iva or dro

gawebb99

so my husband and i are in debt, i want to tackle mine by taking action- he doesnt want to. SO , im going to deal with my own debts that are in my own name which come to just under 15K.

i could probably do a DRO, as surplus with a bit of clever budget tweeking would be less than £50.

Or i could do an IVA>

which is best? also, if i do get accepted on a dro what exactly happens. what would happen if i got a pay rise, or a rise in tax credits or something which upped my income?

i hear so many bad things about IVA;s .

im really unsure but need to act

National_Debtline

Hi

To qualify for a DRO all of your debt in total need to be under £20,000, and that would include any debts you are jointly liable for if you have any, not just those in your sole name so that’s something to consider.

You need to meet the criteria of a DRO for the full year of the moratorium, otherwise the DRO can be revoked and you would essentially be back to square one owing all of the debt still. If you had an increase of income during the DRO you would need to tell the Insolvency Service who would look at your income and expenditure again to check whether your surplus was still under £50 per month.

It’s difficult to say whether a DRO or IVA is best for you though as it depends on your circumstances, and there are pro and cons to each option. It also depends whether you can afford to offer enough each month to make a realistic IVA proposal.

The pros and cons of each option can be seen on the ‘find out more’ tabs on this webpage;

www.nationaldebtline.org/EW/information/10%20ways%20to%20clear%20your%20debt/Pages/default.aspx

James
@natdebtline

fatbelly

If you meet the criteria for a DRO do a DRO

You need to get talking to an intermediary - stepchange or CAB seem favourite

So husband's strategy is ignore them and hope they'll go away - is that it?

gawebb99

fatbelly wrote: »

If you meet the criteria for a DRO do a DRO

You need to get talking to an intermediary - stepchange or CAB seem favourite

So husband's strategy is ignore them and hope they'll go away - is that it?

i have spoken to stepchange several times. my husband is thinking we can sort these as we are, we've never missed any payments BUT its a real struggle. we had no money for food last month.

i think he is worried, hes always been a 'payer' never missed any payments, always on time etc. he's scared i guess to suddenley stop paying whilst we decide which route to take.

im at a complete loss as to what to do.

when stepchange did our budget, they said we had £292 surplus per month however i think we underbudgeted for food so our surplus could be more like £200 per month.

is an IVA likely to be for that amount? what happens if one of us was made redunddant or ill etc- is there any insurance for things like this?

a dmp would take us 9 years- this is an option. again, with our budget with stepchange, are they likely to stick to the £200 mark?

that figure would be do-able. ive heard some stories of them hiking it up the following year or so and such.

if its £200 or there abouts per month, we could do it easily with budgeting.

i kinda feel like i need someone to just tell me what to do. im so indecisive. one day im sure IVA is right. the next im thinking DMP.

our joint debts are almost £31K. of that, just under £15K is in my name, the rest in his. with a joint one split in the two.

i would consider going bankrupt but he would not do this at all.

sorry, rambling. i just dont know what to do

absolutereturn

gawebb99 wrote: »

i have spoken to stepchange several times. my husband is thinking we can sort these as we are, we've never missed any payments BUT its a real struggle. we had no money for food last month.

i think he is worried, hes always been a 'payer' never missed any payments, always on time etc. he's scared i guess to suddenley stop paying whilst we decide which route to take.

That's just not acceptable, you need to put yourselves first, food comes above creditors, no doubt about that. The one thing you have to be aware of is that, whatever decision you make, if you stop making contractual payments you will be defaulted and your credit file(s) will be shot to pieces for the next six years. This can affect not only your ability to obtain credit, certain employers (particularly in the financial sector) carry out credit checks as do mobile networks.

gawebb99 wrote: »

im at a complete loss as to what to do.

when stepchange did our budget, they said we had £292 surplus per month however i think we underbudgeted for food so our surplus could be more like £200 per month.

You shouldn't leave yourselves short.

gawebb99 wrote: »

is an IVA likely to be for that amount? what happens if one of us was made redunddant or ill etc- is there any insurance for things like this?

