Graeme did all the right things with regard to his debt. He researched options. He spoke to 3 different companies and didn’t allow himself to be pressurised by anyone until he was ready to make his own mind up. And he admits that at the time he thought that the IVA made most sense. With £15,000 of debt and after essential expenses he was left with £200/month at the most to pay back to his debts.
But what he hadn’t told anyone was that he was on course to greatly increase his income with a promotion almost certain and bonuses as well. Although it had been mentioned that increased net income would be made available to the IVA, he assumed he could simply increase his outgoings and maintain the £200/month payments. Not so. His supervisor in the IVA noticed at the first annual review that his income had increased by 50%. Try as he may, Graeme couldn’t come up with many justifiable increases in outgoings and the IVA payment level increased to £600/month. He ended up paying the whole debt plus the Insolvency Practitioners fees of over £3000. The fees normally come from the monthly payment, but when someone can clearly afford to pay them within the life of the IVA, they must do so.
Although Graeme finished the IVA early as he had paid everything – he feels he should have opted for a more flexible Debt Management Plan. He may of course have ended up paying back more than the £15,000 debt anyway with possible interest charges and maybe DMP company charges, but he would have avoided an unnecessary insolvency debt solution. Given that he works in the financial sector, he now feels that his last promotion may be his last for some while.