Scared newbie looking at IVAs

Smiley80

Hi everyone
I have found comfort in reading other threads and knowing that there are others in this situation.
I have somehow managed to accrue debts of 95k on various credit cards, personal loans. We were abke to maintain by using 0% offers to balance transfer only to then spend on the cards again. We have 4 'debt consolidation' loans which have not helped as once again life demands and credit cards come to the rescue.
I feel extremely ashamed of how much debt we are in and how it has got out of hand. We both work and always have, and have always managed to meet all payments (albeit minimum payments).
Over the years, our spending hasn't been out of control, it all began on my first maternity leave, and when my child started nursery I remember putting the first months childcare on credit card. I had no other option.
I guess what i am after on here is compassion and a few questions answered....
We own our own home with a mtg of 145k....value 215k. I have looked at secured loans but this will not help us.
Our 95k debt is now costing us 1780 a month. 4 loan payments and all minimum payments on credit carda. We had a few on 0% but have all now expired and the payments gone sky high.
Our joint monthly take home is 2890. After paying all household bills 1230 and the debt 1780. We have NOTHING left. I have literally been living off credit to pay basics. It obviously can't continue like this and I have to face up to it. I have done a debt remedy with step change and will be calling them tomorrow but would like some advice from people who have been through this....going through this.
So. Question 1. Do i start defaulting on our payments to build an emergency fund? Most come out on the 1st....and I could cancel all my direct debits and put the money aside....is this frowned upon or do they expect accounts to be in arrears??
2. We have a mortgage but don't want to touch it. We understand that 5th year we may be asked to reportage and we will have to deal with it then.
3. For all those who's situation is similar....was an IVA the right thing to do? Has it helped?
4. Lastly. My parents would be able to help financially. They have done in the past with a consolidation loan (which I paid them back) but I am absolutely terrified of telling them. They would be so disappointed. And I'm worried the cycle woukd just continue.

Apologies for the long post.....getting it all off my chest is helping!
Looking forward to hearing yojr comments and any advice gratefully received. Please be nice.....ive spent a long time beating myself up over this.

Rosie64

Hi Smiley80, It seems we are living with the same worries and I'm sure we are two of many!. We have very similar debt and have had to juggle credit cards for some years. It's now at a point where we are only just paying the interest accrued each month and see no end to the debt. We have spoken with a company called Pay Plan and although they have been very helpful, we are now speaking with Step Change. We cannot decide what is best either IVA or Debt Management as IVA seems so drastic ...... I also look forwards to any advice as the thought of having to remortgage at the end of 5 years is rather worrying. I'll be 59 by then!

sourcrates

Hi,

The cycle of borrowing, then consolidating, must stop, it simply cannot continue forever, I think you realise that.

With that amount of debt, there are really only two choices :

(1) Bankrupcy
(2) IVA

In your case, as a homeowner, an IVA is the option you should choose, basically in bankrupcy your house is at great risk, in an IVA it isn’t.

Emergency fund is a good idea, you will need it, make sure you budget correctly for every little thing, a lot of these arrangements fail because people don’t budget enough for things, if in doubt, make your figures higher rather than lower, they can always be adjusted later.

Next, get as much information on IVA’s as possible, then when the time is right, approach one of the free debt charities for anything you don’t understand.

All IVA’s are set up by an insolvency practitionaire, and they all charge varying fee’s which are included in your monthly payment, look for a recomended IP, there is a list on the National Debtline website.

Lastly, good luck.

PrettyKittyKat

An IVA certainly does sound like the right option for you, as you have a property to protect.

I also think that the strict budgeting required of an IVA will be a steep but necessary learning curve for you. You say that you have always used credit to subsidise your living costs, therefore it is essential that you overhaul your lifestyle completely, as it seems you are living a lifestyle you can not maintain. This will be extremely important to ensure the IVA is successful also, and that you are then able to continue without getting yourself back into debt afterwards. Start this now, and put the money you save into a savings account as you say.

5 years may seem a long time now, however if you look at the bigger picture with that amount of debt, 5 years isn't that long. Yes your equity will be assessed after 4 years, it is significant currently, however who knows what it will be in 4 years it could be alot more of alot less! Options at the time may be an extra year of payments, or releasing the equity to pay into the IVA up to 85% loan to value. But your property is protected and still YOURS.

SAnon1990

Hi, I am also looking for help. Here’s my story, at the ripe age of 18 and being offered all kinds of credit I started the downward spiral and got into all kinds of debt up to around 2k worth and avoided it as I couldn’t afford to pay it back. 6 years on I changed my name back to my name at birth so I now have a different surname. All I well on experian for my credit report however I logged in to equifax and realised that last week I have acquired a ccj for a debt in my previous name nearly 9 years old. Equifax seems to know everything in regards to previous name and address. Experian however don’t and the difference in credit score between the two is massive. I have just had a formal mortgage offer and I’m frightened if they pull my file they will see a ccj. I have been informed I have 3 weeks left to pay it off in which case it will be removed from my file as you have a month to clear a ccj in full to get it taken from your file. This isn’t a problem as it’s only £400 but I’m scared that if I do it’ll open a can of worms as to linking me to my previous name and address. Any advice??

fatbelly

SAnon1990 wrote: »

Hi, I am also looking for help. Here’s my story, at the ripe age of 18 and being offered all kinds of credit I started the downward spiral and got into all kinds of debt up to around 2k worth and avoided it as I couldn’t afford to pay it back. 6 years on I changed my name back to my name at birth so I now have a different surname. All I well on experian for my credit report however I logged in to equifax and realised that last week I have acquired a ccj for a debt in my previous name nearly 9 years old. Equifax seems to know everything in regards to previous name and address. Experian however don’t and the difference in credit score between the two is massive. I have just had a formal mortgage offer and I’m frightened if they pull my file they will see a ccj. I have been informed I have 3 weeks left to pay it off in which case it will be removed from my file as you have a month to clear a ccj in full to get it taken from your file. This isn’t a problem as it’s only £400 but I’m scared that if I do it’ll open a can of worms as to linking me to my previous name and address. Any advice??

You need to start your own thread as your situation is very different from the original poster here.

Post on the debt-free wannabee forum

Rosie64

Hi Sourcrates, Why will a Debt Management Plan not work? The current situation in our case has been that we have been paying our credit cards until this point, however now the monthly minimum payments we can afford are only paying for the interest on the credit cards and a little extra, which makes no difference to the balance. At this rate it will take me 35 years to pay some of them off. If they would agree to freeze the amount we owe, and allow us to pay them off interest free, then they would eventually become manageable.

sourcrates

Rosie64 wrote: »

Hi Sourcrates, Why will a Debt Management Plan not work? The current situation in our case has been that we have been paying our credit cards until this point, however now the monthly minimum payments we can afford are only paying for the interest on the credit cards and a little extra, which makes no difference to the balance. At this rate it will take me 35 years to pay some of them off. If they would agree to freeze the amount we owe, and allow us to pay them off interest free, then they would eventually become manageable.

Hi,

My post was aimed at the original poster, it keeps things a lot less confusing if you start you own thread, otherwise chaos ensues !!

Post on the Debt free wannabe forum and I can answer you there.

Smiley80

Thank you all for your responses.