I have a debt problem but I want to avoid an IVA or DMP

chris_gray1980

Hi all DFW

I have been looking through the forum for a bit now and have mainly been posting in the IVA section mainly, because i was advised to go for an IVA but then a DMP but these are something i want to avoid due to the restrictions, etc and i feel i can clear my debts in 5 years any way without either (i hope) a break down of what i owe is below

1) Northern Rock Loan - £9800 (ish) - 7.9% - 53 payments left
2) Halifax Overdraft - £2250 - £1 a day - Endless
3) Halifax Credit Card - £2585 (ish) - £25% - Endless (about 40 years)
4) Virgin Credit Card - £258 - 2% - going to pay this off this month
5) Billing Finance (car) - £8585 (ish) - 30% - 3.5 years

My Plan

1) Northern Rock Loan - I am just going to let this run and it will be cleared within 5 years

2) Halifax Overdraft - I am just going to chip away at this over the next 5 years, every bit of spare cash i get will go in there, plus going to clear out the garage for anything that can be sold

3) Halifax Credit Card - My mum has offered to pay this off for me and the payment i was making to the credit card of £60 a month and only paying off about £7 because the rest is interest i will pay my mum the £60 until it is paid off (maybe a touch more if i can to keep within the 5 years)

4) Virgin Credit Card - I am hoping i will have enough spare cash at the end of this month to pay this off in full so hopefully that will be one down.

5) Billing Finance (Car HP) - this is a bit complicated, my soon to be ex-wife is a guarentor on this car and her solictor has requested i get her removed, unfortunately i cannot so my solictitor is dealing with it now

BUT

I have been in close conversation with the car finance company because in all honesty now im paying for all the above on one salary i just cant afford to pay for everything and the car is a great expense and i am struggling to pay for petrol, insurance and tax and if anything was to go wrong i would be in trouble so one of the options i was given was that i could voluntary surrender the car which will leave a deficit of £2247 which they have said will cost me £93 a month for 24 months rather than £200 a month for 3.5 years, which is quite a saving.

I know i will have to buy another car which my mum has offered to help me with but it will just be a small engined car to potter around in so i can get to work and see my children, i know i will still have the expenses of a car but this way they should be a lot cheaper so again i would save money there.......

I haven't made the decision as yet but will be by the end of the day and this is the way i am convinced to go, any advice would be appreciated on this one.

*****

Unfortunately my credit rating is very poor and i cannot take out a credit card at 0% to swap balances etc, so im going it a lone (well with a hand from my mum)

i am always looking for help, advice and motivation which is something i am struggling with especially with going through a divorce, coming to terms with the divorce and well becoming a part time dad. Looking on this forum has helped and the challenges look extremely interesting also so i may try and tackle some of those.

Well, that is my debt story, i look forward to joining all the other debt free wannabes and picking up tips and advice.

Regards

Chris

gonzo127

ok well first thing first let see your SOA (statement of affairs) http://www.makesenseofcards.com/soacalc.html use that link and then post it up here once done this will allow us to help you go through your normal everyday expenses and look at areas where you could make savings and therefore allow you to keep on paying your debts .

as to the car well always a difficult one really i think the main issue in my mind is if you mum helps you will you be paying her back? how much will that cost you on top of the £93 a month you will have to pay back in finance - also make sure you get the repayment amount if you surrender it in writing before you go through with it as they could go back on the offer if they are unable to get the resale value of your car that they are estimating.

have you also looked into dropping your insurance cover to third party fire and theft or only third party for the time being incase that will save you a bit, do you also keep your tyres at the right pressure as that does save on fuel costs! do you drive effiecently slowly setting off/accelerating and breaking smoothly/early at traffic lights, changing up gear a bit earlier etc these small measures can make driving upto 20% more fuel effiecently

for your credit cards, dont dispare at the moment, when you finish paying off your virgin card phone them to cancel but also ask if they will do you a special life of balance rate or a 0% balance transfer rate to keep your custom if not just cancel it! if you do get some special deal find out which of your other cards is the highest APR and transfer as much as you can from that card to the balance transfer one, virgin are currently doing a 0% for 14 months on balance transfers for 'new customers' however a lot of the time they will give you that special rate to esisting ones if its a case of giving it them or losing them

chris_gray1980

Please see below my SOA, this is based on how things are at this moment and not based on returning the car, my mum has said nothing about paying her back for the car but i will do but only when things get a bit easier.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1685
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1685

