IVA or DMP

Missrcj

Hello

I am new to this but have been reading some threads and can see useful replies.

I am 38, single, live in rented accomadation and have no children.
I went back to university to retrain and am now a qualified Speech and Language Therapist. When I was younger I went to university in 1997 but didn’t take it seriously and just racked up student debt (loans amounting to around 12k). This has gone to Erudio.
When I went back to retrain I tried to apply for a second student loan and they said I couldn’t as I had this previous debt and that instead i had to pay that back. So I have been paying it back for 4 years, so far at the minimum amount each month. I got an NHS bursary which just covered my rent and the NHS paid my fees so in that sense I was lucky. I worked all through uni as I didn’t get a loan so literally anything aside from rent and fees I needed to cover with my wages. Even though my contact hours were 35 hours a week in uni and obviously I had assignments etc on top of that I worked as well. It was exhausting but I did it.
I have never not worked and in my final year I was working as a teaching assistant on my days off from uni and continued doing this until lectures finished when I went full time. I gained a job as a Speech Therapist less than a month after finishing uni and went straight from working as a teaching assistant to working as a Speech Thrrqoist - finally earning a semi decent wage.
I suppose what I’m trying to say is that I have always worked. Sometimes holding down three jobs at a time.
However, life on the minimum wage is hard and I occasionally took out a small pay day loan. Only for short amounts of time and I always paid them back.
It was really once I started working that all my debt troubles really began. I live in Manchester but got a job in Chester so I needed a car. I took out a loan from the AA AA -2500- and bought a car for 1500, the rest I used to put the deposit down on the insurance, get to work in the interim and just general life stuff.
I took 3 weeks unpaid holiday as I’d previously saved for a booked a holiday (my first in 4 years) to celebrate finishing university. I know now this was a mistake as I struggled for a few months to get back on top of my wages. On top of that my car kept breaking down. I took a credit card to pay 300 for repairs. The man I bought it from took no responsibility and had only given me a month warranty.
After several trips to the garage and more money spent on it the main advice was to get rid as the work needing doing would cost over 1000. I part exchanged it with VW got a newer car on PCP but lost 900 of the value of my old car plus I was still paying off the loan. I should have got a car on PCP in the first place because I drive around 90 miles a day.
Anyway, now I had two car payments and a credit card to pay for. I ended up getting more expensive pay day loans as I wasn’t still able to pay them back each month but I was literally borrowing, paying them back at the end of the month and then because of petrol etc needing to borrow more.
My employer then told me my contract would be ending that July instead of January- as they’d told me in my interview. Again I had interviews and got a new job with the NHS before my role had ended. However, I finished my job in July but because HR process take so long in the NHS I ended up waiting for nearly 3 months before my new position started. In that time I had to pay rent, two car payments, credit cards and payday loans so as you can imagine I ended up borrowing more. I did agency work but only got work here and there and again mainly min wage stuff.
Now I am employed by the NHS but couldn’t afford the juggling of all my debts. I contacted Stepchange who have helped me out with a budget. However they have made me include my loans to Erudio (student loans) and since they have added that my option are an IVA or a DMP which will take over 15 years to pay off.
I’m 38 and want to think about a home, family etc but I feel I can’t as ill be forever paying off my debts. Their recommended option for me is the IVA which is appealing as it’s shorter but I am worried they’ll take my car on PCP off me. I drive 70 miles a day now to Liverpool and back but also drive around during work as I am community based and visit different schools etc. I get stuck in heavy traffic and drive a lot so I need my reliable car.
The DMP seems appealing too but it’s just so long and after I’ve been struggling throughout uni for 4 years I can’t bear the thought of everything I owe going to debt plans for 15 years and not having any holidays etc.
Sorry for the incredibly long winded message but this is my situation and I wanted to explain it all.
Any thoughts on which would be best for me?

Pixie5740

Missrcj wrote: »

Hello

I am new to this but have been reading some threads and can see useful replies.

I am 38, single, live in rented accomadation and have no children.
I went back to university to retrain and am now a qualified Speech and Language Therapist. When I was younger I went to university in 1997 but didn’t take it seriously and just racked up student debt (loans amounting to around 12k). This has gone to Erudio.

When I went back to retrain I tried to apply for a second student loan and they said I couldn’t as I had this previous debt and that instead i had to pay that back. So I have been paying it back for 4 years, so far at the minimum amount each month. I got an NHS bursary which just covered my rent and the NHS paid my fees so in that sense I was lucky. I worked all through uni as I didn’t get a loan so literally anything aside from rent and fees I needed to cover with my wages. Even though my contact hours were 35 hours a week in uni and obviously I had assignments etc on top of that I worked as well. It was exhausting but I did it.

I have never not worked and in my final year I was working as a teaching assistant on my days off from uni and continued doing this until lectures finished when I went full time. I gained a job as a Speech Therapist less than a month after finishing uni and went straight from working as a teaching assistant to working as a Speech Thrrqoist - finally earning a semi decent wage.

I suppose what I’m trying to say is that I have always worked. Sometimes holding down three jobs at a time.

However, life on the minimum wage is hard and I occasionally took out a small pay day loan. Only for short amounts of time and I always paid them back.

It was really once I started working that all my debt troubles really began. I live in Manchester but got a job in Chester so I needed a car. I took out a loan from the AA AA -2500- and bought a car for 1500, the rest I used to put the deposit down on the insurance, get to work in the interim and just general life stuff.

I took 3 weeks unpaid holiday as I’d previously saved for a booked a holiday (my first in 4 years) to celebrate finishing university. I know now this was a mistake as I struggled for a few months to get back on top of my wages. On top of that my car kept breaking down. I took a credit card to pay 300 for repairs. The man I bought it from took no responsibility and had only given me a month warranty.

After several trips to the garage and more money spent on it the main advice was to get rid as the work needing doing would cost over 1000. I part exchanged it with VW got a newer car on PCP but lost 900 of the value of my old car plus I was still paying off the loan. I should have got a car on PCP in the first place because I drive around 90 miles a day.
Anyway, now I had two car payments and a credit card to pay for. I ended up getting more expensive pay day loans as I wasn’t still able to pay them back each month but I was literally borrowing, paying them back at the end of the month and then because of petrol etc needing to borrow more.

My employer then told me my contract would be ending that July instead of January- as they’d told me in my interview. Again I had interviews and got a new job with the NHS before my role had ended. However, I finished my job in July but because HR process take so long in the NHS I ended up waiting for nearly 3 months before my new position started. In that time I had to pay rent, two car payments, credit cards and payday loans so as you can imagine I ended up borrowing more. I did agency work but only got work here and there and again mainly min wage stuff.

Now I am employed by the NHS but couldn’t afford the juggling of all my debts. I contacted Stepchange who have helped me out with a budget. However they have made me include my loans to Erudio (student loans) and since they have added that my option are an IVA or a DMP which will take over 15 years to pay off.

I’m 38 and want to think about a home, family etc but I feel I can’t as ill be forever paying off my debts. Their recommended option for me is the IVA which is appealing as it’s shorter but I am worried they’ll take my car on PCP off me. I drive 70 miles a day now to Liverpool and back but also drive around during work as I am community based and visit different schools etc. I get stuck in heavy traffic and drive a lot so I need my reliable car.
The DMP seems appealing too but it’s just so long and after I’ve been struggling throughout uni for 4 years I can’t bear the thought of everything I owe going to debt plans for 15 years and not having any holidays etc.

Sorry for the incredibly long winded message but this is my situation and I wanted to explain it all.

Any thoughts on which would be best for me?

I'm a bit surprised that Step Change have recommended an IVA given that you're not a home owner. I would have thought bankruptcy would be a better a option for someone in your position. As for a 15 year long DMP that just sounds grim.

If you do opt for a form of insolvency then you can still have a car if it's necessary for getting to work etc it's just that you can't have a "high" value car.

Could you fill in a statement of affairs so that we can see where you're at?

http://www.stoozing.com/calculator/soa.php

National_Debtline

Hi Missrcj and welcome to MSE,


First of all, well done on completing your course, it sounds like that was a tough time. With regard to your debts and whether an IVA or DMP would be better, other posters will need to know your total debt level and a SOA would also go a long way to giving you more guidance. You can find the sticky for the SOA here - http://www.stoozing.com/calculator/soa.php


With regard to your car and an IVA, the first thing I would suggest is you check the terms and conditions of the PCP agreement. If there is an insolvency clause, then the car agreement may be terminated if you enter into an IVA (or go bankrupt). If that is the case, and a car is essential for you, then it would effectively rule out an IVA as an option. If this clause does not exist within the contract the payments should be able to carry on, but don't forget your IVA will be reviewed every 12 months. And once the car payments are finished, that money will be paid into the IVA as extra.


