All set to go ahead with an IVA, my wife has uncovered a family member with the ability to bail us out scot free
Things have been looking up since day one of this blog. Now it feels like there is real momentum gathering. Without tempting fate, I think I can say I am on a path that, one way or another, will release me from years of debt, worry and stress.
If/when I press the trigger on my individual voluntary arrangement (IVA), in about a month’s time I should be out in the light. Rather than skittering around with leftovers after paying out to the bank, the loans companies, the credit card companies, and trying to make what’s left stretch to cover our (wholly reasonable, according to the CCCS) living expenses, I’ll be paying out a single, affordable amount every month to my creditors and, I hope, be sleeping through the night again. Or, looked at another way, I’ll be able to resume my patriotic duty, according to the wags at the Bank of England, and help spend the country back into rude financial health (spend our way out of debt you say? And your name’s Mr Bean? I rest my case).
If, that is, I keep my dunderhead tendencies under control. My wife and I first met at a Guardian-sponsored music festival many years ago. I should not be surprised she spotted my “anonymous” debtor’s diary; even though the sub-editor tweaked her name she was 90% sure it was me. The upshot is that when the time came to share the good news about my two phone interviews with the debt charity, she called me a series of names I’m not going to shame myself with in print, gave me a far from playful slap round the chops and told me never to keep anything this important from her again. For good reason, as will become clear.
The in-depth phone interview with the specialist freelance debt counsellor felt like an inquisition by a skilled and friendly investigator. “Good cop” went through our income for the past three months and spending for the past year with a fine-tooth comb. I could have told her in advance that the only category in which our household spend outstrips the court-approved maximum for a decent standard of living is my wife’s hairdresser habit. Actually, I tell a lie. Organic veg puts us about a tenner above what the courts consider to be a reasonable monthly outlay on groceries.
Calculating the bottom line on an IVA on our income over the past three months, and throwing in my legitimate business overheads, our dark financial cloud actually ends up with a highly reflective silver lining. If 75% of the creditors accept the IVA offer then all we will be paying out each month is £250 – a tiny proportion of what currently vanishes every month in interest payments, minimum payments, penalties and charges. On an IVA my credit rating will take a mortal hit, but that can only be a good thing. Easy (reckless?) credit was the oil on the road that sent me into this endless skid.
The freelance specialist wound up the call asking if I wanted to be referred to their recommended IVA arranger. I said yes, and on a whim asked how much money they stood to gain in fees. Her cagey initial answer was “it doesn’t cost you anything, it’s the creditors who pay, it comes out of the monthly figure”. Then she came clean: it costs around £5,000, but can be as much as £7,500, to arrange an IVA. No wonder we’re bombarded by tacky “get debt free” TV adverts. At least I’m going through a proper charity, not one of those carrion outfits that charges debt-ridden punters upfront.
Legitimate question at this point: why the hesitation about going ahead with the IVA? Because my wife decided to get her own back and do something major without telling me. Out of the blue she got in touch with her dad’s younger brother, a man known to his estranged kin as Uncle Moneybags – he made a mint doing something possibly dodgy, possibly not; nobody in Sally’s immediate family usually talks about him because of some long-forgotten rift.
Sally told him about our situation and he said to contact his lawyer and get him to draft an informal offer, which he is prepared to bankroll, up to a point. His lawyer told my wife he would send out a letter offering £15,000 – a little less than 30% of what we owe – to pay off our creditors outright. We would be able to start rebuilding our lives from scratch now, rather than five years’ time at the end of an IVA. That is provided a high enough proportion of the creditors bite. They may not, even if the bottom line is that this windfall offer is higher than what the creditors could expect to get back from an IVA spread over five years.
This is the point that it all gets inexplicably conflicted in my mind. Maybe it’s because I’m just not used to manna from heaven; maybe it just seems too good to be true that in a month I might wake up debt-free. Or maybe it’s because I grew up in a family where the mantra was you have to work for what you have. With the banks and the credit companies, I know what I owe; with Uncle Moneybags, I don’t. Plus, it feels like this is my mess to clean up. Then again, the banks weren’t squeamish about being bailed out with taxpayers’ money – our money – so perhaps I shouldn’t care about someone else picking up the tab for my debt.
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