Homeowner (with mortgage) - huge debts IVA or DMP?

Adviceneeded15

Hi everyone

I posted a few months back admitting that I had huge debts and had run credit cards up again The guilt of hiding this from my husband was eating me up. I ended up being signed off work but if I am honest with myself the debt just added to our family problems. I told him about it and I didn't feel any relief. If anything although he said he would stand by me it just drove us further apart. To cut a long story short he left me a few weeks ago and wants a divorce. I am now left with no way to pay off the minimum amounts of these debts. I have contacted Stepchange who have advised me to take out an IVA or a DMP is second choice.

I jointly own my home with my soon to be ex husband who has said he wants nothing from the house. He just wants out. He may change his mind and I am in the process of seeking legal advice.

Can anyone advise what happens to your property if you do go the IVA route? There isn't enough equity in it at the moment to sell and to clear my debts unfortunately. Ideally I would like to stay here as to rent would be nearly double my mortgage which only has another 17 years left to go. I work full time and I am the main carer for my disabled adult son so that is another reason I do want to stay here at least temporarily so he has some stability through the divorce.

The IVA or DMP is just for my debts. I also have a joint loan with my husband which I don't want to include - can I do that? If so my circumstances will change in 3 years and I'll be able to pay another £200 towards the IVA or DMP. When I have put the joint loan into the stepchange calculator it wants my husband to take on that debt which he will not do. If he has to do that he will force the sale of the house so that the mortgage is paid off and the loan is but then I'm potentially homeless with the same amount of debt.

Any advice / guidance would be appreciated as I am struggling to make any sense of all this at the moment.

National_Debtline

Hi there, I understand this is a difficult time so I think it would be wise to say - don't rush into any decision....take your time and understand each option in as much detail as possible first and see how your living expenses will change in light of what has happened before committing to a monthly payment plan.


With joint debts it will mean that each person is responsible for 100% of the money owed separately and together. You wouldn't be able to exclude the loan in either option really but a DMP may have a bit more flexibility with it (you would have to talk to Step Change about that). One of the key issues when looking at a DMP versus an IVA is how much do you owe? How much can you afford to pay each month and how much equity do you have? This will help you determine the timeline for repayment and the potential risk to your home.


Laura
@natdebtline

Vikipollard

I could be wrong, but I don't think you can choose to keep the loan out of the IVA as that would be seen as favouring one creditor over the others. No idea about a DMP as I didn't go that way.

If it's kept out of the IVA the joint loan would receive 100% of its remuneration from you (both), yet credit cards/other loans will get a lesser % and that will have had the interest frozen on it. Why would they be happy to accept that? Not judging, by the way I'd like to be wrong, but I fear I am not.

Unfortunately the joint loan will become your husband's to pay - because they can pursue both of you for all of it.

It's 3 years since I completed my IVA, and I wasn't on our mortgage (fortunately) so they couldn't make me try to release equity. I had to pay an extra year (6 in total) instead.

In my day, there was a clause that said you had to try to release equity towards your debt at month 54, but the reality was that the majority of people could not remortgage anyway as no one would touch them with a bargepole. Now I think there is a push to take on a secured loan instead - which seems mad to me as you risk your home in so doing. Be very sure what they are stipulating as conditions.

Hopefully someone who understands better the legal bumf of an IVA will be along soon who can advise properly.

glentoran99

National_Debtline wrote: »

Hi there, I understand this is a difficult time so I think it would be wise to say - don't rush into any decision....take your time and understand each option in as much detail as possible first and see how your living expenses will change in light of what has happened before committing to a monthly payment plan.


With joint debts it will mean that each person is responsible for 100% of the money owed separately and together. You wouldn't be able to exclude the loan in either option really but a DMP may have a bit more flexibility with it (you would have to talk to Step Change about that). One of the key issues when looking at a DMP versus an IVA is how much do you owe? How much can you afford to pay each month and how much equity do you have? This will help you determine the timeline for repayment and the potential risk to your home.


Laura
@natdebtline

with a dmp you can exclude whatever you wish, its informal, With an IVA that wouldn't be possible and would include your husbands income

Adviceneeded15

I owe around £35K just on my loan and my credit cards. I feel sick just looking at that amount. I have worked it out on StepChange that I would be paying £219 over 19 years but like I said earlier my circumstances would change in 3 years when the joint loan is paid off so I would be able to pay more.

The equity in the house would be approximately 25K which hubby would want to go towards the joint loan so he is clear to walk with no debts.

I don't want to give up the house not right now anyway as I need stability for my son.

It is such a mess. We had planned to remortgage to help us get on top of the debts but now I can't manage it on my own. Hubby said he doesn't want me to sell if I don't need to but the only way I can stay in the house is to pay half of the joint loan but that would mean keeping it separate from the DMP.

Vikipollard

I think you need some proper advice as, unless you have a wardrobe full of designer gear and a hard drive brimming over with photos of your luxury holidays, OH benefitted from the money you spent that led you into debt. I say this because I ran up debts (twice), but they were all on things for the house that we needed (I didn't know about freecycle/ebay then - if they even existed in 2003) and basic things like food. I didn't know how to tell him I didn't have enough money for food as it felt like abject failure at the time on my part. It wasn't, but hindsight is a wonderful thing...

It is a little naïve on his part to think a divorce judgement would not consider things in the round. 50/50 is only a start point.

Amerylis

I think at the moment in yout situtation I would start with a DMP, as it offers more flexibilty. You can always change to an IVA at a later date, but if you start an IVA now and it fails (as your situation atm is not stable) then bankcruptcy would be the only option left to you.