Hi. After scouting around I have some questions about IVA

[nnop72]

Hi

Over the years I managed to get myself into a fair old mountain of debt. I finally started turning things around three years ago, but was promptly made redundant. Since then I have been on a self-managed DMP with six creditors and owing c£47k between them. I have been paying my creditors my spare income of £100 a month.

Recently, I have been offered a better paid job, which would give me about £400 a month disposable income. As this would still take ten years to clear (with no interest), I decided to have a look at the online debt remedy with CCCS, the outcome of which was an IVA recommended.

I have done some scouting about the net, and have some questions about IVA's, and thought perhaps someone might be able to help.

- I understand that when setting up, I would need to provide an IP with proof of debts, income and a statement of expenditure. Is there anything else?

- Within my budgeted expenditure, am I allowed to save money, or have a small pot of money for emergencies? Say, if I found I was saving an extra £100 a month, would that need to go into an adjusted payment to the IVA?

- If I had a pay rise / net increase in disposable income, would that automatically go into the IVA?

- If I took on new commitments, (such as a family), would there be scope to reduce payments (perhaps with a longer time frame) from either the original agreed payment, or an increased one due to pay increases from the start?

Many thanks,

Neil

[Foggy]

Hi Neil

Briefly: The IVA payment will be worked out as your total income, less agreed expenses. Generally there is a small element for emergencies ( I get £20 general and £20 car repairs). If you can make any small saving in groceries, not buying clothes one month etc, you are encouraged to save this for those rainy days!

If you get a pay rise 50% of it will be added to your usual payment, generally at annual review time.

Small increases can be catered for during the course of the IVA -- the secret is to find an IP you are happy working with and keep the lines of communication open. You will find some IP's more communicative than others, and can get a feel for this by cruising around the forum and reading the comments

I would suggest you pop over to www.iva.com where there is a listing of reputable firms ( with reviews) speak to a few until you find the one you are most comfortable with. The advice ios free and without obligation at this stage. Also, again, scout around the forum. Many IP's post here and you can see how they work.

Best of luck and keep posting .... no question is silly


Reason for edit: amend incomplete link.

[MelanieGiles]

Hi there and congratulations on getting a better paid job!

IVAs are specifically tailored to meet our clients specific circumstances, so your questions are perhaps better answered once you have arranged to have a chat with an insolvency practitoner. You may be pleasantly suprised at how flexible IVAs are these days - especially with the new IVA protocol measures introduced just last month.

There is plenty of scope to provide for all eventualities within your income and expenditure summary, but again this is best chatted through with the IP you choose to represent you. And from my point of view, having a savings account is an essential part of the process.

[JetSetWilly]

Building on the pay rise question: if one received a pay rise, say 6 months into year one, does the 10/50/50 rule apply for the duration of the IVA or is it reset at annual review; thereby reducing the client's available funds back to that of the original agreement?

The company I work for has frozen pay rises this year but there are often opportunities to apply for positions with better remuneration and benefits... If pay rises aren't wiped clean each year then it would prove good incentive to future one's career (and also go some way further towards ensuring the IVA ran its course).

One for you, Mel, I guess. And, I fully understand if everything resets at each annual review!

[MelanieGiles]

To be honest, unless the payrise is significant (I would say 5% or more) then I tend to leave things like this until the annual review point and then adjust if necessary. Payrises are not affected by the 10%/50/50 ruling - this only covers exceptional payments such as overtime, commissions and bonuses.

[JetSetWilly]

Thanks for the speedy response!

So, as I thought, there wouldn't be any benefit in seeking a significantly better paid role as the additional funds would be swallowed up by the IVA.

I know a lot of people may not agree with that view but, often, the additional salary is paid to compensate for additional stress... Maybe worthwhile in the latter years of an IVA!

[MelanieGiles]

No - if you had a pay increase, which then increased your bottom line disposable income after taking account of any increased costs, then you would only have to increase your payments by 50% of the increased figure.

Personally I would not recommend that anyone held back their career due to having to pay more money into their IVAs. There is life at the end of the IVA to work towards, and jobs and careers are equally important as paying off old debts.

[JetSetWilly]

That sounds more than fair and thank you for clarifying! Getting to keep 50% of any pay increase is certainly good incentive to progress the old career. Anything that provides more of a buffer and gives creditors an improved return seems sensible.

Thanks again, Mel

PS. Don't you ever sleep!?

[MelanieGiles]

I grab around 5 hours per night which is more than ample!

[nnop72]

thanks for the response. I start my new job in a week, and will be on a six month probation, so will look into this some more with a view to potentially starting in a few month's time.