Read these case studies and find out how real people have used an IVA to get control over their debt.
'I managed to get out of debt without losing my home.'
Mr A. Chisholm separated from his partner four years ago, which left him with only half the household income he was used to. As a result he was unable to finance his mortgage or the payments on his hire purchase car without relying on credit. By the time he spoke to an adviser he had unsecured debts of almost £32,000.
What Mr Chisholm did
Realising his debt situation wasn't improving, he went to the Citizens Advice Bureau to get some advice on dealing with his debt. They referred him to a Grant Thornton adviser.
His adviser helped him to consider his options carefully:
- He decided that a Debt Management Plan wouldn't suit him because there would still be the threat of legal action and he wanted to put a stop to the phone calls from his creditors.
- He didn't choose bankruptcy because he was aware that any payments made in bankruptcy would be used in fees and costs with very little going to his creditors. Bankruptcy would also put his car at risk of repossession.
- Mr Chisholm had considered proposing an Individual Voluntary Arrangement (IVA) to his creditors but he didn't think it would be possible due to his low income.
How the adviser helped
After he talked to the adviser from Grant Thornton it became clear that an IVA was possible after all. The adviser noticed that the payments on his car were due to finish later that year, which meant that his contributions to his IVA would be able to increase later on.
A success story
Mr Chisholm is now paying a highly affordable monthly amount by direct debit starting at £90 a month and rising to £231 when the hire purchase agreement on his car is complete. He's allowed to keep his home and his car, but most importantly, he's now in control of his debts.
'I thought that I'd never be able to pay off my debts successfully'
Ms LJ Green's debts started when she took maternity leave after the birth of her son. She found it tough to cope on her reduced income, so she supplemented it with credit cards and loans.
In order to make ends meet, she returned to part-time and then eventually full-time work, but she still couldn't get control over her debt. By the time she contacted a Grant Thornton adviser, her unsecured debt was over £16,000.
Considering the options
When Ms Green got in touch with Grant Thornton, she wasn't sure what option would be best to help her deal with her debt.
- She didn't want an informal Debt Management Plan because she felt she wouldn't be able to cope with the continuing reviews, the threat of legal action, or ongoing interest and charges.
- She had a little too much debt to consider a Debt Relief Order.
- Bankruptcy seemed to be the most appropriate way to deal with the debt, but she'd struggled for so long to meet her responsibilities, she was reluctant to give up. Bankruptcy could also have a long-standing impact on her credit file, preventing her from getting a mortgage in future and could also have had impact on her professionally.
How it was resolved
Ms Green didn't think she would be able to get an Individual Voluntary Arrangement (IVA) because she had such a low income. One of Grant Thornton's client service managers noticed that Ms Green had put aside an allowance for childcare. These payments would be reduced later in the year as her son was going to start nursery, freeing up more money for monthly repayments, which meant that an IVA would suit her needs after all.
Choosing an IVA meant that Ms Green was able to stay in control of her debt with affordable monthly payments of £30.00 for the first 6 months, followed by 12 monthly payments of £180.00 rising to £250.00 for the remaining 42 months of her five year term
'Getting out of debt didn't mean we'd have to lose our home'
Mr and Mrs Watts ran into debt after Mr Watts was made redundant and struggled to find a new job. He returned to his old job on a lower salary four months later, but by then they'd started using credit cards to supplement their reduced income.
Luckily Mr Watts had income protection to cover minimum monthly payments to many of his creditors, but their debt still mounted up. Eventually they approached a Grant Thornton adviser with unsecured debts of over £80,000.
Considering the options
- A Debt Management Plan wouldn't suit them because not all their creditors would suspend interest and charges indefinitely. It would also take too long for them to pay off their debt and they would always be at risk of legal action.
- Bankruptcy was an option, but with no third party funds available it would almost certainly result in the loss of the family home.
After speaking with Grant Thornton, they decided to proceed by proposing an Individual Voluntary Arrangement (IVA), which dealt with all of their unsecured debts in a manageable way that meant they could still keep their house.
The outcome
The IVA resulted in an affordable, secure and flexible scheme of monthly payments that keeps the family home safe while allowing Mr and Mrs Watts to concentrate on their future.
'Controlling our debt repayment has made us a happier family'
Mr and Mrs Abbott had debts of over £50,000 and they were falling short of being able to pay their mortgage by several hundred pounds every month.
Various family members were helping them with their essential living costs, but the tension was mounting and their relationship was beginning to fall apart under the strain.
As threats of legal action from creditors increased, they realised that the situation was becoming unsustainable and contacted Grant Thornton.
What they decided to do
At first, Mr and Mrs Abbott seriously considered bankruptcy. They were prepared to lose their home, because they felt that the peace of mind of being debt free was more important.
After speaking to Grant Thornton, they decided that proposing an Individual Voluntary Arrangement (IVA) to their creditors would be a better option, based on the understanding that they would offer the proceeds from the sale of their house towards the debt.
The creditors approved their arrangement, and Mr and Mrs Abbott even managed to keep £4,000 of the sale price of their house to help them relocate.
How they took control of their debt
Mr and Mrs Abbott got control of their debt, prevented legal action and found a house to rent.
Now that they don't have to pay their mortgage, they're living with a manageable budget and they're able to concentrate on enjoying a happy family life.
All names and some details have been changed to protect customers' identities.