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 200
Rent.................................... 250
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 15
Gas..................................... 25
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 6
Mobile phone............................ 45
TV Licence.............................. 6
Satellite/Cable TV...................... 10
Internet Services....................... 2.5
Groceries etc. ......................... 200
Clothing................................ 10
Petrol/diesel........................... 130
Road tax................................ 15
Car Insurance........................... 60
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 282
Medical (prescriptions, dentist etc).... 7
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 8
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1441.5


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000- (i have put this in because this is what the car is worth if sold private but i do not actually own it and it is not an asset to me as such but it is to the debt owed)
Other assets............................ 0
Total Assets............................ 4000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 8585.....(200)......30
Total secured & HP debts...... 8585......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Northern Rock Loan ............9494......179.......7.9
Halifax Overdraft .............2250......30........0
Halifax Credit Card ...........2585......60........25
Virgin Credit Card ............258.......25........3
Total unsecured debts..........14587.....294.......-


Monthly Budget Summary
Total monthly income.................... 1,685
Expenses (including HP & secured debts). 1,441.5
Available for debt repayments........... 243.5
Monthly UNsecured debt repayments....... 294
Amount short for making debt repayments. -50.5

Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -8,585
Total Unsecured debt.................... -14,587
Net Assets.............................. -19,172

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

You may notice that my rent and house hold bills are relatively low, that is because im in a house share, i couldnt afford to live a lone so everything is more or less split 50% (apart from food, etc)

My car finance company have emailed me through a schedule but having looked at it it does state how much i am to pay back but then has a statement 'You may still return the asset however, you may still be liable for further payments due after the sale of the property in accordance with the Consumer Credit Act. i have just emailed them on this because that leaves a large loop hole in the fact that they can come back for more money.. its a rip off, so far i have paid £4482.71 of the car off, the half way point is £6370.20, that leaves a short fall of £1887.49 (2247.49 with collection fee) the car is worth £4000 private and about £3200 trade in, Auction who knows. so therefore i assume the chances of them coming back to me may small but they are rip off merchants (aren't they all) and they will try it on, but if the car sold for more than what i owe i doubt they will clear the debt --- Rant over

i really have to make a choice on the car today, my head and heart says let it go and to be honest i may have to let it go any way depending on what happens with the solicitors, so im kind of thinking be done with it, that will save me £200 this month which i can pay of my virgin credit card.

Thanks

Chris

chris_gray1980

Sorry, a little bump to keep me up there

:whistle:

RAS

hi

Your food bill is massive, head over to the Old style Forum for ideas on cutting that.

Your mobile is high, can you downgrade and then go PAYG?

i appreciate that you have just come out of a relationship, so this may be useles, but do you have stuff that you no longer use kicking around that you could put in a car boot, amazon or e-bay?

Could you pay enough off the car to eventually give it back at the half way point and remove your liability?

chris_gray1980

Hi RAS

do you think the food is massive! that is £50 a week, that figure is purely a guess really based on what CCCS, Vincent Bond and McCambridge Duffy advised when i was looking at an IVA or DMP i have cut down for me and i eat / buy very little for myself and i save it for when i have the kids so i have cut down a lot.

