New member, large debt.. IVA or DMP

Depth_Charge

Hi chalky

There has been a cross section of excellent posts here

Thank you for posting your SOA

Your SOA has made interesting reading indeed as I agree with others that some of the expenditure figures are low in relation to the so called guidelines.

It is a little poor from the CAB if they did not explore bankruptcy as an option, in fact very poor.

Further information on bankruptcy IPAs & IPOs below from the Citizens Advice Cabmoney site that may be useful

https://nedcab.cabmoney.org.uk/ipaipo.asp

Think very carefully about what is appropriate and best for you and your family before making any decisions that could affect you for a long time.

It may be worth getting a second or third opinion from another agency as to make sure you fully understand the pros & cons of all available options

It is you and your family that come first.

Your decisions at the end of the day

Just another question after noting the tax debt - are you self employed (apologies if you have already answered this)

My view

Best Wishes

DC

chalky1313

Thanks, I am going to get another opinion Thursday hopefully

the tax bill was due to having a company car and the company not informing them when I started, not self employed

I just don't know what to do, as the house I rent should be ok, but reading that bankruptcy freezes my bank account, I won't have any money to survive on for food etc??

Depth_Charge

Hi


Info on B/R & bank accounts


https://www.gov.uk/government/publications/bankruptcy-what-will-happen-to-my-bank-account


DC

chalky1313

Thanks, so it does look like I could retain my bank card to live on as my account is literally wages in, everything out.

Depth_Charge

Hi


Just going back to the house


You may find this worth a read


http://www.midsussex.gov.uk/media/AssuredandassuredshortholdtenanciesAguidefortenants.pdf


DC

longtermplanner

With two children that age, your SoA is way too low for food, clothes, and childrens expenses. Also over a 5 year period you just have to have a provision of more entertainment - in bankruptcy you are allowed a small provision for a holiday.

Depth_Charge

longtermplanner wrote: »

With two children that age, your SoA is way too low for food, clothes, and childrens expenses. Also over a 5 year period you just have to have a provision of more entertainment - in bankruptcy you are allowed a small provision for a holiday.

Hi

Agreed

I see so many Financial Statements that are under scored so to speak, resulting in people still struggling in payment arrangements.

People must make their own decisions at the end of the day but they have to be given genuine independent impartial advice on all appropriate options at the outset.

I will say no more, maybe doristrousers wishes to comment:)

DC

DorisTrousers

Glad to DC, glad to.


Unless I read it wrong here, a CAB advisor has calculated affordability levels but has not allowed items on legitimate and genuine expenditure within an initial calculation of affordability? I would opine that that is next to useless then, but of course the OP may just have got a volunteer on a bad day at one of the CAB branches that are maybe not as proficient as some others in providing debt advice. Reasonable summing up? I think so. You will also find in post 10 that I suggested the OP find someone who would do the job properly. Turning to the SOA...


Household Information

Number of adults in household........... 1
Number of children in household......... 2
Number of cars owned.................... 0
Monthly Income Details

Monthly income after tax................ 1753
Partners monthly income after tax....... 0
Benefits................................ 304
Other income............................ 0
Total monthly income.................... 2057

Monthly Expense Details[/b]

Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 875
Management charge (leasehold property).. 0
Council tax............................. 102
Electricity............................. 41
Gas..................................... 41
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 38
Mobile phone............................ 16
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 115
Pet insurance/vet bills................. 5
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 6.1
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1809.1

Assets

Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly.. .APR
Loan...........................8814......169...... .7.5
Loan...........................3068......139...... .7.5
credit card....................4614......98........25.95
HMRC...........................1250......50....... .0
credit card....................1623......45........25.95
credit card....................4364......94........25.95
Total unsecured debts..........23733.....595.......

Monthly Budget Summary

Total monthly income.................... 2,057
Expenses (including HP & secured debts). 1,809.1
Available for debt repayments........... 247.9

Monthly UNsecured debt repayments....... 595

Amount short for making debt repayments. -347.1

Personal Balance Sheet Summary

Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -23,733
Net Assets.............................. -23,733


If we apply StepChange guidelines to the "variables" i.e. non fixed costs, then food could range from 218, at the low end (ridiculous), £311 mid range (most commonly expected to be used by creditor reps) to £394 at the top end. If £320 is what is spent than that's fine, but if the OP spends more, put more. £320 is £73.85 per week, is that enough? Clothing next. StepChange go from £0, £18 only for the kids (I won't comment and wouldn't expect an answer even if the question were asked) low end, £61 mid range to £74 tops. Again, put what is actually spent.


