DMP or IVA?

sammyjo1979

Hi, I was wondering if someone would be able to offer any advise. I added up all my debts today and they totalled just under £22k
I have rang MBNA who have put me on some sort of plan where they have set the payment at £190 per month which I'm assuming I need to default on? Barclaycard have frozen the interest for a couple of months and I've yet to speak to Tesco. I am just confused how all this works and if this is actually the best option for me or if I should be looking at an IVA instead (I don't own my own house). I work part time but do earn an okay wage. I get tax credits and child benefits and my husband is currently on ESA. Please could anyone offer any advice

sourcrates

Hi,

A statement of affairs will tell us more, depends on your circumstances:

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

sammyjo1979

I think i've filled this in right. The benefits are tax credits, not sure if i've put that in right place but pretty sure it doesn't make much difference. Thank you.

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 974
Partners monthly income after tax....... 500
Benefits................................ 500
Other income............................ 0
Total monthly income.................... 1974

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 35
Gas..................................... 43
Oil..................................... 0
Water rates............................. 31
Telephone (land line)................... 0
Mobile phone............................ 27
TV Licence.............................. 13
Satellite/Cable TV...................... 68
Internet Services....................... 0
Groceries etc. ......................... 340
Clothing................................ 100
Petrol/diesel........................... 125
Road tax................................ 21
Car Insurance........................... 32
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 20
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 6
Buildings insurance..................... 0
Contents insurance...................... 11
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 25
Entertainment........................... 25
Holiday................................. 50
Emergency fund.......................... 40
Total monthly expenses.................. 1837


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 400
Other assets............................ 0
Total Assets............................ 400

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
mbna...........................5305......190.......0
barclaycard....................8670......130.......18.9
santander......................1790......40........0
tesco..........................6150......140.......22
Total unsecured debts..........21915.....500.......-


Monthly Budget Summary
Total monthly income.................... 1,974
Expenses (including HP & secured debts). 1,837
Available for debt repayments........... 137
Monthly UNsecured debt repayments....... 500
Amount short for making debt repayments. -363

Personal Balance Sheet Summary
Total assets (things you own)........... 400
Total HP & Secured debt................. -0
Total Unsecured debt.................... -21,915
Net Assets.............................. -21,515

sourcrates

If you could get your debts below the 20k Mark, by paying off a bit more of it, re-jig the budget, as with two kids, you can easily add another £100/quid to it, you would possibly qualify for a debt relief order.

Craig1981

gas, electric, groceries for 4 people seem to be own the low side
no amounts for parking either. other child expenses like school meals and school clothes?

best option as said, try get below the £20k mark and do a DRO. if DRO and Bankruptcy not an option, then IVA over DMP

fatbelly

I agree that you could add £100 to your budget without anyone blinking an eye.

But to get a DRO you will need to pay £2000 (to get the debts down) plus £90

Bankruptcy is a straight £680 and you stand a good chance of keeping a £400 car

An IVA is just about possible on your budget but seems to have the fewest advantages of those three insolvency solutions.

A DMP is going to take too long at your surplus level. You can't even afford the MBNA payment that you have agreed to.

sammyjo1979

With an IVA, do they tell you how much you have to pay monthly? It just all seems very confusing. I feel as though I should have an IVA to try and pay back what i've had rather than it being all written off. With the DRO, am I right in thinking that for the first year you don't pay anything and then if your situation hasn't changed it'll be written off? But surely if you aren't paying your debts you will be better off? Have I got this very wrong?

sourcrates

sammyjo1979 wrote: »

With an IVA, do they tell you how much you have to pay monthly? It just all seems very confusing. I feel as though I should have an IVA to try and pay back what i've had rather than it being all written off. With the DRO, am I right in thinking that for the first year you don't pay anything and then if your situation hasn't changed it'll be written off? But surely if you aren't paying your debts you will be better off? Have I got this very wrong?

DRO has a monotorium period of 12 months, you make no payments.
After the 12 months are up, all your debts are written off, as long as your circumstances have not changed.

You do not really have sufficient disposable income to have an IVA, they have a formula for working out what is acceptable.

Bankruptcy would be more expensive, but is an option.

sammyjo1979

sourcrates wrote: »

DRO has a monotorium period of 12 months, you make no payments.
After the 12 months are up, all your debts are written off, as long as your circumstances have not changed.

You do not really have sufficient disposable income to have an IVA, they have a formula for working out what is acceptable.

Bankruptcy would be more expensive, but is an option.

Thank you for this. With a DRO though, with not paying my debts each month, i'll have that money, around £400. Does that just become mine? I'm so confused sorry.

sammyjo1979

fatbelly wrote: »

I agree that you could add £100 to your budget without anyone blinking an eye.

But to get a DRO you will need to pay £2000 (to get the debts down) plus £90

Bankruptcy is a straight £680 and you stand a good chance of keeping a £400 car

An IVA is just about possible on your budget but seems to have the fewest advantages of those three insolvency solutions.

A DMP is going to take too long at your surplus level. You can't even afford the MBNA payment that you have agreed to.

Would I not need to default on a DMP? I've read up on stuff but just feel very confused with it all? How does a DMP work? You pay a monthly sum that is then distributed between my creditors? Won't it default on all but at least i'll be paying something? I guess I need to speak to SC. Hate not know what is the best thing to do

sourcrates

sammyjo1979 wrote: »

Thank you for this. With a DRO though, with not paying my debts each month, i'll have that money, around £400. Does that just become mine? I'm so confused sorry.

Your budget is too lean, it could easily account for your full income.

You do not have £400 left after debt repayments, your £363 in the red. add that £137 to your budget shortfall, and you have nothing for debt repayments.

To qualify for a DRO you would need your debts to be under 20k anyway, so presently it’s not an option.