www.iva.co.uk

I am £48K in debt and am a private tenant I live in Belfast and I am looking to start an IVA. I have spoke to one company who said it isn't the right thing for me and want me to take out a Debt management plan but I am afraid of this as it can take years to pay off.

Hi mc15, give a few people a ring and get advice from a few sources. Melanie who posts on here is a great place to start and there are other really good professionals who also post on the forum. Don't just go with the first person you speak to. Kazzy x

HI there mc15 and welcome to the forum

What you need to do is take professional advice from an insolvency practitioner as to the various options that are available to you. There are likely to be more than one, and at the end of the day they will help you to realign your priorities and look forward rather than continue to worry about what has happened in the past which you cannot now change.

Hi there mc15.

How long will it take to pay off your debts with a DMP ? While DMPs can be suitable in certain circumstances, if you are heavily in debt with little available earnings to put towards repayment, then it could literally be decades before you clear your debt. As DMPs have no legal basis it is very much up to each individual creditor as to whether they will agree to run with them, so there is no guarantee that they will all accept the level of payments offered, or even stop charging interest and fees.

Have you thought about bankruptcy ? If you have no assets and your work has no restrictions about going bankrupt then this may be the best solution for you.

If you are thinking about an IVA though, with £48K debt, you'll need to be able to afford to pay least £280 per month into it otherwise you won't achieve the minimum dividend that most creditors look for in an IVA after costs.

Hi mc15

Just wanted to say welcome to the Forum.

As Melanie and Philip have both said there are other options available to you and you should speak to a few different professionals before making a decision ... then go with what 'feels' right for you.

Well done on making those first important steps to addressing your debt situation ... you wont look back. Keep in touch with the Forum and let us know how you get on.

Debbie

Philip - are you still quoting minimum dividends to clients post-IVA protocol?

We are getting a lot of IVAs accepted now with lower dividends, as apart from HSBC I do not know of any others who apply hurdle rates. I do not act for clients who have a disposable income of less than £250, as I find that below that there is too much sensitivity to contingency - leading to a higher failure rate, but there are a number of IP firms who will take cases on from £150 upwards, so MC15 please don't be put off if you have a low disposable income at this stage.

Melanie, yes I was still looking at 25p in the pound hurdle rate, thanks for the tip !

Hi All

We are entering a DMP with payplan and we are intrigued with the companies offering £150 and up for IVAs. Our application was rejected and we were offering £242 on debts of 62k. I thought that was a good offer and as previuosly said IPs would not support offers they did not think would back. I would be interested to see your views.


Thanks

John

Yes, I haven't to date offered IVAs where the expected dividend is under 25%. Although Melanie says she has got some through under this level the IVA protocol is after all only voluntary and I am still not certain how many creditors have abandoned the hurdle rate criteria therefore for me I don't want to take the risk of putting in a lot of effort just to see an IVA rejected and then not getting paid.

Personally I can't see how any IP, even the high volume "factories" can make a living from running IVAs at £150 per month. I think many clients and creditors don't realise it but there is a surprisingly large amount of work required just to comply with the legislation and professional standards when setting up an running an IVA, and this work is not necessarily visible. Under the TIX acceptance criteria with Nominee's fees capped at the first 5 contributions (inc. VAT) and Supervisor's fees at 15% of subsequent contributions + VAT, that would mean the IP getting a total fee exc. VAT of only £1,875 for setting up and running a 5-year job at £150 per month payments. They have after all got office costs, salaries, marketing and all the other expenses that any normal business has. Perhaps that's why the share prices of quoted IVA providers have plummeted.

I take a different stance to Philip, in that I believe that if a client really wants to put forward an IVA then they deserve the right to do so - whether I get paid or not.

Of course we do have to be commercial, which is why I have a minimum entry level of £250 as explained earlier. I believe that Cleardebt are one of the firms who do offer a lower contribution product, and if Size 5 is around today he may be able to clarify that point.

There are plenty of DMP companies running very successful businesses on the basis of smaller contributions, and a lot of my IP colleagues are following this on on grounds that with the intended introduction of SIVAs next year, a lot of the unecessary statutory work is going to be removed.

There will always be IPs who have differing opinions as to what makes a case, and that is perhaps why it is beneficial to shop around a little to compare the levels of service provided. Personally I have a lot of lower contribution cases in my portfolio, and do run a pretty successful practice on the back of that.

Hi Melanie

Thanks for that inf, can I ask what the SIVA element of your repy is about please.


thanks


John

I would like to thank you all for posting your replies they have been very helpful. I have taken my first step to an IVA and I just hope and pray that it will be accepted. I would like to thank Mike for his help today.

A SIVA is a new styled voluntary arrangement which is designed to be far cheaper on grounds that the statutory requirements are limited - no annual reviews, no annual reports for instance. Some of us in the profession will believe this when we see it - and indeed with the advent of the IVA protocol this seems to have largely sorted out a lot of the issues which SIVAs were said to address, however they are bound to have a place and should be able to address the lower contributions cases which in my opinion are just as worthy of presentation.

Hi all, sorry I wasn't around yesterday to answer your point Mel, but yes we are one of the firms that will look at lower contributions than £250.

Thanks and regards.

That's great news Mike - I thought David had mentioned it at a recent conference to me.