Sick of being in debt - is there a way out?

debtor35351

Due to living way beyond my means and taking out lines of credit for absolutely no reason many years ago, I find myself on the wrong side of 30, stuck in a world of repayments.

My total debt was approx £13k. A mix of overdrafts, store cards and credit cards. When the minimum payments got to be more than my income I looked for help and unfortunately stumbled upon 'Gregory Pennington'.

GP put me on a debt management plan. It was just under £100 a month and I paid it for 4-5 years. This barely touched my debt, especially as they took 15% for themselves. Then one of their sister companies contacted me suggesting I should have an IVA. I rushed into this decision and wish I had thought it through. The appeal of having some of it 'written off' was great and the payments seemed very affordable. I didn't really read the small print about my payments going up as I earn more though, nor did I think I would do so well with my career in such a short space of time.

I now find myself paying a minimum of £150 a month, for 60 months. I'm two years into it. My payments are nearer to £300 now and at this rate I will end up paying the full amount back, negating any benefit from having some of it written off in return for completing a 5 year contract. Now, as 5 years is a long time, I've ended up earning considerably more than I used to, all the while my expenses have gone up too. Basically I earn about £10k more than I used to and it will go up even more fairly soon.

This means that my payments have gone up quite a bit and i'm no better off. I can't get any credit - for instance i could really do with a new car. Long commute, old car that cost £500 = poor fuel economy, repair bills every other month - no way to purchase a new one.

I can't save any money because FJ take 50% of any additional earnings and the rest goes on the endless bills/unexpected expenses. They only review my salary every 6 months, meaning my 'allowance' never catches up with my net pay. They will sting me with additional costs at the end of the term.

The settlement figure is looking to be around £8000 which I simply do not have. There is nobody who will pay this for me. I'm really stuck with no way out.

Can anyone suggest what I might do to make my life more bearable? I feel as if I am being punished for poor decisions many years ago. It was my own fault and i've learned a valuable lesson. I do want to pay back what i owe but I also find myself stuck in a rut where I have no savings, no way to pay for any unexpected expenses, ie; when my boiler packed up I found myself borrowing off friends and owing even more money! It's just horrible living this way and another 3 years of it makes me want to quit my job, claim dole and get it written off that way!

sourcrates

Hi,
Oh dear, you seem to of received some bad advice in the past, however, do not rush into doing anything stupid.
Whilst you are in your IVA, you have full legal protection from your creditors, that can be a big bonus, believe me.

I find it strange they do an income/expenditure check on you every six months, mostly they are only obliged to do this on an annual basis, however, there are things you can do to reduce your payments.

Are you certain you are budgeting correctly for every single thing you will spend money on ?

If anything, you need to over budget, and even budget for things you don't use, but are entitled to budget for, for example, if you don't smoke, still budget for cigarettes, likewise if you don't drink, still budget for booze, etc etc.

Your IP will have a certain amount of leeway when it comes to your monthly payment, however, if you need to seriously reduce your repayment, then a creditors meeting will be needed to approve this, I had 3 creditors meetings throughout my IVA, as i failed to budget correctly to, all my changes were approved with no problems, you just need to show, that what you are offering them, is the best amount you can realistically afford.

Forgot to ask, are you a homeowner, or do you rent ?

If you don't own a property, you could look at Bankruptcy as an option, but that's a bit dramatic for 8K of debt, as regards the car, you wont be able to get finance whilst your in an IVA, it just wont happen, you could speak to your IP about this, but as you are not allowed to have credit of more than £500, its unlikely they will be able to help.

rockm87

Hi and welcome!

sorry you've had such a run of luck and horrible advice. You're now in the right place, where warm and fuzzies (as well as tough love!) are day-to-day...

I think you need to concentrate on perfecting your budget, and changing how you think about money, just because you dont have money doesnt mean you dont have love, life and fun...and you shouldnt be trying to access credit ever again, buying a car on finance is NOT what you need!!

I'll keep bashing my mr money mustache drum, as he inspired my to think differently about how I live, to hone in on what is really important! have a look at this blog, warning it can be addictive!!

welcome to the forum, and be nicer to yourself, youre getting there!

andyfromotley

hi,

how much is your current debt? I'm guessing that its under 10K

Given you have had income rises, and are due more yo should be able to crack this pretty soon? Get onto stepchange or national debtline about your situation. It may be that you just have to live like a churchmouse in order to do so.

dancingfairy

The problem you have now is that if your IVA fails then you will be back to square one again. Your creditors will be getting some of the money but a lot of it will have gone to GP in fees. According to the CAB the average fees are £5,000
I'm not saying you should or shouldn't stop paying but obviously if you've paid £7,500 off a 13k debt then only actually about 2,500 has come off the actual debt.
So let's assume that you come out of the IVA and still owe 13k, then what? Well you'd probably be looking at a dmp, an IVA, go bankrupt or maybe try a DRO (but it sounds like you're income is too high vs your expenses for a DRO (you're only allowed £50 left over after living expenses in order to qualify for a DRO).
Based on this it would seem that the most sensible option is actually to carry on paying the IVA and look into whether you were missold it. I don't know if people can sucessfully claim they were missold it but that is probably the route I'd be looking at right now if I were you.
Obviously run it past National Debtline or Stepchange and see if they have any better ideas.
df