Other child expenses should include bus fares if needed, dinner money, if not on free dinners, and school trips.


Medical may be an issue, looks high whichever way you view it, but if there is genuine reason why such a large amount per month is needed, such as long term and demonstrable illness, then stick to your guns. If pet insurance is necessary, then has the cost of pet food been included in housekeeping? If not, then put an expense down. I have a cat, two boxes of Whiskas a week, plus biscuits for the teeth, is £8 per week. Not a lot, but don't overlook it if you haven't budgeted for it. Meals at work can carry another £36 allowance using StepChange, so put it in if it is needed. Sports/hobbies/entertainment can carry up to £41, and sundries/emergencies another £34 maximum. I tend to think using the maximums on these is the safest, simply as it is often a cost that is difficult to quantify exactly.


Applying these differing figures, where necessary, will produce a significantly different level of affordability than the original SOA, notwithstanding the medical issue which only the OP can answer. It would be interesting, therefore, if the OP would produce a new SOA after considering the potential changes listed above.


Of course, after that the ultimate decision will still lie will the OP anyway, again as stated in post 10, but as a rule of thumb the lower the disposable income against a debt level that high, the more reason to avoid a DMP.


If we wish to muddy the waters further, then I have just had a quick play with the Nedcab debt remedy tool and found it excellent, really good and a huge improvement on the StepChange debt remedy. Don't shoot me for that by the way, it is only a personal opinion. It seems to work on CFS (Common Financial Statement) guidelines for variables, which are widely accepted to be more realistic than the StepChange ones if you live in the real world, although far too "generous" if you listen to creditors and their representatives. Only tiny concern I have with the Nedcab tool is that if the CFS guidelines are being used, then they are out of date and not high enough. That is a side issue, very minor quibble and I am sure they are aware of it of course. Anyway, the reason that muddies the waters further though is that the OR in BR doesn't use CFS, nor the StepChange ones either, he has his own figures to go off. It is therefore not a given that an IPA will not be sought, so factor that into any decision once a truer idea of affordability is obtained.


What does seem clear, in summary, is that the decision still seems to be either IVA or BR, which is what I said in post 10 and you can make a case for either according to your own opinions and viewpoint on it, but overall BR is almost certain to be cheaper, and definitely over with quicker, which again tallies consistently with my thoughts in the previous post.


I do wonder, however, why the original advisor at the CAB, of whom as an organisation I have the greatest admiration for, clearly seems not to have made use of the Nedcab tool when it is one devised by his or her own organisation? Do some branches not know of its existence, or do some just choose not to use it? I have no idea of the answer to that one, just thinking out loud really.

Depth_Charge

DorisTrousers wrote: »

Glad to DC, glad to.


Unless I read it wrong here, a CAB advisor has calculated affordability levels but has not allowed items on legitimate and genuine expenditure within an initial calculation of affordability? I would opine that that is next to useless then, but of course the OP may just have got a volunteer on a bad day at one of the CAB branches that are maybe not as proficient as some others in providing debt advice. Reasonable summing up? I think so. You will also find in post 10 that I suggested the OP find someone who would do the job properly. Turning to the SOA...


Household Information

Number of adults in household........... 1
Number of children in household......... 2
Number of cars owned.................... 0
Monthly Income Details

Monthly income after tax................ 1753
Partners monthly income after tax....... 0
Benefits................................ 304
Other income............................ 0
Total monthly income.................... 2057

Monthly Expense Details[/b]

Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 875
Management charge (leasehold property).. 0
Council tax............................. 102
Electricity............................. 41
Gas..................................... 41
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 38
Mobile phone............................ 16
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 320
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 115
Pet insurance/vet bills................. 5
Buildings insurance..................... 10
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 6.1
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1809.1

Assets

Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly.. .APR
Loan...........................8814......169...... .7.5
Loan...........................3068......139...... .7.5
credit card....................4614......98........25.95
HMRC...........................1250......50....... .0
credit card....................1623......45........25.95
credit card....................4364......94........25.95
Total unsecured debts..........23733.....595.......

