Posts Tagged ‘IVA’

Negotiating With Creditors for Changes in Terms and Loan and Debt Schedules – 1

September 16, 2008

When you have sent you creditors your second letter, or if the matter of your having trouble keeping up payments has come up another way with them, you are deep in negotiation territory.

Even if you choose to use an intermediary—with a debt management plan, or an IVA, or consolidation—you must take charge of how it is to be done and what it will cost and how long you will be tied to repayments; and all the other changes of terms these moves entail.

It is because you become at the mercy of a routine system through this that I strongly advise doing it all yourself. The best of the intermediaries still have you as only one of a large number of clients. And they can tie you to something that can in turn become difficult to maintain. So at least make sure you understand exactly what is on offer. Always ask questions—and insist on an answer you understand.

If you watched the stream of of highly paid workers being summarily dismissed by the collapsing banks you should note how easy it is to go from easy control of your finances to loss of control. Was it Lehman Brothers in New York whose workers average a monthly pay cheque of $330,000; that’s about £160,000 or £1.9m a year.

You can imagine what rents or mortgages they pay, cars they drive, clubs they belong to. How they eat and pass their day is easy to adjust, if uncomfortable, but these call for many judgements abut their future objectives; staying in the loop or making a life change!

Suddenly they are going to have no income, and their insurances may well be on the line too. These were regarded as safe, well-paying jobs with prospects. When disaster strikes it usually comes unheralded or with little notice.

It is things like this I urge you to think about when deciding how to negotiate. What objectives to set yourself, how to think through your living costs, what the size of the debt is and the realistic chances of repaying it

Always remember you are the only one who really knows your position and needs. Your wants may have to be revised. But you should think of living a reasonable life even in this situation.

And seeking all the advice and information you can.

Joseph Harris
Debt Control Man

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Matching Debt Repayments to the Budget

September 4, 2008

A vital part of the process of contacting creditors to negotiate a new arrangement is the income and expenditure statement. They need it to assess what they can ask for and you need it to assess what you can afford to pay.
Usually you will receive a budget form from the company. My advice is ignore it. Not the need to present a completed form, but the actual form they send. The reasons for this are many, among them the fact that each company has its own layout, and none are about you; they are about the company!
Now more important is the fact we are facing difficult times. Living costs will inflate for some time, and it is likely that incomes will decline. A squeeze.
So long as you describe your needs clearly in this income and expenditure account it will provide the essential and accurate point for discussion.
I favour this accompanying your second letter, when you have had time to review all your affairs carefully. It might be worth setting it out roughly and putting it aside to come back to for review and correction. When you finally send this off it is vital that you have all items of expenditure included.
This is the 21st century; you are expected to continue to live without starving and without being homeless. In pursuit of this there are certain priority debts and payments. These must be deducted from your income before any attempt to assess what you might be able to pay towards settlement of non-priority debts.
If this gives a debit position—in other words if you need more money than you have to meet your needs then your creditors cannot expect payments.
As you investigate further you will learn of the options for managing your position: IVAs, bankruptcy and so on, and be told about bailiffs and court action. Court action—which rarely happens—will in any case be a long way down the road, and bailiffs can only be involved after court action.
You have research to do of course and trying to work out your personal best course of action. As you seek advice as well you will probably find your first fears recede, and options which you can handle with little discomfort becoming realistic.
That is exactly what I found. Because those who might have been intermediaries gave me advice that was not very sensible for me and made hashes of the figures I gave them I determined that it was up to me. And I am glad I took the step to control my debt crisis on my own terms.

The Importance of Getting Help

September 2, 2008

However you decide to tackle your debt problems you need to make sure you understand what you are doing. That is true of everything one does. And I think the process of getting advice and help is not just a first step, but an on-going one.
Even if you are not going to do it yourself there are good reasons from finding information on your own. Many intermediaries offer services for designing and running a debt management plan, an IVA, or even bankruptcy.
What is important is how any plan affects you. And the way to be sure of clear understanding is to find out exactly what each suggestion means, and how it will need to be improved for your own circumstances.
Don’t ever feel rushed. Don’t allow people to insist on a decision before you are ready. Always ask for clarification of anything that is not clear.
There is plenty of advice available, much of it good, but some of it like the sharks in the water.
First collect your thoughts and think what you need. You are going to be seeking the agreement of people to whom you owe money. They are going to want to know what the position is regarding the debt itself, what your income and expenditure are, and how your intend to pay back, or seek some other route.
You are going to want to know what you must do, how severe the law is for debtors and whether the finance company, bank or debt collection agency has any rules it must follow, how to contact and deal with the company, and where to get that detailed help and advice.
I already have some of this information on this blog for people in England and Wales, and there is more in my book. The first part should be ready very soon.
I wrote a note on the FSA (Financial Services Authority) trying to find a way to ensure advice was independent of selling. Well that isn’t a firm rule yet, and even when it becomes one there are still people’s personal views. In your case the only personal view that matters is your own.
So always take more than one source of advice. If I had taken the advice of my first ‘advisor’ I and my family would be starving and in the street, with no long term benefit to my creditor’s either.
Take a deep breath, take your time, and seek multiple advice and information.

Joseph Harris
Debt Control Man