Which Way To Turn????

We are a married couple with two children with 47k of debt on credit cards. God knows what we are going to do we have a good monthly income of 3600 but our outgoings exceed 3200 leaving very little for any food and basic essentials. I have spoken to Debt Free Direct today and they can reduce my monthly c/cards payments from 1700 to 321 hard to beleive I know so this is why I am asking all you people out there to give me some good advice. The option that I have is an IVA.

What do you think about IVA???
Is this a good company to represent me to my creditors???

I DO NOT want to go bankrupt

Is there another option??
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Comments

  • deedee_3
    deedee_3 Posts: 891 Forumite
    Please can you post your monthly incomings, ALL your monthly bills (including things like MOT's etc.), All your CC's and loans including total balances, total limits available and % rates.I know this sounds like a bit of an intrusion but the bods on this site might be able to point out ways in which you can reduce some bills and pay off more of your debts. It's surprising what a fresh eye can do.
    Namaste DeeDee x
  • Malestrom
    Malestrom Posts: 983 Forumite
    Yes, a DMP (Debt Management Plan). You should ring CCCS or National Debtline, in the blue banner at the top of this page, and talk with them. They will be able to offer free, impartial advice on the best option for you. An IVA is generally more expensive in the short term but can save you money in the longterm as you don't have to repay all of the debt. With a DMP you generally have to pay the whole amount but it costs nothing to setup.

    I believe Debt Free Direct are a fee-based company so you pay them for their services, CCCS and National Debtline are both free and as well respected by creditors.
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
  • fatbelly
    fatbelly Posts: 20,440 Forumite
    Name Dropper First Anniversary First Post Cashback Cashier
    Debt Free direct are a highly profitable company who recommend IVAs because it's the best deal for THEM. Get independent advice (CCCS, National Debtline, CAB) to find out the best deal for YOU. There are about a dozen different strategies but your adviser will need full information about your circumstances to work out which one is best.

    Good luck - keep us posted.
  • rossie_3
    rossie_3 Posts: 10 Forumite
    Thank you for all your help.

    I have once again spoken to the CCC'S today and they refered me to Debt Free Direct as the National Debtline do not set up IVA's. They only advise, and it has got to the point now where if I don't act fast there will be creditors on the doorstep. When speaking to the DFD they assured me that the service is free and at no stage do I have to pay them any money!!! I am really grabing at straws. My mother is a financal advisor and has gone through my finances with a fine tooth comb and she first of all suggested talking to my creditors, explain the situation, and see if they would set up a verbal arrangment, none of them were the slightest bit interested and just said that they want there money. I am only one month behind on a few accounts out of 11 but it has got to the point that we are both busting our guts to earn more money and we are just seeing it disapear into a cloud of interest as we are no postion to pay off any capital we would have nothing. I would appriciate any feedback and advice from any fellow debtors and advisors as it would make me feel a whole lot better about my situation and possibly give me some light at the end of this very long tunnel.

    Kind Regards
  • fatbelly
    fatbelly Posts: 20,440 Forumite
    Name Dropper First Anniversary First Post Cashback Cashier
    Sorry, me again...

    Are you saying that the CCCS recommended an IVA as your best option? Or did you say 'I want an IVA. Can you do them?'

    You've got credit card debts, yes? Why will creditors be on your doorstep? Standard letters are the usual form of harassment.

    What are the attractions of an IVA to you and what about the disadvantages? Have a look at this for the pros and cons if you've not done so already. You say that you do not want to go bankrupt but if an IVA goes wrong, the Insolvency Practioner can make you bankrupt.

    Don't get me wrong here. I'm not saying it's a bad option. We just don't have enough info on your debts and personal circumstances to say that. I'm just not sure from your posts that anyone has taken a detached objective look at the whole picture.

    Trying to be helpful...

