Life After A Personal Insolvency Arrangement
Finally breaking free of the debts that have trapped you for so long is a huge achievement and one worth celebrating. It may have taken you around 10 or more years to become debt-free - six years of PIA repayments and probably a few years before that where you were struggling with debts that led you to the PIA. That’s a long time to be trapped by debt and you may not know what life is supposed to be like without it. You may have fears of falling back into debt or doing something wrong and jeopardizing everything you’ve worked hard to achieve.
Rebuilding your life after a PIA will take time, and the following is a rough guide to the best way to get you started.
Even though you have made the last payment your PIA is not officially over until your PIP ties up all the loose ends. They have to contact all of your creditors and sort out the details of getting the remaining balances of what you owe written off or dealt with, then they contact the ISI and the Circuit Courts to let them know you have successfully completed your PIA. Your name then has to come off the PIA register and finally all the paperwork and administration for handing everything back to you has to happen. It can take several months so you have to be patient for just a little longer.
Being able to stick to a budget is what has helped you complete your PIA successfully, and it will also help you rebuild your financial life again successfully. There is nothing wrong with taking some of the money from your first debt-free pay cheque and using it to celebrate – in fact, it’s important to mark the occasion of being debt-free in some way. However, whatever you do don’t overspend and end up having to finance the rest of your post-celebration month with credit. The temptation to let rip after so many years of being in debt is very strong, but one wild night could put you back in debt. A few wild nights could undo everything you’ve worked so hard to achieve.
Every month from now on you will find you have a surplus in your bank account as you no longer have to pay back your creditors. You will probably rework your budget to be a little less limiting, but don’t necessarily spend everything you have that comes in. Building an emergency budget will be important to help cover you for any unexpected events, such as boiler or car breakdowns, and you may want to set goals to save for something your really want. The PIA has given you a head start on this, as it has shown you how to stick to a budget to leave a surplus of cash – just now it goes into your pocket instead of creditors!
To start the next phase of your financial life you will need to make sure the PIA is permanently in the past, and part of that means making sure it is recorded on your credit record as completed and any debt balances written off. That can take a few months as there is a lot of paperwork for your PIP to sort out before a discharge certificate can be sent. However it also depends on your creditors taking steps to inform the ICB that your obligations to them are complete. Once you have your discharge paperwork, request a copy of your credit record from the ICB to see if your creditors have notified them that your obligations have been fulfilled. You may have to send them a letter reminding them if they have not or if they have sent the wrong date of completion for the PIA. Alternatively you may have to send a letter with your paperwork to the ICB and request they update your records. Your PIP can advise you of the best course of action.
Your credit record has taken a bit of a beating over the last six years. The PIA is a flag to every lender that you have not been able to live within your means and were personally insolvent. Now you have to prove to them you are responsible with money, especially if you want to obtain a remortgage and move house or set up a business. Both will need a good credit history, so the sooner you start consigning your PIA to the past the better.
The best way is to take small consistent actions every month that demonstrate you are a good payer. There are credit and budget cards available that allow you to pre-load them with cash and use them as you would a normal credit card. Use the card to pay one bill every month or your shopping every week and make sure balance is paid off in full. Start to build up a series of small successful payments that will show up on your credit record. The more successful payments you can make the further down the list the list your PIA will fall.
For more information on life after a PIA, call one of our experienced PIA advisers now on 0800 193 1024.