly better mileage but uber-reliable and much less costly.

I am thinking Japanese here like Toyota, Honda, Mazda. But also considering Ford, Vauxhall and possibly the odd Germany car e.g. VW group. I desperately need my car for my job and other personal reasons.

How would creditors know that you have used some of your savings to replace your car or put towards a small contingency fund ahead of iva?

A lot of people are talking of this on the forum and that it makes senseto build a small reserve ahead of doing an IVA, and even stopping payments or making token payments to creditors for a month or two before entering into an IVA as the first few months of an IVA are meant to be particularly bad especially if any big costs come up and fall due? E.g. I am thinking of car insurance in particular and road tax. Plus repair bills and servicing costs if you haven't replaced your lemon on four wheels before doing an IVA?

[Kev.02]

When we set our IVA up on the expenditure our IP included car tax car insurance petrol servicing and an additional contingency for the unforeseen.

[Foggy]

The chances are, John, that they won't know if you don't declare ---- they will, however, ask for details of your car and will wonder where the money came from as it will have recently been purchased. However, even in this scenario, most decent IP's will take the sensible view that a reliable vehicle, especially if needed for work is a reasonable investment, as it will, in all probability, save money in the long run. Here, I am talking reasonable amounts for a reasonable car -- don't look through an Aston Martin showroom window!

I downgraded, a few months before my IVA, from a petrol guzzling QX (25 to the gallon and £200 plus road fund licence) to a frugal diesel Skoda Fabia (Affectionately known as "The Skip") (50 to the gallon and £95 RFL). My IP said nothing, however there was mention in my proposal that I had switched to a more frugal vehicle in an attempt to minimise ongoing running costs, but no figures were mentioned.

I also, as you mention, stashed my months unpaid payments in an emergency fund, as, although RFL and repairs are built in with a small allowance, of course it takes time for this pot to build and sod's law dictates that the breakdown will not wait!

The bottom line is to be sensible (i.e don't splash thousands) and be honest with your IP --- he won't be impressed if a nest egg of a few grand comes out of the woodwork during the 5 years ( and these things do have a habit of doing so!).