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 Should I leave debt management plan?
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Jenny Flynn
New Member

4 Posts

Posted - 20 May 2011 :  16:23:43  Show Profile  Reply with Quote
I have had a debt management plan up and running for just over a year. At first it seemed like a godsend but I am worried now that my debts don't seem to be reducing very quickly at all, especially as a couple of them still charge interest (most have stopped).

I'm thinking that switching to an IVA might be a better move now. I had thought about this before but am a bit worried about it as it all seems so much more complicated and scary than what I am doing at the moment. I currently pay ?340 every month to the debt management plan and could probably afford to pay a little more as I have had a pay rise recently. I hate to say it but my debts are nearly ?50000. Can you advise whether switching to an IVA would make sense and be possible please?

Mike Sloper
IVA Expert



107 Posts

Posted - 23 May 2011 :  12:44:55  Show Profile  Reply with Quote
Hi Jenny



Based on the figures you have given it looks like an IVA would be viable, but of course it depends on your circumstances so you should contact a reputable company to help you. Paying ?340 a month towards ?50k of debt would mean a debt management plan might last 12 years or more, whereas an IVA would probably last 5 or 6 years. An IVA is more formal than a debt management plan and although it can be intimating and seem complicated, a good IVA provider will explain everything to you and hopefully put your mind at rest.

I am a Insolvency Practitioner handling IVA cases.
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Beverley Budsworth
IVA Expert



311 Posts

Posted - 23 May 2011 :  15:36:03  Show Profile  Reply with Quote
Hi Jenny,



To add to Mike's comments above, reputable providers should explain an IVA in detail and manage your expectations so you know what to expect before, during and after the IVA.



Also, are you a homeowner? If so, is there any equity in the property? If you could give us some further information we may be able to give you some further insights on what to look out for.

I am an Insolvency Practitioner handling IVA cases. To contact me about starting a IVA please:   ???
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Jenny Flynn
New Member

4 Posts

Posted - 25 May 2011 :  09:59:51  Show Profile  Reply with Quote
Thanks Beverley and Mike.

I am a homeowner. We bought the house about four years ago and probably paid too much for it at the time. The mortgage is still just over ?200,000 and I think we'd even struggle to sell it for this much the way things are now.

Does owning a home make an IVA more complicated or risky? We really cannot afford to risk losing the house as being here is the one thing that's keeping us sane!
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IVA Adviser
IVA Expert



734 Posts

Posted - 25 May 2011 :  18:50:45  Show Profile  Reply with Quote
Hi Jenny Flynn.



If there is no equity in your home there will be no requirement to take any action as part of an IVA.



Even if equity were to develop later during the IVA there are rules in place that safeguard you if equity release isn't practically possible and which restrict the future expense even if it is.



Carefully explaining the implications of this to you will be a key role undertaken by any decent IVA provider before you commit to proceed with anything.

I am a professionally qualified debt adviser. To contact me about starting a IVA please:?      
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Jenny Flynn
New Member

4 Posts

Posted - 26 May 2011 :  14:35:48  Show Profile  Reply with Quote
Thanks, that's reassuring.

Could you just clarify what you mean when you say "equity release isn't practically possible"?
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IVA Adviser
IVA Expert



734 Posts

Posted - 28 May 2011 :  10:46:19  Show Profile  Reply with Quote
Hi Jenny Flynn.



In general terms at the moment it would normally mean you cannot remortgage the equity out of your home.



As things stand, remortgaging to release equity is currently next to impossible for most people while in an IVA.

I am a professionally qualified debt adviser. To contact me about starting a IVA please:?      
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Beverley Budsworth
IVA Expert



311 Posts

Posted - 02 Jun 2011 :  11:20:10  Show Profile  Reply with Quote
Hi Jenny - The way that your residential property is dealt with in an IVA is actually really fair especially if the IVA is drafted under the Protocol rules. This provides that in year 5 a valuation of your property is undertaken and you seek to remortgage at a max of 85% LTV less your secured borrowings. This however only happens if your share of the "net worth" in your property is over ?5,000. Your net worth is calculated after deducting 15% of your equity. There are other clauses which provide that you do not increase your mortgage payment by more than 50% of your contribution and the best safeguard is that if you cannot remortgage you simply pay 12 extra contributions if your share of your net worth is over ?5,000. If you want to e-mail me with details of the value of your property plus the mortgage balance outstanding I can give you an indication of what the likely outcome in an IVA would be.

I am an Insolvency Practitioner handling IVA cases. To contact me about starting a IVA please:   ???
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Jenny Flynn
New Member

4 Posts

Posted - 03 Jun 2011 :  11:35:02  Show Profile  Reply with Quote
Thank you Beverley. The current mortgage balance on our house is ?201,700 and when we look on valuation websites the house comes up as being worth ?210,000 to ?220,000. We're a bit worried about that as we know of similar houses that aren't getting sold as these types of prices and think that realistically it might be worth ?200,000 or so. Are these valuation websites used for IVA purposes?
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