DMP, IVA, BR??? Which?

bikechic

Hi,

I've a house valued at £90k approx with outstanding mortgage of £96k. There are 3 charging orders placed on the house. I'm on a suspended repossession order which is currently being 'managed'.

My total debts (which include those charging orders) are £24k.

My monthly mortgage including £100 arrears payments are £790 pm. £600 arrears still to go. My monthly income is £1400 and expenditure £1450??

My monthly day-to-day living expenditure isn't allowing me to pay anything off the debts, i'm just paying mortgage, and priority debts, car to work. Have cut down mobile phone bill, changed ISP, cancelled private study and won sponsorship from work, barely eat to cut down on food bills and so on.. eek!

How do i decide whether I don't pay my mortgage this month, and either voluntary reposses/give keys back and go and rent somewhere, stay with making house payments and go into a 'plan' to repay existing debts, if this is the case is a DMP or IVA the best option?

My current house is in need of plumbing repairs to shower, it has leaked onto kitchen ceiling with electrics being a bit dodgy. Wood on doorframes and windows is in need of repairs and i'm not in a position to make any repairs or make any maintenance to the house let alone whether the car breaks down or washer breaks down.

I have prepayment meters for gas/electric. The house is very often cold as I can't afford to top up the gas as i need food or fuel to get to work.

I'm resigned and positive to do SOMETHING, just don't know which is the best way to go. Any suggestions??

Ooh, also concerned re BR route due to being a social worker for Local Authority.

cheers!:j

HHH_2

I would strongly suggest you contact one of the debt charities to see what your options are. I'm with CCCS you can telephone them but I think some people have said they are having to wait a while for their telephone interviews, but they do have a debt remedy thing which if it's right for you ( it will also give you your options) will be a fast track way of doingthings. I am with CCCS and they are fantastic. I think there might be a sticky at the top ofthe page from CCCS where you can also put questions directly to them. good luck and others will be along soon who are much more knowledgable than me.

RAS

Definately speak to one f the debt charities www.moneysavingexpert.com/loans/debt-help-plan#help

Once you know what you want to do, come back here for more support.

bikechic

Hi - thanks for information.

I've spoken with Payplan - VERY HELPFUL.

Apparently, my debts in the charging orders are secured debts on the property and can't be considered in an IVA as they reduce my unsecured debt total to 5k. IVA minimum is 15k.

Also told that if i choose bankruptcy, the charging orders cannot be taken into account and will still remain with me, so this wouldn't solve the problem either.

Have been advised the following:

To voluntary repossess - i.e. hand the keys back. Await for court letters/eviction and rent somewhere in the meantime with the withheld mortgage payment.

Then, when the mortgage company finally sell the property and gain their mortgage sum, any shortfall from the mortgage and the totals from the creditors on the charging orders will return to me as unsecured debts. In the meantime i make minimum payments of £1 per month to each company and save my 'clear' money in the meantime.

When the unsecured debts return to me, i can then reduce the debts in a controlled manner, with a reduced rental income in relation to the high mortgage i was paying, either by a DMP or an IVA or by informal arrangements.

Phew - this is good news huh?

Any advice, suggestions welcome - thanks all.

RAS

Hi

I suggest you post on the bankruptcy forum. I think that once the charging orders become unsecured debt, they can be included in the bankruptcy.

RAS

Read this thread http://forums.moneysavingexpert.com/showthread.html?t=1419673

Same basic problem as you but get more advice on it.

bikechic

Yes, sorry - I was also told that i can consider bankruptcy at this point too...

But happy to have alternative options to consider and some time to reduce my mortgage payments from £800 pm to a rental payment of £400 pm. This will give me a good sum of money each month to make offers of payment to the creditors anyway - and have some form of reasonable living where i can eat properly and put the heating on.

RAS

Hi

i would not challenge the advice you are given about going bankrupt. It sounds like the sensible solution.

What i am suggesting is that you get more advice on the charging orders as I think this advice is wrong.

When the unsecured debts return to me, i can then reduce the debts in a controlled manner,.. either by a DMP or an IVA or by informal arrangements.

Do not think you will have to pay that debt back either, it will be included in the bankruptcy if you ask the OR to do so,

bikechic

my only concern is that i would like to avoid bankruptcy due to being a social worker for the Local Authority - it could affect my registration and current/future employment.

Yes, i agree, my interpretation of advice given is that once the charging orders become unsecured debts they are then applicable for bankruptcy. I was told that they are now considered to be a 'secured debt' - is it this that you think is not correct advice?

RAS

They are secured now but once the house is repossessed and there is negative equity, they become unsecured again. As long as you do not sign the forms undertaking to repay the debt, they can be included inthe bankruptcy as far as I know.

Re the impact on your job, can you get your union rep to take advice on your behalf? At least two people on the Bk firum are bank workers whose employers now and have retained them.

I would also ring NDL and CCCS or the Insolvency help-line for advice.

bikechic

Thanks - that's interesting about the bank workers.. good for them, that's great news!

I have taken advice from the s/w register, union, HR and university and all seem to think it's ok. I still feel uneasy about it and don't want a future career option to be marred by this...

I think I want to be rid of the house and in rented accommodation before I pursue the 'last-chance' option of Bankruptcy. I guess it feels better for me to be re-housed and comfortable first.