alcazar

iTrader: (2)

So how does THAT work then?

Seen loads of adverts on TV, (interspersed with those practically BEGGING us to borrow even more money), which seem to say that you can "write off" 75% of all unsecured borrowing, and pay the rest over 5 years?

How on earth does THAT work? Who pays the rest? And how do the people who do this, continue to live, I'd assume with no more borrowing EVER? (No credit cards, no debit cards, etc etc?)

Alcazar

Chris L

The only way you can do that is by IVA (Individual Voluntary Arrangements) - The way they work is that you enter into a contract with your creditors to pay your debts. Interest is stopped and they last for a maximum of five years. After that time the debt is effectively written off. If you do it right, you pay off 25% over that time - therefore 75% is written off. Doesn't do much for your credit rating though.

An IVA isn't bankruptcy, so in theory, you could continue to live in your house etc or even borrow more money if you were mad enough (and assuming the loan company was down right irresponsible). I doubt your creditors would be happy either!

They are normally for people with more than 20K of unsecured debt. Doesn't make that much sense below that level because IVAs aren't that cheap and if you don't keep up the repayments, your creditors will almost certainly petition for bankruptcy.

The reason you see so many adverts for these schemes is that they are very lucrative for the agent that manages the scheme. Setup fee is normally around £2K and then anything up to £800 a year for the length of the IVA. You don't do it to save money, you do it to avoid bankruptcy (and they neglect to mention that in the ads)!

Petem95

Debts in this country have reached frightening levels - daytime TV used to be all adverts about "go on, borrow 25k - you know you want to! - buy that X5 and pretend to people youre rich!" and now its all "struggling with massive debts? balifs at the door all the time? we can help!" etc

Its government legislation which allows IVA's to write off debts - the banks DO NOT like it as of course now debt problems are spiralling, theyre having to write-off ever increasing amounts as bad debt.

wwp8

trying to sort one out for my parents, quite a kerfluffle at the moment,
been negotiating for 3 months,. still little progress,

Chris L

You need to get a minimum of 75% of your creditors to accept the IVA - as Pete says, the banks are not very keen on them.

mart360

from what i heard, they carry almost the same penaltys as bankruptcy

ie you cant get credit, open a bank acc, and it stays on file for six years from the end of the discharge

Mart

lordlucan

IVAs are a great idea, an even better idea is to get out in the first two yrs. I used to work for a company that specialised in this. Providing there was equity in the house we would re-mortgage the property through an adverse lender at rates not that much higher than the normal lenders and negotiate with the creditors. Every case was different however most people would get out for 20% of their debt.

We would only act for people who had an equity clause in the IVA, 95% did, forcing them at the end of the 5yrs to re-mortgage and pay the equity to the creditors. How do you think you can get 75% of creditors to agree in the first place !!

I have seen people in IVAs who are still able to get credit, one was even able to get a Barclaycard with a 5k limit !!!

J

mart360

can you clarify this?

i,m confused


Mart

SiDHEaD

I managed to get about 70%

You dont go bankrupt either.

You get defaults at the start - no CCJs etc tho, then you pay rediculous low amount (like £10/mo on 20k) then after a year you can get them to settle

And I kept my car as it's nothing to do with those debts!