I have two years left on my IVA. Due to being too ashamed to tell my IP that I couldn't afford to live, I now have two credit cards on top of my IVA.
Should I inform my IP about the situation and come clean, or should I try and deal with the credit card company myself and try to keep up with the IVA?
I feel rotten that I have put myself in this situation but am willing to do as much as I can to settle my debt. I find it impossible to speak over the phone to creditors. It is my silence that has contributed to my position.
Your credit cards are a breach of your IVA (I presume they total more than £500 and you haven't received permission to have them). However, you are not the first and won't be the last to do this.
If your IVA is unaffordable you MUST speak with your IVA company to ensure your I&E is up to date and discuss options. There are ways that your payment into an IVA can be reduced.
My IVA payment is £120 a month and the two credit cards total £6000. I could manage the IVA on its own. Its the credit cards that I can't. That's why I wondered if it was worth tackling the credit card company (Vanquis) on my own.
If you ran up the credit card debts because the IVA payments were not leaving you enough to live on, it suggests that the credit card payments are not the only problem here. Certainly start with a statement of affairs (SOA) to see what your normal income and outgoings are before paying any of your debts http://www.stoozing.com/calculator/soa.php.
Sometimes it is possible to add extra debts into an IVA, but that would depend whether your other creditors found that reasonable. I would recommend contacting one of the free debt advice agencies for some impartial advice on what to do next.
I did contact StepChange a while ago but they told me the only advice they could give was to tell my IP. Would I need to do this in writing or would I have to speak to them? I am paying the debts at the moment but falling behind with rent and buying food daily because I can't afford a weekly shop. A crash is looming.
I agree with National Debtline. You have accrued more debt since starting your IVA than you have paid off, this shows that the IVA is not suitable. Unaffordable most likely, possibly coupled with not changing your spending habits.
There is no point trying to keep up with the IVA and the credit card repayments, you will only get yourself into more trouble.
Ringing and speaking with your IP for advice would be best.
Your IVA payment is already very low, so the options I was thinking of would not be suitable.
I think it would be best for you to consider other debt solution options such as DMP or bankruptcy. Would these be suitable for you?
I have read about bankruptcy and it scares me too much, although I don't have any assets that are worth anything. Besides, I wouldn't be able to find the setup fee. I don't know how a DMP works. I will have to research it.
How can I explain to my IP what a mess I've made? Won't they just fail my IVA instantly?
if you could manage the IVA payments on its own, what is the 6k debt for on the cards?
Your IVA won't fail instantly, so don't worry. They will likely tell you that you are in breach (which you are) and should send you a letter of breach which gives you 30 days to rectify it (not all bother with this but they should do!). Within that 30 days to rectify the breach you would need to pay off the credit card debt or put a plan in place to do this, which is isn't something you can do.
What is it about bankruptcy that scares you? It certainly seems the best option if you have no assets.
It would take you around 6 months to save the bankruptcy fee if you stopped paying your IVA payment and paid it for the bankruptcy instead. It would take a few months for the process of the IVA failing anyway (Particularly if you didn't disclose the additional credit straight away and just stopped paying as you are only in breach after 3 missed payments) so you could save the money in that time.
Debt management plan is an (not legally binding) agreement between you and your creditors to pay reduced payments. You repay 100% of the debt with a DMP so it can take many years, however interest and charges should hopefully be stopped. It can be useful as a temporary solution if you think your circs may improve and you will have more disposable income to manage your payments or complete an IVA successfully.
Thank you for your advice. It is much appreciated.
The £6,000 credit card debt is a result of comfort spending to address emotional / personal issues between me and a close family member. I don't feel as though I can disclose any more information than that on a public forum. I am not trying to excuse myself, just telling the truth as much as I can.
The thing that scares me most is actually speaking over the phone to my insolvency practitioner and owning up to what I've done. The fear of that make it impossible for me to face. Can I do it in writing?
Shows how responsible lending is a cornerstone of Vanquis policies, when your details would show on the Insolvency Register for your IVA!
The advice you've been given by PKK is probably the best option, you might have an IPA for 3 years with BR but at least your debts would be gone.
It looks like my best course of action then is to stop paying my IVA and my credit cards and save up to apply for bankruptcy. Do I inform my IP (Aperture) that I want to stop my IVA or should I just stop payments and if I go this route, will I owe Aperture any money?
Also do I inform Vanquis that I intend to file for bankruptcy and can no longer pay them or does all of this have to be done through an insolvency practitioner?
I would just stop paying, nothing will happen quickly, you can write and explain the situation as and when you see fit to do so.
Aperture take their fee from your payments, it could be at some point fee`s may be owing, but if your going bankrupt, that may take care of them.
Again with vanquis, nothing happens quickly, in the time it takes you to save the fee the card account will likely still be with collections.
I have been researching bankruptcy on the Citizens Advice website and it seems a scary option to me.
What will happen if I carry on scraping by to pay the IVA and ask Vanquis for some time to see if my situation improves or pay them back when my IVA ends and give them a token payment in the meantime?
When I check my Vanquis statements, I have paid at least two thirds of what I have borrowed already. Would they settle for getting the rest of their original money back in time rather than not at all?
It is an option, but as you are struggling already, it would not be sustainable, bankruptcy is not much different to your IVA, just a different procedure to go through, and its pretty much guaranteed, no what ifs or may be`s.
The only real difference is that your bank account may be frozen, so you may need to get another basic account, or keep plenty of cash available, and you have a telephone interview with the OR to discuss your budget (do it correctly this time) and potential IPA, that's it really, after 12 months your discharged, you may have to pay an IPA for up to 3 years (if you have more than £20 disposable income), your bankruptcy, as with your IVA, would be on the insolvency register for the duration, and on your credit file for 6 years.
Won't Aperture make me bankrupt when they know about the credit cards? I've got a feeling they will.
The thing that worries me about bankruptcy is that it says that some landlords won't let you stay in rented property if you are made bankrupt. I don't know if this applies to a council house. I have been late with my rent and council tax regularly.
It looks like bankruptcy is my only option but will have to do.plenty of research first.
I doubt they will want to fork out £680 to make you bankrupt and get nothing in return, what possible benefit would it bring them, you have no money or assets.
The fact you’ve been neglecting essential payments shows your current situation is untenable, this is designed to be a fresh start for those that need it.
IP's very rarely pursue bankruptcy for failing their IVA. I'd imagine the only cases they would is if they knew there was significant assets which would repay creditors, and of course they can take fees from. Which isn't the case for you.
Yes you have breached your IVA for getting additional credit, but in all the different breaches that can occur this isn't a major one.
You can just stop making payments, ignore the phone calls, and then write to them to explain the situation and your intentions once you get your 3 months missed payments breach letter if you prefer.
I would recommend calling StepChange again and discussing bankruptcy, how it works, what it means for you etc. Be realistic with your budget for the I&E, the current one hasn't been sustainable so you must have been spending more on some items. I know you said it is due to a family situation that caused an emotional response but don't be afraid to say you need more on your budget. In bankruptcy having no disposable income left for a payment means you don't have a monthly payment to make, and if you do it will be for 3 years and needs to be affordable.