Unsecured Debts - DMP / IVA / Bankruptcy or somthing else?

PJEDEVON

Between us, my wife and I have amassed over £100K of unsecured debts on credit cards and personal loans.

This is stressing both myself and my wife to the max and beyond. Sleep is difficult. Panic and depression are easy to succumb to.

We are both worried sick first about losing the house and second generally about not having enough money to live a happy family life.

With advice from StepChange we have current agreed temporary payment plans with all but 1 of the 23 creditors.

We have a large mortgage, not in arrears with a small amount of equity in it.

We both work with good jobs, - but this is a long term and cumulative debt, made much worse as I have been self and under-employed for 3 years following redundancy and unemployed for 6 months up to last Christmas.

But now I have a new full time permanent job, subject to probationary period of course and it requires a 120 mile round trip each day. But still great news and big relief to the family.

In theory we will have £1000+ left over at the end of the month - but; something will break. The family will need to go on a holiday. The cars will need repair, servicing, taxing and insuring all at the same time. My daughter loves horse riding, my wife loves gardening, baking and craft, I love photography and classic cars - if we cannot have any of this, what's the point?


What should I do with my 23 unsecured creditors?

Should we:

Make the creditors a revised reduced monthly payment offer?
Make a DMP with Stepchange - but not at £1000+?
Make an IVA for a reduced and fixed amount?
Go for bankruptcy?

Key Question: Can they touch the house? If so - how, when and for how much?

Tixy

What have Stepchange advised?

I'd imagine that an IVA for one or both of you might be an option in your scenario. Or depending on the debt split and earnings split possibly an IVA for one and a DMP for the other. This is just based on the limited info in your post, whether one is suitable will depend on more detailed information but stepchange would be able to advise.

Whichever option you take you will probably need to learn to live on a more restrictive budget than you currently do.

In terms of this

something will break. The family will need to go on a holiday. The cars will need repair, servicing, taxing and insuring all at the same time. My daughter loves horse riding, my wife loves gardening, baking and craft, I love photography and classic cars - if we cannot have any of this, what's the point?

Your budget will include a monthly allowance for repairs/ servicing/ tax of 2 cars.
Your budget will likely allow for a modest annual holiday
Your budget will allow a small amount for children's activities
Gardening/baking/craft/photography don't need to be costly hobbies.

Regarding the house - if you enter an IVA then you may be required to try to remortgage your house afte 5years to release any equity.
If you enter a DMP then there is a small chance of a creditor taking court action and attempting to secure a charging order on the house (but it would not need to be sold).

If one of you went bankrupt the other may be able to buy out their share of the house equity. If both of your were bankrupt you may be required to sell the property.

Time_to_face_the_music

PJEDEVON wrote: »

Between us, my wife and I have amassed over £100K of unsecured debts on credit cards and personal loans.

This is stressing both myself and my wife to the max and beyond. Sleep is difficult. Panic and depression are easy to succumb to.

We are both worried sick first about losing the house and second generally about not having enough money to live a happy family life.

With advice from StepChange we have current agreed temporary payment plans with all but 1 of the 23 creditors.

We have a large mortgage, not in arrears with a small amount of equity in it.

We both work with good jobs, - but this is a long term and cumulative debt, made much worse as I have been self and under-employed for 3 years following redundancy and unemployed for 6 months up to last Christmas.

But now I have a new full time permanent job, subject to probationary period of course and it requires a 120 mile round trip each day. But still great news and big relief to the family.

In theory we will have £1000+ left over at the end of the month - but; something will break. The family will need to go on a holiday. The cars will need repair, servicing, taxing and insuring all at the same time. My daughter loves horse riding, my wife loves gardening, baking and craft, I love photography and classic cars - if we cannot have any of this, what's the point?


What should I do with my 23 unsecured creditors?

Should we:

Make the creditors a revised reduced monthly payment offer?
Make a DMP with Stepchange - but not at £1000+?
Make an IVA for a reduced and fixed amount?
Go for bankruptcy?

Key Question: Can they touch the house? If so - how, when and for how much?

Hi and welcome PJEDEVON :hello:

You are both worried sick about losing the house and sleep is difficult but trust me, you are not yet stressed to the max! That time will come and when it does, you will have a lightbulb moment (LBM) which will totally change your life.

