Tricky situation need advice please.

kelv1984

Hi All,

I am in a situation and need some advice on the next step.

ok so I owe the following,

WITHOUT LISTING ALL creditors TOTAL Debt is = £62181.65 as of May 1st.

THIS IS MADE UP OF UNSECURED DEBT. LOANS, CC'S AND OVERDRAFTS.

I AM CURRENTLY ON A DMP WITH STEP CHANGE.

My salary is £1200 per month so I pay £240 per month to step change towards my debt after other bills etc.

Also I owe a family member £40000. (Not included in the Dmp)

So Total Debt is £102181.65

ASSETS I OWN.

PROPERTY FLAT £180000 (NO MORTGAGE OR LOANS)
SAVINGS ACCOUNT £4000

I've been promoted at work and will be on £40k per annum from September this year. RE £2600 per month net.

So just some advice needed as I'm thinking of using some equity from flat to pay off debts.

But as I bought the flat under the right to buy scheme only two years ago I will have to pay a large chunk back to local council if I sell. but year 2020 I will be free of this restriction.

any ideas or advice will be greatly appreciated.

fatbelly

I wouldn't move unsecured debt to secured

Sometimes a dmp is the least worst option. However, you are moving into the area where an IVA might work.

Have stepchange mentioned this?

kelv1984

Thanks for your reply yes step change did mention it but advised to stay on Dmp.
as IVA wasn't applicable as my debts are lower then my assets.

EssexHebridean

Congratulations on your promotion, that's great news! I take it that is 100% definite, you've had confirmation in writing etc?

I'd start now to put together a new SOA - once your salary increases are you planning to save the extra money towards F&F settlements? Either way, do NOT look to convert unsecured borrowing to secured - consolidation of any type is rarely a good plan but that way lies madness.

National_Debtline

Hi kelv1984

Great news on the promotion, well done! I would also suggest starting with a new SOA based on your promotion http://www.stoozing.com/calculator/soa.php. If your outgoings remain the same as they are now you will have a considerable amount of extra money that you can afford to pay into the DMP, drastically reducing the current term.

You can work out the term of a DMP by taking your total level of debt, dividing it by the amount of money you can afford to pay each month, and then dividing that figure by 12.

You certainly need to be very cautious about using equity in the flat to pay off your debts. Once a debt is secured, your home will be at risk if you cannot keep up repayments. You would also need to consider the costs involved because of the right to buy scheme.

Susie
@natdebtline