26 years - I'll be dead before my debt is cleared. HELP!

Acheron

My current DMP says I'll be debt-free in 26 years. And with a new debt of £4,000 from the taxman looming, I fear I'll never be sorted.

Don't know what to do... If I'd done an IVA when I'd first gotten in touch with Stepchange (CCCS), I'd have been debt-free a long time ago. I'm reduced to paying the bare minimum of £5 to each creditor because my reduction in salary dictates it which means my debt will not be paid off for another 26 years. Very depressing. I wrote to all of the companies to ask them to write off the debt - just one out of six replied saying "no". Another wanted a letter from my doctor to get it even looked at (I laid it on about stress etc.) . The rest simply didn't reply/ignored the letter.

My job means I cannot go bankrupt - if I did, I'd lose my job which is just not an option. Is an IVA the right way out of this? Is there anything, given I've been paying for last seven years with no visible sign of it being over, I can do to get it wiped so I can rebuild my life again?


Thanks in advance for any responses.


A.

sourcrates

Hi,
Tough predicament, I was going to say go Bankrupt, but as that's not an option for you, I would certainly look into an IVA, although you do need a certain level of disposable income to be able to pay towards it.

Lots of info on the National Debtline website, also check out Stepchange.

Acheron

I'm already with Stepchange and on a DMP. I don't have any disposable income to speak of, hence the time it'll take to resolve this.


A.

chasingfreedom

If your job means you can't go bankrupt doesn't an IVA also impact on your job? (I'm assuming its financial services of some kind)


Is there anything you can change to increase your disposable income?

National_Debtline

Hi

As sourcrates says, you’ll need to be able to pay a certain amount per month into an IVA to make it a viable proposal. As a rough guide we work on a client needing to be able to pay a minimum of 10% of their debts over the course of the IVA, which normally lasts 5 or 6 years. Bear in mind that several thousand pounds worth of insolvency fees will also need to come out of your payments in addition to a minimum of 10% to your creditors.

Also, as an IVA is a legally binding agreement it’s a big thing to commit to for 5 or 6 years so you’d need to make sure you can meet the payments for the full duration.

If you don’t have any disposable income at the moment it doesn’t sound like an IVA will be a possibility, and there aren’t really a lot of other options to have debt wiped if you can’t go bankrupt. Presumably a DRO would also affect your career in the same way as bankruptcy.

You’ve already tried requesting write-offs so it may be that you need to stick to your minimal payments and try requesting write-offs again in the future. It’s possible that your creditors may change their attitude to writing off your debt if it becomes clear that you aren’t going to be able to increase your instalments.

You’re welcome to give us a call if you’d like an adviser to go through your situation in more detail.

James
@natdebtline

Acheron

Thanks for your responses.


>Bear in mind that several thousand pounds worth of insolvency fees will also need to come out of your payments in addition to a minimum of 10% to your creditors.


I don't know how this would work, especially given the amount I've been advised, as to the minimum payment that would have to be made - which I can make. So it looks like this [an IVA] is the best way to go. At least, despite committing to it for 5/6 years, there'll be an end in sight. At the moment, there simply is none.


Thanks for the help guys. Much appreciated. I've got some things to check now, but I do feel somewhat relieved now I know I have some options. First stop is to try the write-offs again. If that fails, then screw 'em... I'll go for the IVA and they'll get a quarter, if that, of what's owed.


A.

fatbelly

Acheron wrote: »

Thanks for your responses.

I don't know how this would work, especially given the amount I've been advised, as to the minimum payment that would have to be made - which I can make. So it looks like this [an IVA] is the best way to go. At least, despite committing to it for 5/6 years, there'll be an end in sight. At the moment, there simply is none.

Thanks for the help guys. Much appreciated. I've got some things to check now, but I do feel somewhat relieved now I know I have some options. First stop is to try the write-offs again. If that fails, then screw 'em... I'll go for the IVA and they'll get a quarter, if that, of what's owed

You don't seem to have enough surplus income to consider an IVA.

It's hard to advise properly because we know so little about your circumstances. Maybe give National Debtline a ring and discuss the options

andyfromotley

Hi Acheron,

i cant add to the practical advice given above.

But i can hopefully add to the more philosophical point. You could try to embrace simple frugal living seeing it as a desirable thing to do, rather than as a punishment. Mr Money Moustache has some interesting things to say about this. I think if you can achieve this change of mindset then you may feel a little more positive about things? I dont want this to sound any way twee, but i hope this helps.

National_Debtline

Acheron wrote: »

>Bear in mind that several thousand pounds worth of insolvency fees will also need to come out of your payments in addition to a minimum of 10% to your creditors.


I don't know how this would work, especially given the amount I've been advised,

There are generally around £4k - £6k worth of fees which the insolvency company you use will require as payment for running your IVA. For the IVA to be viable the amount you would need to pay over the course of the IVA would need be enough to cover those fees, plus a minimum of 10% of your total debt level.


I hope that makes sense. If you give us a call we’ll be able to advise on the specifics of your situation.


James
@natdebtline

DorisTrousers

National_Debtline wrote: »

There are generally around £4k - £6k worth of fees which the insolvency company you use will require as payment for running your IVA. For the IVA to be viable the amount you would need to pay over the course of the IVA would need be enough to cover those fees, plus a minimum of 10% of your total debt level.


I hope that makes sense. If you give us a call we’ll be able to advise on the specifics of your situation.


James
@natdebtline

Can't agree with that, sorry.

Creditor voting representatives are driving nominees fees down relentlessy, to the point where they are now, more often than not, £1,000 for commercial firms. Bizarrely, StepChange nominees fees are typically double that. As an IVA is always an individual affair it does follow that the above is not accurate in every single case, but the majority that I come across are of that ilk. There are low cost IVA firms that will propose, if appropriate, IVA's from £70 per month. Supervisors fees are typically 15% of realisations, so on £70 that would equate to £483 over a 5 year lifetime, assuming no changes in contribution. There are a couple of odds and sods as well to add, but in a low contribution IVA that amount comes nowhere near £4k-£6k.

Where the 10% minimum comes from is also a mystery. An IVA should represent a better return than creditors would get in BR to encourage them to consider each case on its merits, and though I accept that the OP cannot take the BR route, it is by no means certain that the creditors involved know that. Should BR be declared, with the info given, then it is 99% that there would be no return for creditors at all, so anything better than 0p in the £ would have to be considered. I have seen many IVA's accepted at 3p or less in the £, so what does the OP have to lose by at least considering it?

All that said, affordability does seem to be a key issue, and unless more income can be earned, or outgoings could realistically be trimmed, then it may be a non-starter anyway.

ReadingTim

Sounds like your current job is the problem - a reduction in salary putting pressures on affordability, and it's limiting your ability to explore alternatives such as an IVA or bankruptcy. I'd therefore be looking for a better paying job/role, ideally in an industry where your personal finances aren't a condition of employment.