IVA or debt management plan

manz

Hi all,
I have currently got about £14k worth of credit card debt over 3 cards.
My limit from those 3 cards is about £20k.
I am struggling to pay off the credit cards as the monthly is about £250 per month.

I also want to get a house but need a depoist.
I am thinking of taking out cash money from my credit cards and then getting a personal loan for about £10k.

With the money from both the credit cards and loan. I would put a deposit down for a house.
Once i got my house, i would take out a debt management plan or IVA to get rid of all of the debt.

I wanted advice on is this a good thing to do.
I am desperate to get a house but my current situation means i cannot pay off my credit cards unless i take out a debt management plan or go for an IVA.

Any help is appreciated.
Thanks.
Manz

moneysavingplumber

First off, lending requirements now for mortgages are very tight, especially at high loan-to-value levels, so they would check your outstanding credit balances as part of the vetting process. If your income could not support servicing that debt and the mortgage, they would run a mile. I'm also sceptical that you would even get a 10K personal loan if you're already struggling to service £250/month of debt. Mortgage lenders are also not keen on borrowed deposits, even when borrowed from friends or family.

In my opinion, it really isn't the best time to buy anyway as prices are set to fall and interest rates to rise (although I'm in the process of buying myself!), I would concentrate on clearing the debt first. If you haven't already missed any payments then your credit record could yet be salvaged.

As to whether an IVA or DMP is more suitable, it really depends on your circumstances. Posting your SOA up would enable the experts here to offer their opinions. 14K is not an insurmountable figure of debt, as long as your income is sufficient to reduce it

manz

My SOA is:
I own 2 houses. 1 is on rent that is barely covering the morgtage.
The other i live in. But this house is a family shared house so i am in red every month and forking out for most of the bills as shown below.
My credit card debt is £14k because i have been living on them.
My wages are varied but on average i take in between £1500 - £2000 per month.
I am in sales so it varies.
My other details are as follows:
MONTHLY EXPENDITURE & INCOME Mortgage/Rent:£797.78Electricity:£88.00Broadband£25.00Council Tax:£121.00Gas:£72.00Water Rates:£45.09TV Licence:£15.00Life Insurance:£57.44Food:£50.00Buildings/Contents Insurance:£36.00Petrol/Diesel:£40.00Car Repairs @ £200 per annum£16.67Daughter£30.00Mobile£40.00Road Tax £16.67Bank account fee£21.00credit card£257.00Shopping & Going out£50.00 SUB-TOTAL OUTGOINGS-Monthly£1,778.64

I hope the above has enough info.

Thanks for the help.

althas

At the end of the day, it is your decision as to what road you wish to go down, but for me there would be a few things I would personally think need to be carefully considered:

1. How would your creditors would look any proposal if you take whacking big cash advances on your cards then apply for a DMP or IVA
2. Unless the rules have changed since my days as a loan manager at a bank, you can not do a personal loan for a house deposit. Also point 1 applies again
3. If the DMP or IVA proposal is declined, what would happen then? If BR was to ensue, would BOTH your properties be in jeapordy? (I know VERY little about BR)

IP/Creditors could well ask for the sale of the house you rent out, as it is not your primary home and any saving or equity paid to your debts

Sorry this is all sounding a little negative, but I would kind of have to agree with moneysavingplumber above, and concentrate on clearing your debts before you contemplate doing anything else like this. But as I said at the end of the day the decision lies with you, just make sure you think through every situation and scenario before you decide