Am I doing the right thing?

LowEbb

Hi all,

Newbie here so be nice please

I'll cut to the point and explain why it is that I've signed up to this forum and are posting today. Basically, i'm in my mid 20's, in full time employment in the banking industry and have amassed unsecured debts of approx. £12,500. 50% of the debt is an unsecured personal loan with my current employers and the rest is on credit cards - one of which is my current employers.

I have a number of concerns that i'm hoping the good people of this forum will aid me with - firstly, I have been in contact with PayPlan who, following an Income & Expenditure calculation, have advised that I enter into an IVA. Naturally, I'm concerned that this could have a serious impact on my employment. My role is customer facing though not regulated - anybody have any experience of the impact of this? I've looked through the HR Policies and it doesn't shed a whole lot of light if i'm honest.

Secondly, is an IVA definitely the right option for me? Admittedly, my credit rating has been obliterated by late or missed payments so the impact it would have on that isn't huge (i'm not looking for any further credit/mortgage any time soon) but considering my debt is extortionate would a DMP be a better option?

Any advice/suggestions would be greatly appreciated.

rizla_king

IVA is a bad a going bankrupt for your credit rating. Doubt you employers would be happy either if a lot of the debt is owed to them. PayPlan seem to [STRIKE]sell[/STRIKE] recommend IVAs when they really aren't appropriate, so get a second opinion from StepChange or national debtline. A DMP might be a better bet.

UpToMyNeckInIt

Hi LowEbb,

You will also need to check your employment t's & c's to make sure there are no clauses about bank employess going BR, entering an IVA &/or becoming otherwise insolvent.

Difficult to advise further without details of your income/expenditure, but I must agree with the advice above: For a debt such as yours, might a DMP be a better option?

As an alternative, you may be eligible for a 'Debt Relief Order', for a relatively small debt (I don't wish to trivialise your situation by describing your debt as 'small', and I appreciate that everyone's circumstances are different).

Quite right to do your homework, and research all options.

Good luck, whatever you decide, and keep us posted.

Foxy-Stoat_3

Did you take out PPI on any of your debts?

Can you make lifestyle changes or live any cheaper, maybe down grading your car?

£12.5k doesn't seem a lot of debt to go into an IVA...depending on your current salary.

Anondebtadvisor

I agree that it is a relativley small amount of debt for an IVA.

How much can you afford to pay towards your debts? you might consider a DMP and reclaim any PPI to reduce the debts which might help to clear your debts quicker

LowEbb

Thank you for your responses.

My salary is relatively low, especially against the national average, circa. £16000 p/a. with the odd quarterly bonus (performance depending)
My budget plan with PayPlan outlined that I can afford £142 a month after taking all reasonable living costs into account.

I'd ideally like to avoid an IVA as, although after the 5 years I'd essentially be debt free, the stigma that goes with it and the demolition of my credit worthiness coupled with the potential impact on current/future employment is something that concerns me.

Interestingly, I just undertook the 'Debt Remedy' program on Stepchange and they're recommendation was a DMP - que more confusion :doh:

The positives of a DMP are obvious - more fluid plan which is open to potential PPI claims being used to clear balances rather than line IP's pockets and less of an impact on my credit file moving forward. What does alarm me though is:
1). the ability for my creditors to continue to pursue me for the debts even when i'm within a DMP - is the reality as bad as some of the horror stories i've read?
2). The length it entails - PayPlan's calculations were that it would take 7 and a half years minimum to clear my debts in this manner (not allowing for payrises etc obviously)

Re. PPI - I've only had the loans in the last 5/6 years after the main PPI scandal was uncovered. I'd be very surprised if I had any PPI on them but still worth a shout do you think?

Again, thanks for your support.

Foxy-Stoat_3

So you will be paying into an IVA £8500 which is around 70%.......whats the interest and minimum payments like on your cards and loan?

LowEbb

Foxy-Stoat wrote: »

So you will be paying into an IVA £8500 which is around 70%.......whats the interest and minimum payments like on your cards and loan?

That's what i've calculated it as too. Obviously, PayPlan would take their cut so unsure how much the creditors would actually receive.

Payments and Interest

• Loan - £205.17 - 13.89% APR
• Credit Card #1 - I'm in arrears so they want £165 as the next payment which I simply can't meet. - 34.9% APR but that could be because of the arrears. Sure it was 19.9% previously.
• Credit Card #2 - Also in arrears of approx £190. Unsure of APR
• Credit Card #3 - Paying £31 a month but they have frozen the interest currently.

Admittedly, I've buried my head in the sand for too long and now it's mounted up to the stage where something HAS to be done.

Anondebtadvisor

When you start to miss payments you will get calls and letters but once the arrangement is in place these will become less frequent.

Debts will often be sold on when you enter a dmp to companies than pay maybe 30p in the £ sometimes more sometimes less, so if you can offer lump sums in final settlement for example 40p in the £ you can see how this offer is attractive to the debt collection agency and they often accept in final settlement

Foxy-Stoat_3

Trouble with the IVA route with such a high percentage is that it would only take a bonus or 2, change in circumstances and a bit of luck for you to achieve close to 100% of your debt - not knowing your living arrangements renting/mortgage living with friends/partner/on your own/house sharing of course....I used to lodge with a friend for £200 a month but that wasn't really sustainable so my IVA allowed for to rent a flat for £600 a month and still have a life....you need to think long term before proceeding with an IVA....so maybe a DMP for a few years and review it then.

I assume you have tried to get a 0% credit card, selling any stuff you can, saving, stopped spending on none essentials and making cuts to your day to day bills etc.

Any family members can help you out with a lump of cash for you to make a full and final settlement??? just a thought.

UpToMyNeckInIt

LowEbb: Based on the information provided, I would suggest a DMP: Yes it's 7.5 years vs 5, but you might be able to pay it off more quickly using your bonuses/if you get promoted etc.

Fair point about potential employment prospects - especially in your line of work I guess.

Your credit worthiness will be trashed whichever option you choose however. Saying that, you should face fewer 'lifestyle restrictions' (eg. relating to: car/home insurance, mobile phone contracts, banking arrangements etc), vs an IVA and certainly vs bankruptcy.

At least you are doing something about your debt now, not doing as I did and let it accumulate to 3x that amount. That seriously curtailed my options.

good luck.