IVA, DRO, Bankruptcy or Debt Management

jessie179

Hi

I would really like some advice. I tried reading through the forum and everytime when I think I know which option to choose I read something else that is worrying.

I am married (recently separated). And since I finished work in Dec 08 fallen behind with payments. Here and there I managed to pay some creditors. My ex has been off and on using drugs and just when I thought we had him all sorted and had another baby he has now become additcted to a new drug. Which for me has opened my eyes (unfortunately) that he is not capable of putting his family first. Especially after getting paid £2000 on Thursday, cleared out his account and disappeared. Leaving me with not a penny for my 3 year old and 3 month old.

I have a meeting with the job centre to get some help and get assistance with housing benefit because we are in privately rented accomodation. Excluding anything in his name. Because I always had good credit rating everything like loans, utility bills and things are all in my name. One big loan plus an overdraft has been combined by HSBC as a managed Loan. Before I paid £125 every month. And the loan amount decreased. But since it changed to a managed loan the interest was quite high. Example even after a year of paying £125 I only paid £150 off. The difference between the start of the loan and after a year of payments.

I now want to take this £9000 loan plus smaller loans, £800 credit card and catalogues and either do a debt relief order.
I tried to read up about the negatives about a DRO but cant really find anything. Is it best to have that or should I just go bankrupt go for an IVA or Debt Management Plan.

Please note that I am a mature student and have one semester left of college (had baby in March) but will have to do these 3 modules from Sept 11 to June 2012. My head says DRO because it means I can start a new job with a clean slate next year after my studies and hopefully apply for a mortgage before I am 40. I am 32 now. I do not want to stay on any benefits if I get help on Wednesday as am studying to get a good job to provide for my girls. But right now need to stop the phone calls and letters.

Any good or bad points about the above greatly appreciated.
Thanks

scarlet55

jessie179 wrote: »

Hi

I would really like some advice. I tried reading through the forum and everytime when I think I know which option to choose I read something else that is worrying.

I am married (recently separated). And since I finished work in Dec 08 fallen behind with payments. Here and there I managed to pay some creditors. My ex has been off and on using drugs and just when I thought we had him all sorted and had another baby he has now become additcted to a new drug. Which for me has opened my eyes (unfortunately) that he is not capable of putting his family first. Especially after getting paid £2000 on Thursday, cleared out his account and disappeared. Leaving me with not a penny for my 3 year old and 3 month old.

I have a meeting with the job centre to get some help and get assistance with housing benefit because we are in privately rented accomodation. Excluding anything in his name. Because I always had good credit rating everything like loans, utility bills and things are all in my name. One big loan plus an overdraft has been combined by HSBC as a managed Loan. Before I paid £125 every month. And the loan amount decreased. But since it changed to a managed loan the interest was quite high. Example even after a year of paying £125 I only paid £150 off. The difference between the start of the loan and after a year of payments.

I now want to take this £9000 loan plus smaller loans, £800 credit card and catalogues and either do a debt relief order.
I tried to read up about the negatives about a DRO but cant really find anything. Is it best to have that or should I just go bankrupt go for an IVA or Debt Management Plan.

Please note that I am a mature student and have one semester left of college (had baby in March) but will have to do these 3 modules from Sept 11 to June 2012. My head says DRO because it means I can start a new job with a clean slate next year after my studies and hopefully apply for a mortgage before I am 40. I am 32 now. I do not want to stay on any benefits if I get help on Wednesday as am studying to get a good job to provide for my girls. But right now need to stop the phone calls and letters.

Any good or bad points about the above greatly appreciated.
Thanks

hi jessie...i cant really advise you which route to go down but iff you are considering a dro or bankruptsy i would say definately a dro....your debts dont seem high enough for bankruptcy plus this will cost you £700 although you would get so much off as you are on benefits but i think it is only about £150...a dro will only cost £90 and you dont have to go to court....my dro was approved 4 months ago and its the best thing i ever did....you will still have bad credit rating for 6 years and may or may not be able to get a mortgage...one of the experts will probably be along shortly and will be able to advise you better than me..:)

Tixy

Hi Jessie

Have you had any advice from one of the charities yet?
If you qualify for a DRO then this would be preferable to bankruptcy - you would only need to consider bankruptcy if you didn't qualify for a DRO.
Just from the info you have posted I cannot see that an IVA would be suitable in your circumstances, you won't have enough income to service IVA payments if you only have benefits coming in at the moment.

