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In a DMP with CCCS. They propose an IVA. However,now have a £2000 debt undisclosed to them |
Submitted on: 22nd Jun 2010 by Non-Member | Total Answers: 1
My wife and I have been in a Debt Management Plan and have stuck to it rigidly. The plan is 3 years old and we have paid £11,000 to our creditors, with just under £45,000 still owing. We pay £185 a month and have been totally honest in disclosing our income and expenditure. However, times have been really hard. So much so that, stupidly, we let an overdraft build up on our current account to around £1900. Paying the charges to the bank is not a problem and we don't go over the £2000 overdraft limit. Upon reviewing our debt management plan, CCCS have advised that it will take about 20 years to clear the debts and, with Lloyds TSB becoming ever more ferocious (now wanting to re-instate interest, nasty phone calls, recovery threats etc) they concluded that an IVA would be the best option, to get us legally debt free in 5 years. The CCCS has offered to broker the IVA for us. Will disclosure of this £1,900 cause the DMP and/or the IVA to fail? Where will it leave us? Please help
Re: In a DMP with CCCS. They propose an IVA. However,now ...
There is no reason why this should prevent you from proposing an Individual Voluntary Arrangement. After 3 years in a Debt Management Programme it does seem that another 20 years until all your debts have been repaid is excessive.
It is often the case that, on disclosing a new debt that has been acquired whilst in a Debt Management Programme, the Debt Management Company will cease acting on their behalf as it has broken the terms of the Plan. Creditors are likely to reject the Plan as the whole basis was that they should wait for longer to get their money back as the monthly payment was unaffordable. Now they will be asked to take even less each month as a new debt needs a share of the available funds as well.
In my experience it has often been the case that the reason for the new debt has been because the original Income & Expenditure assessment and proposed Payment Plan have been set to a budget that was never really possible to maintain over any length of time.
If considering an IVA as a solution then it is critical that the budget set for the household expenditure is realistic as the consequences of a failed IVA can have more serious impact.
I would suggest that the best thing to do at this stage is to go through a new fact finding session with an experienced Debt Adviser and prepare a realistic Financial Statement.
If an IVA is appropriate as a solution to your situation then further credit should not be taken during the IVA term. If an emergency arises during the course of the IVA, e.g. vehicle repairs, then you can ring the Supervisor of your IVA and they may be able to arrange a short payment break with the payments added to the end of the IVA. So there shouldn’t be any need to acquire further credit.
This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you're considering entering into an IVA, Debt Advice Foundation provides a free, confidential helpline and can advise you on whether you qualify. Click here to find out more.
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