25 year DMP! To IVA or not to?

tigerfeet2006 · 24 August 2014 at 10:11PM

TBH and not having seen you SoA it's hard to be accurate but I would suggest that you DMP is too tight for you. You need to include an emergency fund of at least £10 per person living at your address per month. This would take your free cash for debt repayments down even more, possibly to £40 a month. I don't think your DMP is sustainable and I certainly don't think an IVA is do able. Your creditors are going to want to see more than £40/50/60 a month. I honestly think you may need to look at bankruptcy.

Would be nice to see you SoA if you would put it up.

Sazzie23 · 24 August 2014 at 11:13PM

Hi Cupcake

I think Sourcrates is correct, you need to change how you are doing things, if £80 is all you can spare towards debts your outgoings should be reduceable if income is £34K (+child benefits any other benefits I guess).

Seems like drastic action in your case is unsustainable, although I think it might be what you need, but can you take little steps, like use child benefit one month to pay off a PDL? Then when you can manage a month without that child benefit, and you have paid off PDL, use that benefit money to start savings.

Finally is your partner aware of these problems, (I realise he is in the DMP) ? Does either of you suffer from 'I earn good money I should be able to afford..xxx' mentality - I know I was for ages and I have had to change it to move towards a DFD.

cupcake32 · 25 August 2014 at 11:28AM

Thank you all for your help. I'm feeling more upbeat the last couple of days but have been doing some serious thinking. We need to be honest with ourselves and just realise that we have neem living beyond our means. Though we consider ourselves to be living on a tight budget we squander too much cash on food, entertainment and things we *think* we need at that time but could make do without. I guess we could save this ones for contingency once the payday loans are paid back.
I talked to my husband about an IVA or bankruptcy but he says we would never be accepted because our bank statements would show that we can meet our DMP arrangement.
I should say that the reason we got in to this mess again with payday loans and whatnot is because my husbands teenage daughter was in hospital some distance from where we live having life saving spinal surgery. We spent everything that month on fuel for frequent hospital trips, time off work to care for her sibling, school bus passes for the sibling and unbelievably his ex's council tax bill.

sourcrates · 25 August 2014 at 11:41AM

cupcake32 wrote: »

I talked to my husband about an IVA or bankruptcy but he says we would never be accepted because our bank statements would show that we can meet our DMP arrangement.

Hi again,
That is irrelevant, and will have no bearing on weather you are accepted for an IVA or not.
You can make your selves Bankrupt for a fee of approx. £1000.
All you do is fill in the court forms, hand over the money and hey presto, of course its a little more complicated than that, but with Bankruptcy, its you who choose.
With an IVA, if you decide to go down that route, most IP`s will charge a fee for this, it is paid through your monthly payments to your creditors.
I suggest you Google "IVA criteria" and get as much info as you can, I have been through this, but cant remember all the details.
Your budget needs to be spot on, budget for everything, and be honest, if you can show it would be more beneficial to your creditors to go the IVA route, then you should be accepted.
There are many providers for IVA`s, I went with DFD (debt free direct) and had no issues with them.
Do some research first of all, before you decide.

Nargleblast · 25 August 2014 at 2:33PM

Talk to Stepchange first about the alternatives to DMPs because they are the company you are using at present. There is no reason why you shouldn't talk to other organisations as well, such as National Debtline, Payplan. You may find your only recourse is bankruptcy, in which case you will just have to bite the bullet and do it. The alternative is to spend the rest of your life being hounded by creditors and possibly ending up homeless through not being able to afford rent or other living costs. I think you know payday loans are a bad idea so do whatever you can to pay any existing one off and leave them well alone. There is always a solution to a debt situation, but you need serious professional help to find the right one for you. That said, you can still try the Bankruptcy, IVA and DRO forums for advice and help.

Killick · 25 August 2014 at 2:40PM

cupcake32 wrote: »

The DMP should be doable but this is what happens:
There's no contingency. If we need to break the budget for an unexpected expense it leaves us with nothing. We turn to payday loans and borrow a small amount to see us through to payday, say £50. Then when payday arrives we pay them back and uh-oh! Now we're short again, so borrow more. Classic. We never ever learn.
I think if we go back to Stepchange and tell them the extent of what we've done, breaking arrangement with them TWICE now they'll go mental and end our DMP?
I thought maybe an IVA will help us to get rid of debt bug more importantly not take any more out. That's where the real problem lies I suppose.

I have a DMP with Stepchange and over the past few years circumstances have arisen where I've been on reduced hours working, my boiler has broken down beyond repair and other things at least 5 times. I have told Stepchange the circumstances on every occasion and we've always managed to find a temporary solution and they have never once said that they would end my DMP. If you keep them informed and be upfront I don't believe you will have a problem based on my experiences.
The worst that could happen if they did end the plan would be that you would have to pay what you could yourself, it wouldn't be the end of the world.

sourcrates · 25 August 2014 at 3:10PM

Killick wrote: »

I have a DMP with Stepchange and over the past few years circumstances have arisen where I've been on reduced hours working, my boiler has broken down beyond repair and other things at least 5 times. I have told Stepchange the circumstances on every occasion and we've always managed to find a temporary solution and they have never once said that they would end my DMP. If you keep them informed and be upfront I don't believe you will have a problem based on my experiences.
The worst that could happen if they did end the plan would be that you would have to pay what you could yourself, it wouldn't be the end of the world.

You can always take over the DMP payments yourself and go self managed, that is not the real problem.
I think the OP needs a more long term solution, as previously suggested, as a DMP for 25 years is just completely unworkable, and not realistic.
There has to be an end in sight, and the only way to properly achieve this will be either IVA, or Bankruptcy.

To be honest, in the OP`s situation, with no assets, I would not think twice about going Bankrupt, you can include all your debts in this, it usually lasts for a year, but could be longer, if you have sufficient money to make payments, then the court will advise on this, after which you are free to make a fresh start.
Its a no-brainer in my opinion, why struggle like this when you don't need too ?
You will need approx. £1000 now for the Bankruptcy fee however, life is too short to be perpetually worrying about debt.

Killick · 25 August 2014 at 4:50PM

sourcrates wrote: »

You can always take over the DMP payments yourself and go self managed, that is not the real problem.
I think the OP needs a more long term solution, as previously suggested, as a DMP for 25 years is just completely unworkable, and not realistic.
There has to be an end in sight, and the only way to properly achieve this will be either IVA, or Bankruptcy.

To be honest, in the OP`s situation, with no assets, I would not think twice about going Bankrupt, you can include all your debts in this, it usually lasts for a year, but could be longer, if you have sufficient money to make payments, then the court will advise on this, after which you are free to make a fresh start.
Its a no-brainer in my opinion, why struggle like this when you don't need too ?
You will need approx. £1000 now for the Bankruptcy fee however, life is too short to be perpetually worrying about debt.

You are right. I was only trying to point out that altering payments to a DMP at times was not as drastic as some people may think. It was meant to be a general point and not a solution to the OP's situation and I didn't make that clear. Sorry about that :-)

25 year DMP! To IVA or not to?

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