It's a make or break situation and you feel like the bottom has truly dropped out of your world and you hit rock bottom. At that time, you will realise you can't have holidays and horse riding and classic cars and photography until your debt is paid off .... or maybe you can have some of them but obviously not to the extent that you have in the past!

You need to change, really change, your outlook and realise that a little time of doing without luxuries will change your life forever.

Don't believe me? Check my signature, 3 years today we were almost where you are now - not quite at £100k but almost there with £82,344 of unsecured debt. Today we have £4854 left to pay and hope that will be gone by April. We didn't make massive sacrifices but we did give up true luxuries for those 3 years and if you want peace of mind and sleep and a stress free life, you will do that too.

Is 3 years really too long to start over all fresh and new? We didn't think so and I hope you don't either.

Good luck

TTFTM x

PJEDEVON

Hello Tixy. Thank you for your considered, comprehensive and measured reply.


StepChange have advised a DMP.
My concern are, that this will take between 7 and 10 years and is not binding, that I am not yet permanent in my job and I don't yet know what my new reduced and controlled budget will pan out as.


I have been reviewing that today and already have found another £250 worth of regular necessary outgoings related to insurances, health and pets.


IVA looks tempting as it writes off some of the debt, is fixed, is over in 5ish years and as there is little equity in the house not a significant risk of a charge being put on it.


Unless you know different.


Finally I don't want to rush into any commitment until my job is made permanent in May.

PJEDEVON

Hi TTFTM,


Thank you for your reply.
Cannot disagree with what you say but changing habits built up over 30 years is going to challenging.
My guilt at having to make the rest of my family suffer for what is mostly my fault is going to be a tricky one to deal with but, with the exception of horse-riding everything else can be done at little or no cost. And obviously I can sell the cars - unfortunately they are not very valuable!


You have taken 3 years only - what method did you use?

Time_to_face_the_music

PJEDEVON wrote: »

Hi TTFTM,

Thank you for your reply.
Cannot disagree with what you say but changing habits built up over 30 years is going to challenging.
My guilt at having to make the rest of my family suffer for what is mostly my fault is going to be a tricky one to deal with but, with the exception of horse-riding everything else can be done at little or no cost. And obviously I can sell the cars - unfortunately they are not very valuable!

You have taken 3 years only - what method did you use?

I'm 57 and my better half is 55, our habits were pretty old too but you really can teach old dogs some new tricks

Have you got an accurate figure for your debt? Ww thought ours was around £60K and £82K came as a very nasty shock, almost as bad as the first LBM.

When I first came to MSE, I had never heard of a DMP but soon realised it could be the solution to our problems. I thought it had to be done via a third party, so started it off with CCCS (now Stepchange) but struggled to get interest stopped due to their method of distribution of payments. After a few months and some great advice from people here, we changed to self managing our DMP and have never looked back.

You really don't have to suffer, the only thing we have really missed is holidays and we already have a villa booked for this summer. You can do so much that does not cost money or at least very little of it. It may seem a bit tough at first but you really can't put a value on sleeping at night, learning to smile and laugh again and knowing that there really is a great future ahead, rather than a huge stone of debt dragging you further into it every single day.

Have a think and a chat with your wife and ask anything you want. I got help, advice and support by the bucketload when I came here and I try and give some of it back. If you feel like it, have a read through the DMP & Mutual Support Thread:

https://forums.moneysavingexpert.com/discussion/4988866

That's where I started off but I think it was thread number 7 and we are up to thread 10 now.

Sorry if I sounded a bit tough earlier but am glad you responded. The help is all here if you want it.

TTFTM x

PJEDEVON

Hello TTFTM, thank you again for your comments. I have now had a chance to discuss matters with StepChange and agree a possible route forward with an IVA starting May or June after my employment and clearance is confirmed.


I have also been able to refine the budget and content so that life is not too unpleasant - but I will need to sell my classic cars. But hey its an ends to a means and if it means we can sleep its well worth it.


Still a way to go and no deal is done until it is done but I think this is what we will do to shorten the length of time it takes, know the amount back and have some certainty of the end.


John.