IMPORTANT - Where to seek professional impartial advice about your debts.

Catalyst

Firstly, many congratulations on the birth of your child, and I can see from your post that you are trying very hard indeed. I know that having children, and struggling with debt is very tough indeed, and being on your own on top of that is very challenging. So my first piece of advice would be to keep yourself as unstressed as possible about the debt, seek good support where you can get it and keep focussed on all the positivity in your life at the moment. You also have a great long-term vision.

Its a good idea to phone up a few places for some advice, but I am wondering if you can get a 30-day hold letter off to all your creditors explaining that you are seeking ways to settle the matter, and need some time to do this - they may be able to freeze the interest and costs during this period, I am not sure. This may well stop the calls and letters which are very upsetting, and have a habit of going off just when the little ones are going off to sleep. Keep posting, and keep well.

jessie179

Hi

thanks for all the replies.
I am going to see if I could go into CAB but having a 3.5 year old and keeping her occupied whilst I am busy sorting that out in their office wont work as its school holidays. I am going to wait once I have a quiet time and see if I can apply using either PayPlan or CCCS.

My main problem is sorting out money for my kids. I have an appointment later with the job centre. I need to go through all the letters and make sure I have everything covered.

Can someone tell me though. A few months ago when we fell behind with our rent because of my exs cocaine habit. His cousin signed as guarantor for a loan which has helped us a lot. But last month and on Monday £150 was taken from his cousins account as he acted as guarantor. No matter what I do and dont do I wont be able to afford it now. His cousin just moved to China for a 2 year work contract. I called the company and they said if his cousin called and give me authorisation to talk about the account I can call back. But can anyone tell me how can I force my ex to pay it to avoid his cousin having to pay it. Is there a way that it can be taken like a Student loan through the HR before he gets paid. Because even if we do it when he gets paid then he can again just clear his account.

Thanks

fatbelly

jessie179 wrote: »

Hi

Can someone tell me though. A few months ago when we fell behind with our rent because of my exs cocaine habit. His cousin signed as guarantor for a loan which has helped us a lot. But last month and on Monday £150 was taken from his cousins account as he acted as guarantor. No matter what I do and dont do I wont be able to afford it now. His cousin just moved to China for a 2 year work contract. I called the company and they said if his cousin called and give me authorisation to talk about the account I can call back. But can anyone tell me how can I force my ex to pay it to avoid his cousin having to pay it. Is there a way that it can be taken like a Student loan through the HR before he gets paid. Because even if we do it when he gets paid then he can again just clear his account.

Thanks

On the general question, if you qualify for a DRO, do a DRO.

One the guarantor loan issue (FLM by any chance?) - this sounds like a loan taken out by your ex with cousin as a guarantor. So it is not your debt legally and there is nothing you can do. Cousin must have known what he was doing when he signed and is fully legally responsible for the debt. If it is FLM, they will take court action against him if he does not keep up payments.

jessie179

Thanks re: DRO. But can anyone also just tell me the disadvantagous of having it. Like with BR I know its you cant have certain jobs. I am finishing my last 3 modules this Sept. And I really would not want any nasty surprises when I apply for certain jobs.

Yes it is with FLM. Yes cousin obviously did it as he knew we desperately needed a loan to get back on our feet and especially since I dont work. My credit is no way as bad as I thought because I do keep in touch with the companies and pay where I can but because I dont have my own income we couldnt get a loan in my name. He does know what will happen but he is such a good guy and I know its not my problem but I feel bad that he will be saddled with the debt. I dont know maybe I can demand or sue his cousin and ask for the payments back.

fatbelly

Compared to bankruptcy, DROs have loads of advantages. Provided you list all your debts at the correct balance figures, and answer the questions honestly, I can't think of any disadvantages, which is maybe why no-one attempted an answer. During the 12 month morotorium:

You must not obtain credit of £500 or more from anyone without first telling them that a DRO has been made against you;

You may not be involved (directly or indirectly) with the promotion, management or formation of a limited company, and may not act as a company director, without the court’s permission.

For most people, these restrictions aren't a problem.

There are certain debts that are excluded: Court fines, CSA arrears, Student loans.

The position with rent arrears is confusing at the moment following a recent court case. That may be an issue, but equally may be resolved by guidance from the DRO Unit - any intermediary should be able to update you on this, be it CCCS, Payplan or CAB. Hopefully the FLM loan cleared the arrears.