Selling my house, moving into rented, starting an iva?

Shouldigetaniva

Hi

My first post so thankyou in advance for any advice you can give

My husband and I have been paying our dmp for 4 years now expected debt free in about 6 years. We have paid about £20k off or near £70k starting point.

I am an IT contractor working through my own limited company but my rates have reduced so don't have as much surplus money. My job currently means a 100 mile a day commute which costs a fortune in petrol.

We are considering selling our house and moving into rented so I can be close to my job and we can move away from the bad area we live in. We will probably have about £5 - £10k equity in it.

We are now thinking that an iva would be a better option for us but don't know if we sell our house whether this would go against us? Or if we had £5k whether we offered that into an iva that would be a good start? Or should we just reduce our dmp payment?

CreditCrunched

Hello, and welcome (not that I'm a 'regular' here, but bear with me).

Firstly my credentials. I, too, am a contractor operating through a ltd company. We entered out IVA in September 2005 and are now in 'clean up our credit history' mode.

I think your questions are perhaps as much 'lifestyle' as financial. Here are some questions for you. You don't need to answer them, but maybe they will help.

Firstly, The Talk from one contractor to another. your current 'job' isn't a job. It's where your current client is.

You claim your mileage cost from your company at 40p per mile in line with HMRC scale rates. This is then offset against YourCo's Corporation Tax. The distance isn't excessive for a contractor. Nor, therefore, is the cost of your fuel.

The real issue, in my experience, is the travel time. If you're on the road for less than about 2 1/2 per day in total this is a non issue. You are a contractor, remember.

Given that you live in a crap area, the next question is do you have kids? If so then it's worth 'losing' what is a relatively small amount of equity to get them into a nicer, safer area so the kids are mixing with a peer group that will help them move on in life. Been there, done that, absolutely the right thing to do.

How much is your current mortgage? How much rent would you pay in the new area. Only you can 'do the math' on that one.

Your current plan will will get you debt free in about the same timescale as an IVA, but without the big blot that an IVA would leave on your credit history so, in that respect, there's no advantage in the IVA.

I understand what you mean about contract rates. I'm on less than I was on in 1996.

If your rate has dropped since entering your plan, then it's probably time to renegotiate.

You also have the possibility of offering your creditors 'full and final' settlements. Be creative with your Directors' loan accounts. Start at 20% and see what happens. As we entered our IVA, a number of our debts were sold on and we were offered the 'opportunity' to settle 'in full and final' at significant 'discounts'.

Finally, you should join the PCG www.pcg.org.uk to keep yourself up to date with IR36, S660a, ICTs etc.

p.s. Apologies if this sounds a bit 'robust', the bottle of red is almost empty, I'm in work again tomorrow (Sunday) and we Go Live on Tuesday, so I'm feeling no pressure at all! :rotfl: