Some Guidance Please

10past6

Hi

I’m not sure where to start or what to write here, so I’ll type as I am thinking, and trust it makes sense.

I’m trying to deal with our finances as best I can, as it stands now, we are not being chased by any creditors, although we do have huge debts, i.e. CC and personal loans.

OK, we have managed to pay our loans each month without being in any arrears, however at the end of this month I will not able to make 1 payment to a loan company.

Cut a long story short, I have been in contact with Pay plan, they have taken onboard our case, and they have done an income & expenditure, the total amount available to be spread out to our creditors is £535.00 per month, now, this is the most frightening part for us, we owe around £85.000 in unsecured debts.

I knew the figure was high, but am shocked at the amount, this built up by having consolidation loan, on top of consolidation loan, which at the time, I thought was the easiest way of dealing with our debts.

The only secured loan we have is our mortgage, and as I say, we are not in any arrears at this stage.

In the past I have experienced 2 nervous breakdowns due to various reasons, and I am afraid of this situation becoming too stressful and out of control.

Having spoken to pay plan they mentioned something about declaring ourselves bankrupt as an option, but in the heat of the moment and with the relief that someone was willing to help us, I became confused with all the details they were stating on the phone, (no fault, and no criticism of pay plan)

I asked pay plan should we go for bankruptcy, and I think they said we have to make that decision.

So, should we continue with the DMP being arranged by PP, or should we go for bankruptcy?

Our property is worth around £125.000, outstanding balance around £78.000.

We are both in full time employment, my salary is around £18.000, and my partner’s salary is around £16.000.

I trust my post makes sense, and I apologise in advance for my long post, just being able to type out my thoughts is some relief.

Any assistance would be a great help.

tigerfeet2006

Sorry to hear about your situation. It is horrible when things seem to be getting away from you, but you are doing the right thing by seeking to break the cycle and getting things sorted. There is some really great support here so keep posting.

BAAB good to see you around

backontheup

Almost certainly an IVA would be best for you at the moment. Contact Payplan or an independent insolvency practitioner to arrange this - try and avoid the 'ambulance chasers' advertised on TV

As an aside on the IVA issue, when I was considering this as an option before going BR I found a very very nice IVA practitioner, who wasnt dressing up the situation behind such superlatives as 'a little known piece of government leglislation' and 'write off up to 75% of your debt'. She told me simply that her fees were £3000 and the best way to IVA was to offer a lump sum on the table there and then for the creditors.

debt_doctor

Hi, Have to say this is a real tough one. There is no clear way for us to say what may be best. I agree with the points made above in most respects and feel that all we can do is point out what the options are and what they mean, so here goes.......

DMP the object of a debt management plan is to repay all of your outstanding debts over a period of time. I calculate that without fee's etc it would take about 13 yrs to pay off, although it is possible after a few years to ask for full and final settlements, which may or may not be accepted, and you would have to have a lump sum to offer. A DMP is not legally binding, and any creditor can take further action against you at any time.

An IVA is a legally binding agreement with your creditors that you will pay some, and possibly all the money you owe your creditors in either a lump sum or monthly payments of 60 months plus equity release in the final year.
I attended a meeting with the marketing manager of payplan some weeks ago ( I had previously thought they were a not for profit charity, but they are in fact a commercial organisation ) Their manager told us that they expect 75% of the equity in the property on the day the IVA starts to be released in the final year ( in your case that is £ 35000 ) the manager also went on to say that they have agreements with lenders who will alllow the equity release on payplans proof of 60 months of 'on time payments'

I have to say I found this quite scary,:eek: and in future will be far more careful of refferring to payplan when clients have large equity.

Bankruptcy - If you declare bankruptcy you will almost certainly lose your home and will get an income payments order for 3 years, the amount being paid back based on payplans surplus income would be around £ 13000.

To sum up ;

DMP 13 yrs, paid in full, no legal protection from creditors.

IVA 5 yrs plus equity release, legally binding ( if creditors agree your plan ) total cost approx £ 67 000 plus on going cost of equity release loan from year 5 onwards.

Bankruptcy - Discharged after 1 year but IPA for 3 years, total likely cost, loss of home and £ 13 000 over 3 years.

Sorry that this is very clinical but I want you to have the full facts. Please post any further questions or points you wish to raise, or the option you feel might be best, and we will go through this with you.

Another option of course may be to sell the property and private rent. You could then offer some of the equity as full and final settlement or a lump sum IVA .This may leave you with non of the above long term payents and some spare cash.

Also, I would welcome comments from everyone on what the payplan manager said. Is this the experience of others who have an IVA with payplan ?

Best

DD

fermi

debt_doctor wrote: »

I have to say I found this quite scary,:eek: and in future will be far more careful of refferring to payplan when clients have large equity.

That's something I seem to remember hearing quite a lot about IVA's in general, and not just the PayPlan organized ones. But I haven't done enough reading on IVA's to be sure.

I don't suppose you've had any feedback on the new CCCSVA setup?

http://www.cccs.co.uk/media/Article.aspx?ArtID=PR20070413

EDIT: Sorry to go off topic OP.

debt_doctor

Hi Fermi, no I have nt, but im going to make it my business to find out !! - will post when I know something.

Homework

It is hard to make a decision when everything is building up and looking scary. I would talk to payplan again with a paper and pen and ask them questions about each option. I would then sit down with your family or friends going through the options (if you want them to help) and then go to Citizens Advice or Money Advice place at the council and go through it. Make notes as you go and then make a decision you are in control of. Being in control is important as it will help you mentally feel you have been involved in the decision and not pushed over a barrel.
Whatever happens good luck to the start of your new life. Dealing with the debt you have will make you in the long term less stressed and happier. Living with the debt and the beginning of getting rid of it are the hardest times.

10past6

Hi Folks

Thanks for everyone’s tome and dedication, very much appreciated.

There is quite a lot of information for me to digest, and not being that intelligent regarding some of the advice, I’m still trying to understand the implications of each decision.

That being said, someone asked how long PP said it would take to clear, PP advised me 12 years.

Also, another member posted this ”I attended a meeting with the marketing manager of pay plan some weeks ago ( I had previously thought they were a not for profit charity, but they are in fact a commercial organisation”

I also believed PP were a non-for profit organisation, which was my min reason for choosing them, as they are a commercial organisation, will this have any effect on my situation?

I will post back again soon; in the meantime, may I personally thank everyone for giving up your free and valuable time in assisting people like me.

Dr_Hook

10past6 wrote: »

I also believed PP were a non-for profit organisation, which was my min reason for choosing them, as they are a commercial organisation, will this have any effect on my situation?

AFAIK the IVA division of Payplan (The Payplan Partnership) is a separate entity and does charge fees. The DMP side (i.e. Payplan 'proper') doesn't charge fees & is funded by donations from the credit industry.

10past6

Hello Folks


I have taken a few days to digest the advice / information offered within this thread.


We have now come to the conclusion we will stick with a DMP via PP.

“DMP 13 yrs, paid in full, no legal protection from creditors.

IVA 5 yrs plus equity release, legally binding ( if creditors agree your plan ) total cost approx £ 67 000 plus on going cost of equity release loan from year 5 onwards.

Bankruptcy - Discharged after 1 year but IPA for 3 years, total likely cost, loss of home and £ 13 000 over 3 years”

Bankruptcy, we don't believe is an option, as we do not want to lose our home.


Neither do we believe an IVA would be suitable to us.


That leaves us with a DMP, which we believe will work, I'm not to sure, but when our mortgage deal is up for renewal in 18 months time, we may be able to re mortgage and release some funds in attempt to clear some of the debts.


I thank you all for your advice and guidance.


Much appreciated.

betterlatethannever

Thanks for the up-date. This is an example of someone using the information from all sources and working out what is best for THEM
I wish you all the best of luck