Advice required please...

DAM

Hi,

To cut a very long story short, due to the breakdown of my marriage and a change of job I am currently earning a lot less than my outgoings and am living on credit.

I have contacted National Debtline and used their budget planner. They advised a DMP, which seems a good option. The thing is I reckon it will taken about 12 and a half years to clear my debts. I have read about IVAs and bankruptcy - I would prefer not to declare myself bankrupt but I wonder if an IVA might be a good option?

Here are my main monthly figures:

Income: £1830
Outgoings: £1530
Credit cards and loan - current balance: £47000
Credit cards and loan - current monthly payment: £950

My outgoings include the following:

Mortgage: £350
Graduate loan: £155
Student loan: £88
Child support: £200
Travel expenses: £260 (I work 40 miles away from home and petrol costs £200/month)

I haven't included my graduate loan or student loan as creditors on the advice of National Debtline. Besides, both will be paid off in full by 2007.

Other relevant info: following Martin's advice on this site and the advice of many of the MoneySavers in these forums, I have made as many "pain-free" savings as possible and have cut back to the point where I hardly go out at all. Also, I don't have any equity in my home, (remortgaged just over a year ago).

Any help or advice will be much appreciated.

Thanks

Edit: Some of my concerns about going for a DMP or IVA include getting hassled by creditors, going to court, never being able to get credit (e.g. mortgage) again, etc...

jellycat40

Hi there

I am currently setting up an iva with payplan https://www.payplan.co.uk and they are quite helpful. The good thing about an iva is no court appearances. Although when my husband went bankrupt he never actually appeared just had to be around the court in case the judge had questions for him.

The down side is it takes a while to set up and you do start getting hassle from creditors the good thing is you just take the current balance from the letter or phone call and pass it on to payplan. Most of my creditors have heard of payplan and seem to be ok to me personally. M&S money are about to issue a default but again this seems common practice and remember none of it is personal.

After 6 years it will no longer show on your credit check and in theory you could apply for more credit - but why would you want to!!!!

A mortgage is possible after iva as apparently there are companies out there who will still accept you, i expect the interest rates will be bad but it at least gives you a chance to rebuild your credit rating if that is what you want.

Good Luck

Louise

DAM

Thanks Louise. The only credit I am bothered about getting in the future is a mortgage. I also need a debit card as I run a small Internet business in my spare time and need to purchase things like domain names, secure certificates, etc.

I've never had any defaults at all and it's stuff like that that is putting me off going down either the DMP or IVA route. That said, I do recognise that I can't carry on any longer with my finances in the state they are in.

Takeover

Your question is one I have been thinking about as well. My main concern is that a IVA route through someone like Payplan will automatically mean defaults on my credit and therefore I have no chance of remortgaging for six years - despite the fact that my income is set to steadily go up.

Is there anyway to go down the IVA path without incurring defaults - or is that just how it works?

DAM

Update... I've got a call booked with PayPlan for this Friday evening. I spoke to them today and went through my budget. I reckon I can be debt free in 8 and a half years with a DMP, although I will find out on Friday if an IVA would be a better option.

severussnape

hi dam

we are going down the DMP road and will take us about nine years to clear.

what worried us about an IVA is that we understood it is quite a bit stricter than a DMP

angelstar25

Hi I had my call with payplan last week, with a debt management plan it doeesn't so much matter if you miss a payment or make a late payment, but with an iva it does as its set at the monthly payment agreed and if you miss a payment, they creditors can declare you bankrupt according to paypal. My payment will be around £200 a month for 5 years and thats it, they will write off £16'000 of my debt approx, I currantly have around £28k, so this is the best option for me . I've been stressing and allsorts about them, but I don't think they're as bad as what people think.
angelstar

donnalove

we completed an iva in oct 2005, we ran it for 4 1/2 years we were paying £242 a month we did miss acouple of payments but each year on review in the letter they sent to creditors it just said we had been asked to bring arrears uptodate asap, we were actually paying about £20 ex a month to cover arrears.
due to home circumstances we needed to get an extension(our equity had risen to more than £60000 from £6000 when we started).
the only way to do this was remortgage to get the equity and pay the iva off at the same time, we were worried they would want more of the equity but in the end only 2 creditors voted positivly.
so we finished it in oct. we didnt have to many problems over the 41/2 years the arrears mainly stemmed from the first two years it was hard to adjust after thinking you were loaded whilst you had the credit.
we settled at 35p in the pound on debt of £37000 so i think creditors got about £15000 after ip fee's
if you think you can live for 5 years paying that amount and you think your job is secure then i can't see why it is not for you.obviously when we took ours out i didn't really know much about iva's and we didn't have a comp so we didn't have access to as much info as we do now.
you do need to way up the pro's and con's i think the biggest thing to think about is if i lose my job how quick could i get another.
you will be able to get a mortgage after or even while your in (as long as you are settling iva)
we are paying £496 a month on a £72000 remortgage for three years

hope this helps
donna
xxx

dchurch24

Forgive me if I'm not understanding, but do you not have £300 left over each month after your outgoings?

DAM

dchurch24 wrote:

Forgive me if I'm not understanding, but do you not have £300 left over each month after your outgoings?

Yes, I have £300 left over not including my graduate loan and student loan payments. Those add up to £240 a month, so once they are paid off that would take my leftover cash to £540.

Actually, I spoke to Payplan and they have advised a DMP. They also said that the loans I mentioned above would be treated the same as any other creditor, so my leftover cash is actually £540 now. With those loans taken into account, my circumstances are as follows:

Total debt: £50,000
Monthly leftover cash: £540
Time until debt free: just under 8 years

I feel really positive about it all now and am looking forward to getting the DMP started.

Cheers,
DAM