www.iva.co.uk

Feeling really really sick at the moment, and don't know where to turn. My husband and I have been in an IVA for the last 3 years, and have not missed any payments apart from a payment break after my baby was born a few months ago. We pay £730 a month and have been really struggling with this, so I have therefore been using other credit cards and an overdraft to buy essentials like food every month. I am not behind with any of these payments and pay the minimum on time, every month. We had our annual review today and when my husband has rang they have said that we have failed the iva due to the overdraft and my card with barclays. I have been directed to our terms and conditions, and it apparently states we can not take out anymore credit, which I stupidly wasn't aware of. My husband has asked what we will do now and they are not interested. Said they will send out a breakdown of what we owe! Don't know what to do! Will have to go bankrupt, but don't know how this will work! Any advice would be greatly appreciated!

Hi Lou - your IVA is company is right, no credit ( unless IP gives permission) is acceptable in an IVA. At the end of the day, an IVA is there to resolve your debt problems. You are not paying the full amount back to creditors, so to take out a credit card and repay full amounts to another creditor is not fair. I'm surprised you were not made aware of this from the start.

That doesn't help you now and you need to find a solution going forward. Basically, you're back to square one with all of your debts.

You can either enter into an another arrangement, no guarantees creditors will accept this or you can go BR.

Do you have any assets that would be affected in BR, house, car, etc???

It should be down in your proposal and your chairmans report that any credit over £500 has to be approved.

When we had our IVA's approved, we were specifically asked by the IP if we had any other credit outstanding.

I'm surprised that you were able to get more credit. Was this something that you had prior to the IVA but didn't tell them about?

Who is your IVA with? It might be worth trying to speak to them about this, although you should have realised that an IVA is designed to sort your debts out, and you should have not have taken out further credit.

Sorry to hear about your current difficulties, however the use of additional credit during an IVA, without seeking the Supervisor's permission, does give grounds for the IVA to fail. I am amazed that you were not aware of this!

Hi Lou
Melanie and the rest of the guys are correct, with an IVA, additional credit is not permissible unless approved by your supervisor.
Whilst it is unfortunate there are other options available, namely a debt management plan or bankruptcy. I think you will need to sit down and weigh up the pros and cons of each before deciding on what to do.

Thanks

Hi Lou

Really sorry that youre in this situation its a shame that you didnt know about credit cards and overdrafts. Perhaps your IVA payments were a little too high?

Dont give up hope of a solution, there obviously isnt a solution with the company that did the IVA for you three years ago. Perhaps you could consider BR or a DMP until you sort things out?

If you do go in for another IVA at a later date, please make sure your figures are realistic before you sign on the dotted line. I can see a situation where you are so desperate you might agree to anything. It must feel like you have let yourself down but only if you dont get up and plough on again.

Good luck.

I have often been confused by this as in some places it says you don't have to ask for your IP's permission to obtain credit of less than £500, but some people say no credit whatsover.

Would it be worth the IP failing a person's IVA if it was only £500?

It depends on the terms of your IVA. I believe that some people can obtain credit for a certain amount (which I would imagine would be very difficult in an IVA!), but others can't have credit at all without the express permission of their IP.

It seems a bit more than unfair that the goalposts are different for some than others.

Surely there should be a standard?

I have read posts on this forum where people have said they have kept a catalogue line of credit open to buy clothes, so what's the difference in that and having £500 credit?

With the costs involved in making somebody bankrupt, would this be a case of where the IP would notify someone of a breach of the IVA and give them the chance to put it right before going down the bankruptcy route?

An IVA is individual, so you're never going to get 2 the same.

The answer lies in the IVA proposal itself which forms the basis of the contract. Everyone should understand the terms of their own contract and abide by the terms.

But I do agree that it would be silly to fail an IVA for the sake of £500 - but the poster does not say how much has been incurred.

I think the difference is the fact that £500 credit would possibly be a small purchase, if you could get the credit.

The point here is that you are not supposed to have an overdraft or credit cards whilst in an IVA, and I doubt the £500 credit allowed for some people would include any of those.

I suppose if your catalogue was down to nil, and you just ordered necessities from there and could manage the payment from savings from other allowances that might not be too bad?

You could get white goods from somewhere like BrightHouse, but they are not to be recommended. They don't credit check though.

My catalogue had been paid off before the IVA (with one of my many consolidation loans!) and they closed my account!

Thanks for everyones replies. It was my £500 overdraft and £450 with Barclaycard. The overdraft was given to me automatically when I opened the bank account when starting the iva. I had the barclaycard before the iva but the balance was nill. We used it to buy a new fridge freezer and a new exhaust as we suddenly found all our household items breaking. I don't know whether Bankruptcy would be the best option as we do own our own house. We do however have a £60000 mortgage (interest only) plus a £80000 loan secured on it, and we think the house would currently be worth less than £140000 so are probably in negative equity. Where would that leave us?
Does anybody know how long we have before the creditors start harrassing us?
We are going to the CAB on Tuesday so things may be clearer then! Maybe I should post on the bankruptcy forum! Thanks

Hi Lou

Sorry to hear what's happened, I hope you manage to get something sorted soon.

Just out of interest, how was it you were needing the additional credit for every day things? was your budget/allowance insufficient?

x Kate