My mobile contract has another 17 months to run unfortunately i only got the phone about 7 months ago when i could afford it before then i had been on pay as you go for many many years, im not sure if i can reduce my tariff but its worth looking in to (good tip)

i do have very few items if im honest but i am going to go through what i do have with a fine tooth comb and try and find anything that i can sell,

Im absolutely torn when it comes to the car, letting it go makes me £107 a month better off and then i can get a car i can afford to run, at the moment i refuse to go any where because i cannot afford the fuel up and above going to work and collecting the kids but i do not want to make a mistake by letting it go and something happening (not sure what but) i understand what your saying but im not sure how many more months that would be, with interest etc but i think it would be around 10 months. unfortunately i do not know what will be decided with the car when the solicitors get there head together, it may be a case i have to return it to the finance company any way. ARGH, Head ache

Jesthar

Hey Chris, and welcome!

Let's have a look:

chris_gray1980 wrote: »

Please see below my SOA, this is based on how things are at this moment and not based on returning the car, my mum has said nothing about paying her back for the car but i will do but only when things get a bit easier.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1685
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1685

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 200
Rent.................................... 250
Management charge (leasehold property).. 0
Council tax............................. 90
Electricity............................. 15
Gas..................................... 25
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 6
Mobile phone............................ 45 - would lowering the tarrif be an option if you don't use all your allowance?
TV Licence.............................. 6
Satellite/Cable TV...................... 10
Internet Services....................... 2.5
Groceries etc. ......................... 200 - :eek: for one? That's MASSIVE!
Clothing................................ 10
Petrol/diesel........................... 130 - can you cut down on car trips? Make sure you are not carrying excess weight and driving efficiently.
Road tax................................ 15
Car Insurance........................... 60
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 282
Medical (prescriptions, dentist etc).... 7
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 8
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1441.5


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000- (i have put this in because this is what the car is worth if sold private but i do not actually own it and it is not an asset to me as such but it is to the debt owed)
Other assets............................ 0
Total Assets............................ 4000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 8585.....(200)......30
Total secured & HP debts...... 8585......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Northern Rock Loan ............9494......179.......7.9
Halifax Overdraft .............2250......30........0
Halifax Credit Card ...........2585......60........25
Virgin Credit Card ............258.......25........3 - if this is 30% you need to look at overpaying on this first. Then the Halifax
Total unsecured debts..........14587.....294.......-


Monthly Budget Summary
Total monthly income.................... 1,685
Expenses (including HP & secured debts). 1,441.5
Available for debt repayments........... 243.5
Monthly UNsecured debt repayments....... 294
Amount short for making debt repayments. -50.5 Only £50 to find, which should be easy from your food bill alone

Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -8,585
Total Unsecured debt.................... -14,587
Net Assets.............................. -19,172

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

You may notice that my rent and house hold bills are relatively low, that is because im in a house share, i couldnt afford to live a lone so everything is more or less split 50% (apart from food, etc)

My car finance company have emailed me through a schedule but having looked at it it does state how much i am to pay back but then has a statement 'You may still return the asset however, you may still be liable for further payments due after the sale of the property in accordance with the Consumer Credit Act. i have just emailed them on this because that leaves a large loop hole in the fact that they can come back for more money.. its a rip off, so far i have paid £4482.71 of the car off, the half way point is £6370.20, that leaves a short fall of £1887.49 (2247.49 with collection fee) the car is worth £4000 private and about £3200 trade in, Auction who knows. so therefore i assume the chances of them coming back to me may small but they are rip off merchants (aren't they all) and they will try it on, but if the car sold for more than what i owe i doubt they will clear the debt --- Rant over

i really have to make a choice on the car today, my head and heart says let it go and to be honest i may have to let it go any way depending on what happens with the solicitors, so im kind of thinking be done with it, that will save me £200 this month which i can pay of my virgin credit card.

Thanks

Chris

Well, the obvious one is your food bill - that's two/three months supermarket shopping for me, for both me AND my cat, including cleaning and other non-food items! You should be able to halve that with very little effort - cut out any ready meals and pre-prepared food/takeways, and head over to the Money Saving Old Style boards for excellent advice on batch cooking (making big amounts of stuff to freeze for your own ready meals) and other moneysaving food ideas. I kid you not, some of the people over there could feed a family of four to bursting point on £200 a month!

