Charlie had mounting debts and the COVID pandemic had severely reduced his income. He runs a business and was used to drawing a regular salary plus significant dividends. Although debts of over £50,000 took a bit of managing he was fine before the virus struck. But with no dividends for 9 months and counting, he was struggling to keep up with all payments.
Speaking with one IVA company, they suggested that given his new financial circumstances he could only afford £300/mth on debt payments as opposed to the £1200/mth he was supposed to be paying as a minimum. Charlie owned a property with a fair amount of equity but none of it was releasable. An IVA seemed initially to be a good way forward.
But - contingency plans were in place for the business, orders were on the increase and confidence was high that income would very soon to be on the increase, and in maybe 6 months time dividends would resume and income would be such that the £1200/mth paymenrs would easily be affordable once again.
In an IVA as income increased so in all liklihood would IVA payment levels. And if £1200/mth was again affordable then an IVA would be completely unnecessary. His problem at the moment was a short term cash flow issue. A DMP at £300/mth could keep him going for the next 6 months or more. Then as income started to increase he could start increasing the DMP payment levels. And with the flexibility of a DMP he could simply continue to increase the payment level until the debt was paid off, or end the DMP and resume contractual payments.
The more severe IVA was not the right solution. An informal repayment plan with all its flexibility allowed Charlie to repay his debt as he wanted to, but with help now as needed.