How does an IVA work?

[vespaboy]

A close friend has got into financial difficulty and is thinking about contacting a debt cosolidation company to initiate an IVA.

I've told him to try to get a consolidation loan rather than go down this route, although when asked why? I could not give an answer, just that if they are adverstised on tele all the time their must be some money to be made by them.

He owes circa k25 and his monthly income is �1500 approx and he doesn't own his own home.

Any advise and/or approx figures would be appreciated.

Thanks

[boro1986]

Going via the IVA route i believe takes years and credit is badly affected. I also believe these companies do it for there gain so it will cost a lot less payments over longer time. What i dont understand is how people get into these situations living beyong there means �1500 is not a bad monthly salary to live on

[vespaboy]

Thanks for the effort boro, unfortunately you gave me no worthy information at all apart from passing judgement on a friend in need...are you so perfect??

[boro1986]

Me well yes besides a mortgage i have no debt i dont have any credit cards etc. I was not passing judgement but asking why or how you can be in that much debt with a fairly decent salary. I do not believe an IVA is the answer as credit is affected i suppose your "friend" wants a morgage one day

[Harley]

How about a proper answer Vespaboy....here goes.

Your mate has to first consider what he can afford to repay and indeed if he can get a consolidation loan. If he is not a home owner he will have no chance of consolidating several small loans into one large one as these loans are always against security.

So IVA or go bankrupt?

IVA means he is tied in for 3 to 5 years paying approximately �200 per month thats �12500 in 5 years and 50p in the � for the creditors less the IVA fees that could be �3500 to �5000. So you see it's not very attractive

Go bankrupt, lasts for 1 year and probably no payments. He is then clear to sort his life out.

My advice is to go bankrupt. He has no home to lose.
Hope this helps

[Solarjunkie]

Go and have a look at
www.moneysavingexpert.com

and you will find all kinds of explanations and advice on all kinds of financial situations. An excellent site.

[boro1986]

I do not agree with Harley going bancrupt is not the answer every time you try and get credit they always ask if you have ever been declared bancrupt and they will not touch you.

[Harley]

With an IVA he will not get credit either ! It's recorded on his credit file.

Do you think his Supervisor would allow it even if he was able get it.

True , his bankruptcy will be recorded on his credit file for 6 years the same as an IVA but he hasn't had to pay anything back.

Why struggle for 5 years when he can wipe the slate clean.

I am stating facts not opinions. Unless bankruptcy will affect his job then it's the sensible option.

In the past IVA's were for business people who owed trade and Crown debt but wanted to stay in business.

More recently it has become fashionable to have a personal IVA to keep the family home, this person HAS NO HOME he has nothing to lose.

[themas]

Agree with Harley that IVA is pretty pointless as no home to protect. If he insists on doing one it is better to go to a reputable outfit such as Payplan/Shaws or Grant Thornton, rather than one of the TV & internet advertisers.

Whatever he does, his credit record is almost certainly shot for 6 years. If he goes on without bankruptcy or IVA it could well be shot for a lot longer, as paying off in full would very likely take much more than 5 years.

He should look at the bankruptcy booklets on insolvency service site.

Does he own a car? If so, it could be at risk in bankruptcy unless he can show a definite need for it for work.

[boro1986]

I just see bankrupcy as an opt out at the end of the day you ran the debts up you have to pay for them

[vespaboy]

Boro
if you have nothing positive to say please mind your own and keep your perfect lifestyle out of my questions.

[boro1986]

I do have a perfect lifestyle own house own car and earn 32K a year but guess what i have bills/debts and pay them all

[joeypeterson786]

An Individual Voluntary Arrangement (IVA) is a contract between you and your creditors in which you agree to settle all or part of your debts. You agree to pay a certain amount to an insolvency practitioner, who will split the money among your creditors. An IVA, rather than bankruptcy, can provide you more control over your assets. For any information related to iva work call on national debt helpline number 03338803165!!