Also, from the 6th April 2010 student loan debts are excluded from IVA's as it is intended to mirror the position of bankruptcy. So, if you did an IVA, the student loan debt would still need to be repaid in full. Whereas if you did a DMP, all of the debts are repaid in full, and I would imagine the student loan debt would get a proportional amount of the surplus in the same way as the payday loans.




Laura
@natdebtline

Missrcj

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1394
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1394

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 340
Management charge (leasehold property).. 0
Council tax............................. 60
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 27
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 160
Clothing................................ 30
Petrol/diesel........................... 200
Road tax................................ 2
Car Insurance........................... 88
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1112


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 147......(0)........0
Total secured & HP debts...... 147.......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Tesco credit card..............292.63....0.........0
Barclaycard....................1174.76...0.........0
AA loans.......................1175.34...0.........0
Erudio Student Loans...........9756.05...0.........0
Good energy ...................120.......0.........0
Quickquid......................432.08....0.........0
Sunny..........................643.14....0.........0
Wonga..........................535.68....0.........0
Total unsecured debts..........14129.68..0.........-


Monthly Budget Summary
Total monthly income.................... 1,394
Expenses (including HP & secured debts). 1,112
Available for debt repayments........... 282
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 282

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -147
Total Unsecured debt.................... -14,129.68
Net Assets.............................. -14,276.68

Missrcj

Hello. Thank you for getting back to me. Above is my SOA.
Thanks for any help or advice .

Pixie5740

What are the contractual minimum repayment amounts and interest rates of your debts? I'm guessing that the repayments come to more than £282 a month.

There are two adults in the household but only one income. Is that because the other adult does not work or is it because you have just split the bills in two i.e. total rent is £680 so your half is £340?

If you ended up in a pay day loan cycle it might be possible to reclaim money back from the pay day lenders you used if you can demonstrate the loans were unaffordable at the time.

Reclaiming money back from various payday loan companies

Pixie5740

Most pre-1998 student loans were sold to Erudio to manage. Your income is below the repayment threshold of £29,219 so should you be repaying your student loans? Do you no longer have the option to defer payments?

National_Debtline

Hello again,

This is just a quick observation that your final figure of £282 does not actually take the car payments into consideration. After you deduct the £147 payment for the car from £282 you will actually have £135 per month for the debts. I agree with Pixie5740 that it would be helpful to know if this is a sole budget because the other person isn't working if your expenses are 50% of the expenses. Do they earn exactly the same as you? Is this a proportional split of the bills?


With a £135 surplus a DMP would take just over 8.5 years, whereas the IVA is for 6 years (but, bearing in mind what I said earlier about the student loan). If you are still able to defer that, then that is something to consider as it would change the scope of your options quite a bit. Is deferment on the student loan still an option?


Laura
@natdebtline

Missrcj

Hello
Thank you. I can’t defer the student loan as it has past its maturity. I have asked them but it got declined.

I live with a housemate so we split the bills etc. So yes my rent is 340 it’s 680 for the house. I don’t know whether to put her on as obviously what she earns doesn’t help towards my debts but the SOA asked.

Thanks for your help so far.

Pixie5740

Missrcj wrote: »

Hello
Thank you. I can’t defer the student loan as it has past its maturity. I have asked them but it got declined.

I don't understand what that means. As long as you earn under the annual threshold you are well within your rights to defer payments. Did you at some point in the past forget to apply for deferment and now your student loans are in default?

Missrcj wrote: »

I live with a housemate so we split the bills etc. So yes my rent is 340 it’s 680 for the house. I don’t know whether to put her on as obviously what she earns doesn’t help towards my debts but the SOA asked.

Thanks for your help so far.

That makes more sense. There are two adults living in the property but each forms a separate household in terms of finances.

Missrcj

Hello
Sorry yes that’s what I meant. My loans are in default.

I have been speaking with someone from Money Advisor and he seems to think an IVA is my best option and that it should be possible with Erudio. It actually seems like the most positive outcome. Hopefully I will hear back from him today.