An IVA has to be managed by an insolvency practitioner who will charge quite a bit to set up and manage the IVA so not all the money you pay into it will go to creditors. The IVA has to be agreed by the majority of your creditors. Most IVAs last five years and any outstanding amounts are written off after that. If the IVA fails there's a possibility of being made bankrupt so that's something you need to be aware of.

gawebb99 wrote: »

a dmp would take us 9 years- this is an option. again, with our budget with stepchange, are they likely to stick to the £200 mark?

that figure would be do-able. ive heard some stories of them hiking it up the following year or so and such.

Who would hike it up? You only pay what you can afford, if your circumstances do not change you'd keep paying the same amount. Also Stepchange are just an intermediary and if you were not happy with them you could take the DMP into your own hands. The difference between an IVA and a DMP is that an IVA is legally binding while a DMP is an informal arrangement.

gawebb99 wrote: »

if its £200 or there abouts per month, we could do it easily with budgeting.

i kinda feel like i need someone to just tell me what to do. im so indecisive. one day im sure IVA is right. the next im thinking DMP.

An IVA, like a DRO, is a form of personal insolvency. That means having your affairs and your assets scrutinized by third parties and there may be some restrictions and obligations imposed on you. A DMP, on the other hand, is something you could even do yourself, i.e. fill in an income and expenditure form and offer pro-rata payments to your creditors. There is no official requirement to involve a third party, people who choose to do so do it for their own convenience.

gawebb99 wrote: »

our joint debts are almost £31K. of that, just under £15K is in my name, the rest in his. with a joint one split in the two.

i would consider going bankrupt but he would not do this at all.

sorry, rambling. i just dont know what to do

With the joint debt, your are both liable for the full amount so if one was to go bankrupt or enter into a DRO, the other party would be liable for the full amount. Each option has advantages and disadvantages. If you meet the DRO criteria, that would be a better (and cheaper) solution than bankruptcy. If you own property, then neither would be suitable.

It would help if you told us a bit more about your debts as well as your circumstances. Are you homeowners?

gawebb99

we are not homeowners. we rent from the LA. We both work although full time we are not high earners. We have two small children. We dont intend to buy a house. We have one car worth less than £1000 , more like £500. All of the debts are unsecured on a range of credit cards, loans (£1000) store cards.

fatbelly

I do a lot of DROs and they work well for those who qualify.

If you qualify, and that removes 15k from the equation, I think you should go for it.

gawebb99

fatbelly wrote: »

I do a lot of DROs and they work well for those who qualify.

If you qualify, and that removes 15k from the equation, I think you should go for it.

Hopefully once out budget has been amended I will qualify . I will try and ring stepchange again today or tomorrow to discuss this with them . Is there a guide anywhere of what is 'allowed' on each section of the budget ? Like the maximum figures ?

absolutereturn

gawebb99 wrote: »

Hopefully once out budget has been amended I will qualify . I will try and ring stepchange again today or tomorrow to discuss this with them . Is there a guide anywhere of what is 'allowed' on each section of the budget ? Like the maximum figures ?

The criteria for a DRO is set out here: https://www.nationaldebtline.org/EW/factsheets/Pages/debtrelieforders/droadvice.aspx

There are some maximum figures for expenditure known as the trigger figures but these are not published, they are used only by authorised advisors. Having said that, you can have higher expenditure in some areas if you can justify it. As an example, if you commute to London to work, your travel expenditure would be much higher than average. Some extra expenditure may be necessary for work, children's education, due to health or disability issues, etc.

National_Debtline

When you complete your budget just make sure you put down enough for you to realistically live on. If any figures are considered too high for your size of family the adviser will explain this to you and you can always reduce them at that point if necessary.


James
@natdebtline

gawebb99

thanks for the replies. unfortunately i didnt get round to ringing stepchange today.

im really going out of my mind with worries. my husband is so reluctant to sort this out, he's worried about missing payments whilst we set something up. saying what if we dont get accepted for an iva, or me a DRO or even a DMP.

i just want this sorted asap.