No way out....

The.Far.Tall.Knight

izools wrote: »

Incorrect.

You agree a figure based on your current circumstances.

If your circumstances change, you inform your IP (Insolvency Practitioner) of the change and they agree an alternate figure based on income.

It's not a legally binding agreement that says "I will pay X amount even if I can't realistically afford it".

Is is an agreement that says, I'm being honest, and honestly I will pay what I can, when I can, without being frivolours, and without cornering myself into a position whereby I have to wear five year old rags and eat beans on toast.

IPs are a totally different kettle of fish to actual creditors. They are realistic and understanding, and won't allow you to screw yourself over to pay what you can't afford.

When I had to go bankrupt an IPA (income payments agreement) was established for me to continue repaying my debts based on affordability. I paid a lot some months, a little other months. Every step of the way I advised the Official Receiver of my situation, and the repayments were agreeably adjusted in accordance. This didn't extend the 36 months I was legally obliged to contribute what I could afford.

As with any insolvency, the same rules apply, including in an IVA.

Insolvencies aren't a way to get out of debt, and they aren't a way to oblige yourself to more than you an afford.

Insolvencies take into account a realistic situation and apply a structured way of making contributions towards your debt in line with affordability.

Like I say, an IVA is NOT changing your financial situation.

Insolvencies are merely a way of taking your financial situation, and making it official. Taking the debt management out of the hands of the creditors and putting it in the hands of honest folk.

When I was in a situation similar to yours, I struggled with repayments that took the lions share of my income, putting groceries on tick. That had to stop. So I closed all my accounts and started to repay but soon ran out of money. So, with the help of the CCCS, I agreed reduced repayment plans but some creditors didn't play ball. Ergo I had no choice, despite my best efforts, to apply for an IVA. I was unfortunate enough to be declined for an IVA, my creditors didn't agree because I owed 47K on a 15K income and they wanted more over five years than I could afford. I was therefore left with no choice but to declare myself bankrupt.

This didn't mean I got out of debt. I paid off a large sum of my debt post bankruptcy. I merely made official my pre-existing financial situation and enabled myself to live a realistic lifestyle, without any affordability issues, without any !!!! from creditors or debt collection agencies, whilst contributing a good percentage of my surplus income toward a debt that thankfully didn't burden me for a lifetime.

Had I stuck my head in the sand I probably would have only just reach the point now where creditors were referring accounts to debt collection agencies. But I would also be suffering from malnutrition, depression, and a whole plethora of other things that affected not only my life but the lives of everyone close to me. And these issues would continue to be prevalent, getting worse, whilst carrying a debt, stigma, and hassle from creditors, continuing over a much larger chunk of my life than anyone should ever have to bare.


I suppose the best way I can respond to the thread title of "No Way Out..." is that the only way out is the path you allow yourself to walk

wise words from izools dated 27-01-2011 @ 3:15 AM, well done....and as I have already said,

dont try to buy your way out by borrowing more ie: a loan of any description will only increase the debt

Rochdale_guy would be advised to follow these wise words for there are no chains greater than the ones you forge for yourself

jen245

OP, Izools has given some excellent advice. My partner had an IVA, which ended last year, and looking back it was the best thing for us. He had been quite silly with credit cards over the years (which I was unaware of until it got to the point he coudnt pay them anymore!) He owed almost double his salary which was £27000, and even with me helping out with repayments, we just couldnt cope. He contacted Debt Free Direct after seeing an ad on the TV (I wouldnt recommend them, although there are some very good IP's out there have a look at www.iva.co.uk. Great forums, and lots of helpful advice) and they advised him that an IVA would be the best option.

It was a long hard slog, 4 years of frugal living taught him a very valuable lesson. He managed to do a full and final settlement at the beginning of last year, to end the IVA early, due to an insurance payout, and he managed to pay back quite a bit more than what was originally proposed in the IVA, although about 40% of the total debt was written off. The point is, we came out the other end, and we now have no debts, quite a bit in savings, and live comfortably without having to worry about what nasties the postman is going to put through the door, and from next year, his credit record will be clear.

izools

jen245 wrote: »

and from next year, his credit record will be clear.

Make sure he gets a copy of his credit file to check the default dates on his old accounts.

Nearly always, creditors set a default date later than the date of insolvency, which is incorrect, as it causes the bad debt to have an effect for more than six years after the date of the insolvency.

You will likely have to write to them all showing them their entry on his credit file, asking them to correct it to the date of the IVA; otherwise they'll still be there more than a year from now.

But well done you two on coping with it and getting things sorted in the end :beer: Feels bloody marvellous, doesn't it?

jen245

When he got his completion certificate through i was jumping up and down LOL!! Best feeling in the world, it just shows it can be done, but there is no quick fix

Will tell him to get his credit files, thanks :beer:

yenool

Rochdale_Guy wrote: »

And if going for the last ditch loan option, I have to do it before the (to quote Martin) Bloody stupid loan rule from the EU!

comes into effect on 1st february 2011 (which is, yikes, only Tuesday).

I don't want to sound mean but you have gone way past the point of no return. You are not going to get any kind of loan - never mind one big enough and with a low enough interest rate to provide the solution you are searching for.

You debt is basically greater than your income and you are constantly o/d. Banks wont lend against that type of risk anymore. Even if they would it isn't going to help you in the long run because you will just continue to rack up more debt.