Taking your own packed lunches to work is another surefire way to save at least £10 a week, I have mine sitting here awaiting consumption (nice big roast beef bap, an apple and two oranges), and it's much better AND cheaper than our canteen!

Hope that helps,

~Jes

chris_gray1980

Hi Jes

Thank you for your reply,

I will admit that £200 is purely based on what Vincent Bond, etc recommended it should be but whether that was tailored because of the IVA allowances im not sure, i will admit i said it was around £100 a month which i think it may be including when i have the kids i then have 3 mouths to feed.

i have started cooking (Gordon Ramsay style, i was bought 2 books for my birthday) so i have been cooking large meals (well the recipes are normally for 4 people) so i have been saving some for another day, i buy a huge bag of bread rolls and i freeze them, that lasts me ages, i eat a lot of jacket potatoes which are cheap and cheerful and yes i make my own pack up as well so i am on my way to cutting.

I will look at my phone tariff it may be a case i can reduce it

My car is used for essential trips to work and collect the kids (I cannot afford the fuel for anything more in the car I have) any distance I usually use my house mates car because it is more economical (if I can)

gonzo127

i agree with above in that £50 a month is not too hard to get from your current budget

the big one is food, now although the CCCS etc say £50 a week is reasonable that in reality is very large, i personally get the groceries for a family of 5 which includes cleaning products, toiletries food and nappies for between £300-350 a month (£75 a week for 5), so i would suggest a read through the old style board for some ideas.

main ones are

meal planning - work out what you will have for each meal for the next week and buy ONLY what you need to make these meals

batch cooking - when buying for the meals look at the (usually) cheaper bulk buy offers and when you cook make 2-4 meals worth of the food and then put the extra meals in tubs and freeze them for home made ready meals

drop a brand challenge - well says it all really, look at everything you buy and then buy the brand lower for the same thing so instead of keloggs corn flakes buy tesco's own, if you buy tescos own try the value or discount brands one basic maths for this in my signature. of course there will be somethings you cants swop for the lower brand my person thing is toilet roll i just can not drop to the value ones so i get the own brand ones which are acceptable

the other way is to bulk up your meals, for example when i used to make a curry i used to use 1 chicken breast per person, costing ~£4 for the meat alone, now i use 1/2 a chicken breast per person and bulk up the curry with things like peas, carrots sweetcorn, raisons, egg etc so over all it costs about £2.50 - £2 for chicken and about 50p for the veg (i use froozen veg and steam it before i add it to make sure its cooked) so basically not only am i saving money i am also being healthier since i am having more veg

Jesthar

Ah. One other important word of advice - *avoid* Vincent Bond like the plague; they only want to charge you a fee to do what the debt charities will do for you for FREE.

The mantra here is NEVER use a Debt Management Solution that charges a fee, as all it does is divert excessive amounts of YOUR money away from clearing your debts and into their pockets. :mad:

Besides, an IVA is only of real use to you if you have house ownership to protect - which from the looks of it you don't. So if that's what they were recommending, they were *REALLY* tryng to take you for an expensive ride...

Personally I think you can probably do this without needing any form of formal plan, as you have very little money to find per month. I'm not saying it's going to be easy, but it should be doable.

~Jes

chris_gray1980

Jes

Thank you so much for the encouragement, it means a lot because its something i need right now.

it wasn't until i looked at things closer that i noticed that Vincent Bond were basically trying to rip me off so i tried else where but when the figures came together i thought it would be too extreme even for a DMP let a lone an IVA, compared to a lot of people im not in a lot of debt and i dont think that those options are suitable for me and with a bit of hard work and time i can get myself straight without going to drastic methods.

I have just found the 'Old Style' section i will certainly have a look through that and see what i can do to reduce things even more. im also going to look at making some extra money, due to not having a lot of money i teach myself things and the latest ones are Flash and Photoshop which im not too bad at so im going to look at putting a site together (need inspiration on that because i do not know what topic subject to choose) and then try adsense, etc so im working on some plans to try and boost my income and reduce my debt problem.

Thanks again