Prejudice

I am getting increasingly annoyed by the prejudice against people who hold or have completed IVAs and by prejudice I mean refusing a financial product or service, setting employment criteria and making it difficult to rent without sound business resoning. 

The banks are not so far from the landladies of yesteryear putting up signs for “no Irish, no dogs, no blacks” (obviously these people didn’t contribute to the cause of their prejudice so we aren’t quite in the same boat, but it’s not a world away).   

It irks me that banks are becoming so intolerant of IVAs that people are being forced into managed accounts or taking out accounts with building societies without a local presence. On entering an IVA we pose no credit risk as we can’t borrow and on completing IVAs we are a lower credit risk than our peers because we have no unsecured debt, are skilled at budgeting and will borrow responsibly because we have seen the dark side. I am less of a credit risk now than when my new bank offered me an £800 overdraft…at which point I was in the process of drafting the proposal because my level of debt was greater than my annual salary and I was behind on the payments for every single one of my debts.

Also, why insist people in IVAs pay a prohibitively high deposit for mortgages…the borrowing is secured anyway.  It is not as if having once been in an IVA causes your house to depreciate more than the house of someone who hasn’t been in an IVA.  And in many cases the affordability will be improved because we don’t have other debts. I guess I hit the nail on the head with prohibitively – they can refuse to lend based on their “crieteria” and we have no recourse to complain.

I guess in one way, there is a business reasoning behind refusing current accounts to people with IVAs as they are providing us with a loss leader service without having the opportunity to sell in any of their income generating products (I include charges in this category).  And in a capitalist economy, why should a commercial organisation provide a free service?  Well, because they signed up to widening access to bank accounts and being more sympathetic to customers in financial difficulty for a start.  And for second, because their industry has been the recipient of government funding (our taxes) and so they have an obligation to their shareholders (us).  I forget how much every taxpayer has contributed to propping up the banks but I know it’s so much that if I took my share back it would pay off all my debts and leave me with change.

It also shows that banks are not accepting their share of responsibility for the debt epidemic.  Lets not forget that while they are willing to write down a proportion of our debt, many of us have paid interest for years without ever reducing the capital so in effect, they are writing off a smaller amount than would first appear when you look at the dividend.  In many cases i’m sure they break even and in others still profit.  I was paying over £2000 a year in interest alone to one of my credit cards – capital debt £5,000. So agreeing to the IVAs is in many cases lip service to treating their customers fairly and acting sympathetically towards customers in debt.   HSBC and First Direct are neither of these two things when they trawl the Insolvency register to kick people off their books without reference to the status of that person’s account…in most cases we hear of these accounts are run satisfacorily without any debt going into the IVA.  These disgusting banks are actively seeking to discriminate making them the worst of the bunch.

There are even cases where banks choose not to differentiate between IVAs and bankruptcy in order to refuse facilities or charge a higher rate of interest.  

I am not absolving myself of responsibility by wanting the banks to step up but they know they’ve done wrong; otherwise why so many changes to The Lending Code, why so many sackings, why the call to strengthen regulation, why curtail bonuses? Because they were irresponsible too.  I look at the situation as they gave me the rope and I hung myself with it…yet we are paying our dues and they don’t even have the decency to treat us with respect.

 Rant over. 

Congratulations to anyone who made it this far!!!!

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Oh dear.

Wow…this is complicated.  Not sure if I’m doing this right.  I feel like a very modern Milly. 

Writing a blog seems very self-indulgent but I want to keep a record of my IVA and what led me to this point.  Emotions can change so fast and yet life seems to move so slowly it can be very surreal at times. 

Starting at the beginning, I got into debt at university.  A £500 Barclaycard and a £1750 overdraft that the banks were tripping over themselves to give me.  Anyway, the promised graduate jobs never appeared and my debt snowballed into £30,000 as I bought my first car, moved out of home and topped up a meagre salary.  A decade later, I was terrified of the phone, felt physically sick at the sight of the post and dreaded every knock at the door. It was a good year or two after I started struggling with my debts that I sought help…which with hindsight was at least a year or so too long to leave it.  

I wanted the IVA because I desperately wanted protection from my creditors and needed to know I was working towards a fixed goal – 60 months and done.  Choosing the IVA was the best thing ever, the peace of mind I get from knowing that my creditors can’t harrass me and that every month I am less in debt than the month before.  Both great feelings and I can’t wait to complete the IVA…freedom is not the word!! I do feel a little as if I’ve endentured myself to my creditors; they get first dibs on my salary and leave me what they think I can live on.  Still, I bought the goods now it’s time to pay for them.

The first year was poo.  I couldn’t budget and would end up halfway through the month with £10 left in my account and be living off pasta and pesto with no fruit or vegetables. 

I was also evicted as one of my housemates called the council to the property and they declared it uninhabitable.  It was pretty gross but this was reflected in the price so when I moved I had to find the next cheapest thing…a studio with a single bed and a two ring hob.  I love cooking so it would’ve been nice to have an oven.  Every cloud etc, I didn’t have to houseshare with a load of alcoholics, crazies and students anymore.

The bank I worked for were put up for sale so spent 6 months in the shadow of redundancy until I found a new job.  Want to hear something ironic…I’ve gone from a bank to a shopping centre!  Not two careers you would immediately associate with someone in an IVA!!!

As if that wasn’t enough, the car died.

Brilliant year overall (not), but I am looking forward to year two. I will only feel I’m in year two when my first annual review has gone through.  It was fab seeing the anual report tho, with payments made as scheduled. I felt like I was finally getting the hang of this money stuff!

So far I’m having a very positive experience.  An absolute emotional rollercoaster but on the whole it has been very good for me.  Not least because I’m learning the value of money.

Some things are difficult, my sister’s wedding was expensive and I couldn’t enjoy myself as much as I would have liked because I was worrying about how much I was spending at the bar.  Ridiculous really. I’ll make it up by hosting a massive anniversary party for them when this thing is over.  Sis is the only one in the family who knows about the IVA so was totally understanding but I feel guilty all the same.

Buying a new car is a shocker because it puts me 2.5 payments behind schedule and I cling to the schedule for my sanity! Hoping to make it up when my lovely new salary kicks in…I have 10 months of payrise before my payments are uplifted at my next review.  Well, a full year if it’s two months late again.  I certainly shan’t be chasing up the paperwork next time!

Blah blah blah ramble ramble ramble  x

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