If it were me I would open a basic bank account (no credit facilities/cheque book/etc) and have my income paid into there. Then I would be looking to contact the CCCS and get some kind of agreement set up. Alternatively, bankruptcy may be an option.

You can't dig your way out of a hole, your credit rating will be shot to bits simply because of your debt:income ratio and it is going to stay that way forever unless you get things sorted.

Doing B/R or an IVA would allow you to be sorted in 5 to 6 years and in the mean time you will be able to have a reasonably decent standard of living without all the stress an anxiety caused by having this hanging over your head all the time.

izools

yenool wrote: »

Doing B/R or an IVA would allow you to be sorted in 5 to 6 years

Three years on from my Bankruptcy I no longer have an obligation toward my prior debt and am for the most part credit worthy.

Have had no problem obtaining a contract phone, bank account with overdraft, and an array of credit cards (which I subsequently closed, didn't have a use for them).

One thing I have realised looking back on the time leading up to my bankruptcy is that it was somewhat of an inevitability due to the costs of running the house my OH and I were living in at the time. Without credit lines to support our day to day expenses we would not have eaten.

The overall solution to the greater, long term problem was the realisation that not only my approach to debt had to change, but also my lifestyle.

Moving into a small flat shared between three of us was the solution to that issue.

Once OP has agreed some kind of insolvency to alleviate the debt issue he may be wise to revise his lifestyle in a similar way to myself and consider a change of home and dropping the car.

That car is a gargantuan expense considering the income, let alone the debt. Perhaps stepping away from the "I have to have it" mindset and embracing the "It simply isn't viable, so the alternative solution is..." mindset is called for.

The.Far.Tall.Knight

yes almost forgot, the first thing to do is isolate your salary, when I was up to my neck in it I was advised to open up a basic bank account so you can draw cash to pay your basic bills and then get CCCS to help you. I actually went to the local debt counselling service and that's the first thing they told me to do, get a basic bank account, divert your salary and isolate it - I fully agree with "yenool" - also words of wisdom

Rochdale_Guy

Thanks for all the replies that keep coming, you will be relieved to hear I am NOT going to try for a last attempt low rate loan or low rate "fixed until paid off" new credit card either, it's pointless and I'd only get turned down again.

Interestingly, my bank kindly offered me a loan after she totalled up what I was spending each month on cards / interest alone and they offered me £15,000 at something like 9.9% over 6 years, which she said was paying out less than what the cards were costing me....

I was kinda pressured though and they wanted a decision within 48 hours as the woman who set it up was leaving to go and work with a private bank....

That was in July......

What I'll do is a new SOA based on the last 6 months bank statements and repost here, although I know it'll be worse than the original one as I owe more money on the cards....

Thank you all. I'd buy you a pint, but couldn't afford it

Rochdale_Guy

I phoned MBNA up last night and to cut a long story short, they said they can only help people who cannot afford the minimum monthly repayment, they didn't care I was paying it by D/D and the interest was £5 more a month (and rising). He said it's highly unlikely they would freeze the interest or cut the APR as that is what my original credit agreement was.... I originally rang the number for "difficulties paying" and after 10 minutes of automated nonsense, got through to a normal customer service advisor who said the dept. I wanted is open 9am to 5pm only, which is no good to me as I am work in thsoe hours and there is no privacy here, not that I want anyone at work knowing my difficulties

I was that annoyed with them I feel like transferring £2,000 off the MBNA onto my EGG card, just so the greedy MBNA ******* won't take as much interest off me (leaving £2,229 outstanding on the MBNA). But that would then leave me with £2,000 on my EGG card at 26.9%, I can't even fathom what minimum monthly repayments would be on that, and that rates as extortionate as MBNA

Getting nowhere, it's scary....

NekoZombie

izools wrote: »

Three years on from my Bankruptcy I no longer have an obligation toward my prior debt and am for the most part credit worthy.

Have had no problem obtaining a contract phone, bank account with overdraft, and an array of credit cards (which I subsequently closed, didn't have a use for them).

One thing I have realised looking back on the time leading up to my bankruptcy is that it was somewhat of an inevitability due to the costs of running the house my OH and I were living in at the time. Without credit lines to support our day to day expenses we would not have eaten.

The overall solution to the greater, long term problem was the realisation that not only my approach to debt had to change, but also my lifestyle.

Moving into a small flat shared between three of us was the solution to that issue.

Once OP has agreed some kind of insolvency to alleviate the debt issue he may be wise to revise his lifestyle in a similar way to myself and consider a change of home and dropping the car.

That car is a gargantuan expense considering the income, let alone the debt. Perhaps stepping away from the "I have to have it" mindset and embracing the "It simply isn't viable, so the alternative solution is..." mindset is called for.

[FONT=&quot]I do have to say that how quickly people recover from bankruptcy can differ wildly. While Izools seems to have had a largely positive experience, this is not the case for everyone.

I went bankrupt nearly 4 years ago and haven't even been able to upgrade my bank account. I have been able to get one sub prime credit card with a relatively low limit but otherwise, that's been it. I can't get a contract phone or owt else. I still wouldn't change my decision for the world - I was in a mountain of debt that I couldn't handle.

With that in mind, make sure you make your decision based on what's is right for you, and don't expect easy access to credit for at least 6 years after the fact.

Best of luck! You do probably still need to have your lightbulb moment, but when it comes you'll find plenty of support on here.

Neko[/FONT]