    P.S. (added) IVAs aren't free. There's a hefty fee built in to your monthly payment taken by the IP. They didn't tell you that?
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    rossie, sounds like I'm in a very similar situation to yourself (although I've got more debt and less income!). My household income is £2500 , unsecured debts total approx £70K. I too have been talking to the CCCS who recommended an IVA with debt free direct. I am also wondering whether it's the best option for me to be honest but don't really see an alternative (apart from bankruptcy which is the last resort obviously). In case anyone can help here's a breakdown of our main debts:-

    Tesco loan : £19K outstanding £330 pm
    Cahoot loan: £13.5k outstanding £230pm
    Barclaycard: £8500 outstanding £250 pm
    Mint c/c: £7300 outstanding £170pm
    Egg c/c: £4700 outstanding £100pm
    Goldfish c/c: £8500 outstanding £250pm
    Virgin c/c: £2500 outstanding £70pm
    Tesco c/c: £4400 outstanding £130pm

    Out normal household bills total £2000 approx, income is £2500.. hence the problem! We have approx £30k equity in our property. Currently we're not in arrears (god knows how!) but we can't keep this up any longer..

    At the moment I'm going down the IVA with debt free direct route but if anyone has any other options (apart from winning the lottery) I'm all ears...
  • Malestrom
    Malestrom Posts: 983 Forumite
    fatbelly wrote:
    P.S. (added) IVAs aren't free. There's a hefty fee built in to your monthly payment taken by the IP. They didn't tell you that?

    Fatbelly is right, taken from the Debt Free Direct website FAQ:

    10. Do I have to pay any costs?
    You pay only the affordable monthly amount you agree to. This covers both your payment to the creditors and our fees (which we will agree with the creditors). Providing you keep to the agreement for five years, any debt you can't afford to repay will be written off by your creditors.


    Yet on their front page it states:

    "Debt Free Direct finds the solution that works for you and we don't charge you for our help."

    Hmm....well thats not true then is it?! Taken from National Debtlines IVA F.A.Q:

    Fees

    All IPs will charge fees for setting up and supervising an IVA. It is very important that you shop around to make sure you are getting the best deal. Typical fees are over £4,000 and sometimes a great deal higher. Many IPs will offer an initial free meeting to look at whether an IVA is suitable in your situation. Some IPs will only accept payment of their fees up front. Other IPs will allow you to pay the fees as part of the monthly payments over the term of the IVA.


    I would read National Debtlines info about IVA's here so you know all the facts.
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
  • Bossyboots
    Bossyboots Posts: 6,746 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Malestrom wrote:

    Yet on their front page it states:

    "Debt Free Direct finds the solution that works for you and we don't charge you for our help."

    Hmm....

    Ah, but I interpret that as finding the solution is free. It doesn't say implementing it will be.
  • Malestrom
    Malestrom Posts: 983 Forumite
    zAndy1: Any idea how much DFD are proposing you pay each month to your creditors? If you have £500 a month spare then they may want all or most of this. Also, there's a good chance that after the 5 years they will want a majority share of the equity in your property which will mean re-mortgaging to free up the equity.

    If you were to pay £500 a month for 5 years, thats £30,000 and your equity is £30,000 so in effect they might take a combined total of £60,000 from you or more if your equity increases. Because you will have to remortgage to raise the equity, you will actually be paying for £30,000 (or whatever equity they take) of your debt for the life of the mortgage, which will mean that you could actually pay far more than you currently owe.

    I don't like the fact that CCCS have recommended two clients to both use Debt Free Direct, it smells fishy to me. There are plenty of Insolvency Practioners around that you could actually meet in person to discuss your IVA.
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    We haven't got that far yet, I'm just filling in the questionnaire and getting the documents together to send to them. I am well aware that they will want all of the spare £500, isn't that the idea with an IVA, you work out what you need to live on and anything left goes to pay your creditors? My wife does earn some extra in overtime but that's not guaranteed so won't be taken into account when calculating our surplus income, as long as she carries on earning some overtime we might have a chance of saving something (but if you're in an IVA do creditors have the option of taking any savings off us?). I take your point about the remortgage amount being paid over the life of the mortgage but to be honest what alternative do I have? I wonder how we'll be able to remortgage anyway since we'll have a bad credit rating at the end of the IVA and also if we are still earning approx what we are now in 5 years time (allowing for inflation) then we won't be able to afford/get a higher mortgage anyway!
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