Can I trust Stepchange's recommendation for deby repayment

m00npig

Hello,

I managed to accrue a debt of ~£55000 before I realised it was no longer manageable! I worked with StepChange in the Summer and received great service. Their recommendation was to enter in to a DMP. After the number crunching it was decided I have £313 per month to pay in to the DMP, which is just about manageable, but the depressing fact is that this will see me debt free in 2033!!

I have seen a few comments on this forum asking people if they want to enter a DMP for several years. Mine is 15 years, pretty much the rest of my working life, and I am wondering if StepChange would have recommended me for an IVA if that made more sense. I know they pass you on to another division but it was never offered. I think the issue is that I have a lot of equity in my house (£50000 mortgage balance over around 8 years and property probably valued around £450000). I know that makes bankruptcy a no go but if I have to remortgage at the end of the IVA that seems a more sensible and timely solution for me.

I know I can speak to Stepchange but was interested to get a third party view plus they're hard to speak to out of business hours once the DMP is set up.

Many thanks

fatbelly

I'm surprised that the pros and cons of an IVA were not even discussed (not even in their confirmation of advice letter?) - that seems to go against the guidelines that they have to work to (CONC8).

If that is the standard of their advice maybe you should discuss it with someone else.

£313 per month is perfectly do-able for an IVA and would see you complete probably after 6 years.

At least the DMP does give you time not to be rushed into one.

m00npig

You're quite right. I started the DMP six months ago and had forgotten some of the finer details. StepChange did mention an IVA as an alternative but said "An IVA is not our recommended debt solution but it is a solution that is available to you and something you may want to consider." I also got it wrong that they can help with an IVA. It's bankruptcy that they have a team for but cannot help with IVAs so maybe that's why they don't recommend it.

Any thoughts on whether they don't recommend it with my best interests in mind or because it isn't something they can help with?

Pixie5740

Who knows? Maybe it's because if an IVA fails you'll be forced into bankruptcy. You could always ask Step Change. 15 years does seem like a helluva long time to be paying a DMP so maybe an IVA would be better in your circumstances. You could always contact National Debtline or PayPlan to see what they recommend for your situation.

Willing2Learn

I think you really need to consider whether paying a DMP over 15 years is doable. Will you honestly be able to keep to your DMP budget for that length of time? Is the £313 DMP budget a very tight one for you to keep or will it be easy?

sourcrates

It’s all about your disposable income, if you have £300 available per month, then a 6 year IVA is much more preferable than a 15 year DMP.

Normally at year 5, you would have to remortgage, but with an IVA on your credit file, and the associated defaults, it’s unlikely you would be accepted, thus a further year of payments is the norm, making it 6 in total.

Speak to National Debtline, see what they say.

theoretica

sourcrates wrote: »

It’s all about your disposable income, if you have £300 available per month, then a 6 year IVA is much more preferable than a 15 year DMP.

Normally at year 5, you would have to remortgage, but with an IVA on your credit file, and the associated defaults, it’s unlikely you would be accepted, thus a further year of payments is the norm, making it 6 in total.

There is so much equity in the property that there is some risk of lenders looking more favourably on a remortgage. This would be something to discuss when getting advice on your options.


I doubt your DMP will take 15 years if you choose to stay on it - as your situation changes what you can afford to pay will change too and you may be able to get lower final settlement figures for some of the debts. Hopefully you will get some payrises in this time. You mention you have only 8 years left on the mortgage, which would then let you get rid of the other debt faster.

m00npig

Thanks for all of your responses. I think I will seek an opinion from National Debtline if only because it's tough to speak to Stepchange when you commute in to London, work in an open plan office and they only open for existing customers Mon-Fri, 8-6. The point about the mortgage is a good one. If I use the £706 I currently pay for that when it ends for the DMP it does bring it down by five years!!

BTW I just wanted to say what a great community you have here. I wish I'd found it sooner. Looking through some of the other posts I see some great, non judgmental advice and reassurance that we aren't alone in our stresses and worries. Great work.

Thanks