My cousin is currently serving in UK and has run into a real problem with debts. His wife can no longer work and things have now got to a head. I have pointed him to several help websites and encouraged him to take expert help and one of these he is being offered is an Individual Voluntary Agreement (IVA). Does anyone have any experience of these and are they a good move? I have heard that they can help in the short term but ruin your credit rating after that. He is also due out in 7 years and still has to sort out housing etc. He has been told that being in the Army almost guarantees that he will be accepted into the scheme but is this just a sales pitch? What's in it for the agents? Any help appreciated. Thanks
An IVA is just one step down from Bankruptcy. It remains on your credit file for 6 years. I would suggest that your cousin contacts each of his creditors and informs them of his difficulties and then makes a reasonable and affordable offer that he can afford to pay monthly. He will get his best advice re debt from a Citizens Advice Bureau and they are free and without agenda.


Worth talking to the guys at www.payplan.com or .co.uk i forget which it is.
They dont take any fees from whoever is in trouble - they are supported by the industry itself, so probably better people to talk to.


Thanks for the reply. I will check with him but i understand that he has already been to the CAB and they have mentioned this to him. From what I have read so far (admittedly only on web pages) is that the difference between writing personally and an IVA is that the latter is legally binding and that the creditors cannot challenge it. The risk of companies not accepting the offers is that he is still left with the debt and the problem of being unable to pay.

If a mark is made on a credit file - does this bar you from credit or just make it difficult? He is worried about applying for a mortgage.

Also can they hit your pension and terminal grants?


Thanks Daede. I'll pass this on.
THere was a big investigation on this a while ago on radio4

as I understand it, it really depends on her assets - if they own their own home or have a mortgage, then bankrupcy means they will lose the house... the big problem with IVA arrangements through the advertised sources is that if you miss out on one payment, it all falls apart, and you are left owing just as much as before - the IVA complanies take most of your payments in fees.

If not home owners then they are better off going for bankrupcy, as it will clear all debts properly and allow to start all over again.

the most important thing is not to trust website and tv helpline advice, as theyre trying to sell something - go down to the Citizens advice and they will give impartial advice for free, and deal with this stuff all the time.



yanky_loggie said:
Also can they hit your pension and terminal grants?

I think an IVA only lasts for five years, so if he's still got seven years in he should be fine, but don't quote me. Hope it all works out. MB
IVA's can be a great means of a fresh start and are indeed a five year scheme if being paid off monthly.

I know years ago it was an offence to remain in the fores if you were bankrupt or bankrupted, not sure what the score is on IVA.

The advice about the Citizens advice Bureau is sound, its free, impartial and sound advice, opposed to one of the Debt councelling services from the papers or on the box.

Debt is a scary, life dominating and upsetting part of life, more people than you think are in it up to thier necks. And no matter how badly you think you are in the cack, there are far worse and they are far closer to you than you think.

People mostly remortgage if property owners to repay outstanding amounts. However if you aren't on the property ladder with no sevured assests its unlikely unsecured lenders will refuse offers of payment, they will kick off to start with and apply pressure, threateing judgements, defaults and the like.... Provided you stay in touch with them they are bound by the law, and its more in the debtors favour than you'd think.

Even if you can only afford to give them £3 or £4 per month, it demonstrates that you aren't shirking your debt, are aware of your repsonsibilty and therefore a creditor is unlikely to do more than send a stroppy letter or two.

If it was me going through bad times again, I would work out whether or not I could afford to repay my commitments over a reasonable amount of time, say five years, and still be able to keep food on the table and the kids in kicker boots. If this isn't possible then serious consideration should be given to and IVA.

There are Mortgage lenders out there would would still secure a property purchase, although a deposit is unlikely without some sort of lump sum payment ie a pension payout etc.


Thanks for the replies. He really wants to stay out of any formal arrangement if possible and it sounds as if you are speaking from a stand of valuable experience MDN. The IVA sounds too good to be true, hence the original question.
MDN is right (and as a fellow CCL holder I'll add my twopennorth). Above all, talk to the creditors. Do NOT avoid them! Most of the Collections mob aren't complete knuckledraggers and will appreciate someone being straight with them and at least attempting to service the debt. The CA are good folks, but avoid the well suss 'Credit repair' companies and their ilk.

If you attempt to pay off the debt, even at £feckall per month, then it counts in your favour. Beware of the commercial organisations that attempt to make a nice little earner out of your debt: they have been known to rip the arrse out of the charges and still leave the balance outstanding.

Contact the creditors, explain the circs, make at least an honest attempt to set up a payment plan and you are at least blessed with the 'honest attempt' badge rather than 'scrote' badge. Believe me, the collections lot appreciate an honest punter who says 'This is what I can afford' rather than a pikey who just ducks 'n' dives.
YL, I would agree with MDN and CS. He has already taken the most important first step in that he has admitted he has a problem! The best thing for him to do is to work out his total income and outgoings and come up with an amount he can afford to repay each month (a realistic amount) then write to every compay he owes money, let them know the situation he is in to and set out a proportionate payment plan, he should also ask them if they would consider freezing the interest on the loans/debts - most will in my experience! Once agreement has been reached he must stick to the agreement. Consolodation loans are rarely a good idea, IVAs sound good but don't forget companies offering this sort of assistance have to make their money somewhere. He should ensure he is getting every last penny from the system he is entitled to - have a chat with his FSA. The CAB are an excellent source of confidential advice they will also be able to advise if he can claim any other state allowances - Tax credits etc.
I have a friend who was in a similar situation, had about £85000 in unsecured debts.

He wrote to all his creditors and made a pro rata offer to them all, but none of them were willing to freeze the interest on the amount that he owed so out of the £700-800 he was paying off a month there was only about £100 coming off his debt every month.

He could see that he would never pay it off and would never be able to get on the property ladder etc.

He got in contact with PayPlan and eventually went through the process of getting an IVA. It was accepted by all the creditors and he pays £600 per month and as long as he mantains these payments for 5 years the remainder will be written off at the end of the period.

The fact that he has an IVA will be noted on his credit file for 6 years, but it was also mentioned that as long as he keeps up the payments that will also be looked at in his favour as well.

There was no employer contact and it all seemed very civillised so he says.

Of course PayPlan make a fortune off of this, but he only pays £600 total per month, and the fees come out of what his creditors get.

I think they are happier to go for this rather than bankruptcy as they get more money as well in the end more often than not.

Good luck to your mate, I know my mate is very relieved that it is all sorted out and that it will have an end date.
One more thing, don't have a chat with his FSA, speak to his chain of command - Debts are a G1 problem, not an SPS problem, and have been for some time. :evil:


Just a closing comment to thank everyone for their replies and particularly those who PM'd me with some great info. My cousin is now looking at ttrying the informal approach first by writing to each creditor but noting daylights' comment, I hope he has better luck first time
The advice to speak to FSA was regarding ensuring all available allowances were being claimed not to sort out his debts having said thatt any FSA worth his/her salt should also be able to point him in the right direction, confidentialy!

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