I'm in a very bad financial situation and need advice on setting up an IVA

Sandwich

Here's a very brief rundown of my situation: in 2007 I took out a loan with a company called Sallie Mae for £7000, with the total repayable being £29,000. Then in 2009 I took out a second loan with the Co-op for £9000, with the total repayable being £12000. They were both student loans which I was supposed to start paying back once I finished my PhD and started full-time work. I was originally supposed to finish in 2010, but I had to switch to part-time for financial reasons (i.e. to free up time to work) and that's meant that I still haven't finished, nor is my current income large enough for me to be able to make my loan repayments.

Oh, and as if that wasn't complicated enough, in 2008 Sallie Mae went bust and my loan was sold onto a third party called Total Credit Financial Services Ltd, which is now seeking repayment.

From what I can tell I have two options:

1. Declare bankruptcy.

2. Try to come to an arrangement with my creditors that would reduce my debts and make my monthly loan repayments more manageable.

I would obviously rather go for option 2 if at all possible, but I don't know how to approach this situation in order to get a favourable response from my creditors. So what I'd like to know is, what would be a reasonable offer on my part as far as an IVA goes?

In other words, would they be likely to accept an offer such as this:

I'll agree to pay back the initial sum to both creditors at a rate of £50 per month each for the next 12 months and then £200 per month each after that for however long it takes for all of my debts to be cleared (probably around 4 years).

That would be ideal for me because although my current income is low I could probably spare £100 a month if I found somewhere cheaper to live, and in 12 months I expect to be working full-time on a wage of around £26,000 (I've been told by a colleague that a job will be opening up next year and that my name is at the top of the candidate list).

thatsean

You need to get independent advice, CCCS or Payplan. I don't think £50 per month is sufficient for £41k debt. What are Sallie Mae - I thought they were an American College fund, is this the same crowd? Is it a mortgage style loan, the repayable is shocking.

Get advice, option 1 might get you your life back a lot sooner.

Sandwich

thatsean wrote: »

You need to get independent advice, CCCS or Payplan. I don't think £50 per month is sufficient for £41k debt. What are Sallie Mae - I thought they were an American College fund, is this the same crowd? Is it a mortgage style loan, the repayable is shocking.

Get advice, option 1 might get you your life back a lot sooner.

Sallie Mae had a UK branch that closed once the financial crisis hit.

I will contact CCCS, but I was also hoping to get some advice from people on here because I know there are some really clued-up people on here, and I also doubt that CCCS would be able to tell me much about how much creditors like mine would take as part of an IVA.

mrsb83_2

I think you're confusing an IVA and a DMP. There is a lot of good information on the main part of this site about both. I suggest you read Martin's articles.

However, you are not in stable employment and I don't think you should commit to a repayment schedule based on a hoped for increase in salary.

Is there a compelling reason why you can't declare bankruptcy? £41,000 is a massive amount of debt which will likely take you many years to pay off.

Sandwich

There's no real reason why I can't declare bankruptcy. I think it may actually be my best option. From what I've been told my creditors are unlikely to agree to reduce my debt to the levels I mentioned in the OP, so I think bankruptcy might be my best option given that it can be over in 3 years.

room512

"I took out a loan with a company called Sallie Mae for £7000, with the total repayable being £29,000."

Really? I though payday loans were bad! :eek::eek: Hope it all works out for you xx