Monthly Budget Summary

Total monthly income.................... 2,057
Expenses (including HP & secured debts). 1,809.1
Available for debt repayments........... 247.9

Monthly UNsecured debt repayments....... 595

Amount short for making debt repayments. -347.1

Personal Balance Sheet Summary

Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -23,733
Net Assets.............................. -23,733


If we apply StepChange guidelines to the "variables" i.e. non fixed costs, then food could range from 218, at the low end (ridiculous), £311 mid range (most commonly expected to be used by creditor reps) to £394 at the top end. If £320 is what is spent than that's fine, but if the OP spends more, put more. £320 is £73.85 per week, is that enough? Clothing next. StepChange go from £0, £18 only for the kids (I won't comment and wouldn't expect an answer even if the question were asked) low end, £61 mid range to £74 tops. Again, put what is actually spent.


Other child expenses should include bus fares if needed, dinner money, if not on free dinners, and school trips.


Medical may be an issue, looks high whichever way you view it, but if there is genuine reason why such a large amount per month is needed, such as long term and demonstrable illness, then stick to your guns. If pet insurance is necessary, then has the cost of pet food been included in housekeeping? If not, then put an expense down. I have a cat, two boxes of Whiskas a week, plus biscuits for the teeth, is £8 per week. Not a lot, but don't overlook it if you haven't budgeted for it. Meals at work can carry another £36 allowance using StepChange, so put it in if it is needed. Sports/hobbies/entertainment can carry up to £41, and sundries/emergencies another £34 maximum. I tend to think using the maximums on these is the safest, simply as it is often a cost that is difficult to quantify exactly.


Applying these differing figures, where necessary, will produce a significantly different level of affordability than the original SOA, notwithstanding the medical issue which only the OP can answer. It would be interesting, therefore, if the OP would produce a new SOA after considering the potential changes listed above.


Of course, after that the ultimate decision will still lie will the OP anyway, again as stated in post 10, but as a rule of thumb the lower the disposable income against a debt level that high, the more reason to avoid a DMP.


If we wish to muddy the waters further, then I have just had a quick play with the Nedcab debt remedy tool and found it excellent, really good and a huge improvement on the StepChange debt remedy. Don't shoot me for that by the way, it is only a personal opinion. It seems to work on CFS (Common Financial Statement) guidelines for variables, which are widely accepted to be more realistic than the StepChange ones if you live in the real world, although far too "generous" if you listen to creditors and their representatives. Only tiny concern I have with the Nedcab tool is that if the CFS guidelines are being used, then they are out of date and not high enough. That is a side issue, very minor quibble and I am sure they are aware of it of course. Anyway, the reason that muddies the waters further though is that the OR in BR doesn't use CFS, nor the StepChange ones either, he has his own figures to go off. It is therefore not a given that an IPA will not be sought, so factor that into any decision once a truer idea of affordability is obtained.


What does seem clear, in summary, is that the decision still seems to be either IVA or BR, which is what I said in post 10 and you can make a case for either according to your own opinions and viewpoint on it, but overall BR is almost certain to be cheaper, and definitely over with quicker, which again tallies consistently with my thoughts in the previous post.


I do wonder, however, why the original advisor at the CAB, of whom as an organisation I have the greatest admiration for, clearly seems not to have made use of the Nedcab tool when it is one devised by his or her own organisation? Do some branches not know of its existence, or do some just choose not to use it? I have no idea of the answer to that one, just thinking out loud really.

Hi

A very clever, interesting and I suspect well thought out time consuming'ish reply, with a few lead bait tangents in there also (I can only wonder where you got that style of posting from)

Some fair and valid points in there I have to say, a number of which that raise very, very important issues as the debt advice sector currently stands.

Well put, should be a help to the O/P and others in a similar position.

Having another read and will come back a little more in 'depth' later on this one.... with my 'standpoints' you could say!

PS - take the plaudits while you can, they might not last too long, but you are probably already well aware of that:)

Best Regards

DC

dapast

In your SoA if it goes to iva or br, I would look at increasing you clothing allowance as children grow fast! And also no travelling expenses at all?? I would be looking to add 20-30 for buses as I would think it's unrealistic to not need to travel anywhere ever for 3-5years. And the more you can beef out your expenses the easier it will be.