Are we doing the right thing? Help!

chef2

Hi
where to start we have debts of just under £30,000 spoke to the national debt helpline who sent us a pack to set up a DMP. At the moment we have about 9 creditors who we are paying around £450 a month which is not the full amount but what they would accept this is leaving us every month having to borrow off parents to put food on the table.
When we have completed the expenditure sheet from the pack we are only left with about £150 month! will our creditors accept such a big drop in payments?but now so worried it is going to take us forever and a day to pay this off.My husband only has 10 more years before he retires.. Are we doing the right thing???
Any advice greatly received.

Charco_2

It can't hurt (too much) to try...

At the end of the day, when facing up to your problems you have to decide can you make it on your own? If you are struggling to put food on the table AND repay your debts then it's most likely that your are technically insolvent. (Not enough money to repay your debts as they fall due)

Lots of people are "technically insolvent", robbing Peter to pay Paul, and not making much headway into their debts. If your parents were not willing to help out would you be able to cope?

It is a big step and I wouldn't be flippant about it. I think you are doing the right thing to at least find out more. Then you can weigh up the pros and cons for yourself to decide which way forward is best for you.

(Repaying £150 into an IVA you will repay £9,000 over five years, minus IP Fees of £2,000 - at a guess, probably actually less - your creditors will likely receive a dividend of 23p in the £ against debts of £30,000 - this is not such a bad dividend really!

You may have equity in a property that I have not taken into account or debts with NR who would insist on other changes such as 6 years not 5, and an interest only mortgage rather than a repayment)

Charco_2

YIKES! WOAH WOAH WOAH!

Has just occured to me, you weren't talking about an IVA were you!?

You only mention a DMP - In which case run for the hills! It's terrible advice! I thought (rushed to a conclusion because you are on the IVA forum) that you were asking about an IVA. A DMP would be terrible advice for you!

Repaying £150 into a DMP would never see you debt free. Your husband retires in 10 years, in which time you'll have repaid almost £18,000 towards your £30,000 debt leaving you £12,000 short PLUS ALL THE INTEREST AND CHARGES THAT HAVE ACCRUED IN THAT TIME!

At which stage your husband will not be earning and you WONT have £150 to repay towards your debt solution.

chef2

Thanks for the info.
When we first spoke to the National Debt helpline they said it would take about 7 years to pay off our debt! but when we called back to ask a questioin regarding the form they told us it would take about 16 years??

We were not given any other option just told this would be best for us?

Charco_2

Certainly not!

Look into a more definite solution.

A DMP (you'll guess that I'm not a fan) is a short-term stop-gap solution where debts seem to be getting on top of you and you need a breather to sort things out... many people seem to be happy to enter into one and try to forget about it all but realistically those debts aren't going to go away you know!

Whoever told you "seven years" told you a barefaced lie and I would avoid that company... even the sixteen years they "corrected it to wont cover it since there is no guarantee that interest and charges would be stopped! (16 years of £150 contributions = £28,800... how much do you think 16 years of interest would amount to?)

If I was you I would look into an IVA or plain old Bankruptcy. Big steps I know but certainly no bigger than a 16 year life sentence (and that's sixteen years before being considered for parole!)

Under one of those two insolvency solutions you'd know that your debts will be dealt with in a definitive time frame under five years! You pay what you can afford for the agreed time scale (usually 36 months or 60 months) and the remainder is written off (the DMP you are considering will last for 192 months plus!)

chef2

Thanks for the quick reply
Even more confused what to do now!!
Going bankrupt is not really an option as i work for a government agency!
Scared of losing house as lived her for nearly 25 years but same as everything borrowed too much on mortgage so no equity(but are paying this with no arrears).

Have been reading a lot on IVA`S on the forum! Do you think it is worth going back to the National Debt Helpline for more advice??

Charco_2

A company who lied to you already? (seven years!)
A company who had the chance to discuss your options with you already but didn't? (DMP 16 years)

To be honest, could you trust any advice that they give you now? I know it's a minefield out there.

Insolvency is a very serious matter that requires professional advice from qualified staff.

The fact that you work for the Govt does not automatically preclude you from bankruptcy and a reputable IP firm will be able to tell you who is affect and who is not. If you really need to check it out then you could contact your HR dept anonymously and ask them... it doesn't mean you HAVE to then go BR but you'd know if it is an option or not.

As for an IVA, it certainly is a drop from £450 to £150 but that would still offer a reasonable return for your creditors (as I mentioned above) and would only last five years.

chef2

Thank you
you have given us something to thnk about!

Will let you know how we get on.
Thanks