your advice please - IVA or Bancupcy

hamster80

Hi guys. I'm new to this site so trat me kindly!

I'm after sdme advice based on your experiences.
Foolishly I have got into debt of around £23,000 through credit cards and a loan and am obvously looking to clear the debt.
I have been dealing with 'the debt people' who seem very helpfull compared to some other companies I spoke to before christmas and are still calling me on a daily basis despite my telling them I'm not interestin paying them in the region of £500 just for them to start looking at my finances and getting them sorted.
Basically the dept people have offered me the option of an IVE paying around £220 a month or bancupcy. I rent my flat so they can't have that and my car is only worth around £400 so the say they wont be interested in that either.
even though they tell me bancrupcy will be over with quicker and probably cost less I am still inclined to go for the IVA after just spending 3 hours reading various sources of information/advice on the internet.
I have already started the ball rolling to claim back what I expect will be in the region of £1500 - £2000 in charges from HSBC and over christmas opened up a current accout with the Halifax for paying my wages into and paying rent bills etc as I imagine HSBC will close my account with them. I assume if I get this back it will be taken off me by the IVA/bancrupcy people?

I'm interested to know what you guy would recommend (IVA or bancrupcy) and if you have had any dealing with the dept people. I told them I'd call them tomorrow and let them know what I want to go for.
How would IVA's or bancrupcy effect my new account, future credit rating (say in 10 years if I want to get a morgage etc) and other getting other things that require credit checks such as mobile phone contracts etc.

Any advice greatly accepted!!!

james32_uk

There's so much to advise on. I suggest you search through this site for iva and bankruptcy as there'll have been some great advice dished out here over the last 12 months.

You should also consider the possibility of a Debt Management Plan if you have any kind of reasonable income. £23k is quite a low amount to go on an IVA and esp Bankruptcy for.

fatbelly

Not familiar with The Debt People. Is this an insolvency practitioner? They are obviously going to be keen on an IVA because there's about 6k in it for them.

Without seeing your income/expenditure we can't judge whether you are likely to get an income payment order in bankruptcy. So although we can see what the IVA will cost you (£13200), we don't know (apart from the £475 fees and the £400 car) what bankruptcy will cost you. An IPO takes 50-66% of your 'surplus' income for three years. So bankruptcy might be cheaper/quicker. Or it might not.

CCCS would (should) give less biased advice than The Debt People if you want to try them. They would also consider the pros/cons of a debt management plan.

james32_uk

Oh God sorry. The most important piece of advise I have is ditch the Debt People. Call CCCS or Payplan who are charities. These will give you the options that are best for you, not the ones that make the company the most money.

CLAPTON

post an SOA ..presumably you must already have done one for the debt people to give you their advice..without it its impossible to give decent advice.

in any event i would advise that you don't make up your mind for a few days...i'm sure a week or two won't make muich difference in the scheme of things. lets see the soa.

hamster80

Please forgive me but what is an SOA?

My salary is £950/month with rent, bills, petrol, food etc coming in around£600-650.
The 'advisor' at The Debt People said he could tell me about the the basic figures and details of IVA and bankruptcy but couldn't advise me on which one to go for as it had to be my descision.
He mentioned a DMP but I would be paying roughly the same as an IVA but it would take about 11 or 12 years to pay it off. I'm put off a DMP by the fact that it takes so long, I pay a huge amout the the debt management company and there's nothing to stop the card companies etc from demanding all the money bak at any point.
I'm still thinking towards the IVA as it seems more strraight forward and clear about exactly what i'll be paying.
If I go to CCCS or Payplan I take it I'm not paying them a fortune in commission for their service? Does this saving go to my creitors or do I get to see it?

CLAPTON

A SoA is a statement of affairs basically a list of your income, spending and debts..without this no one can sensibly advise you

format is so


a. list of income
b. a detailed list of spending (include mortgage and secured debt but exclude unsecured debt)
c. a total of spending as above
d. now you can see how much you have to pay debt monthly by forming income minus spending
e. a list of unsecured debts i.e. debt amount, monthly debt repayment , APR
f. a total of unsecured debt and of monthly unsecured debt repayment
also say if you rent or buying , if so how much is the house worth and how much the mortgage, also your general situation: partner, children, working etc.


CCCS and Payplan will give free advice as to whether a DMP, IVA or bankruptcy is appropriate to your circumstances.

If you opt for a DMP they charge no fees at all, either to you or to the creditors so all your money goes to paying off the debts,
if you go for a IVA they will give advice but all IVA providers charge although never pay anything upfront, it should be part of the monthly amount you pay.

fatbelly

hamster80 wrote:

.
He mentioned a DMP but I would be paying roughly the same as an IVA but it would take about 11 or 12 years to pay it off.

£23000 at 220 pcm = 105months = 8years 9months, assuming interest frozen.

11 or 12 years seems pessimistic

For an IVA, payments are generally for 60 months

For an IPO in bankruptcy, payments for 36 months, and they are also likely to be around £200 pcm, from what you've said.

What do you see as the downsides to bankruptcy? You rent and you've got a £400 car. Debts are credit cards and loan. It's starting to look the best option to me.