Looks like an IVA each, really nervous about how to proceed

Naf

Not so much nervous about the procedure around the IVA itself, but about the fact that we need to pay for a bunch of stuff now and across the next 9 months; and what happens after that.

We've been teetering on the edge a bit for a while, paying down then having to spend again, but the discovery that we're expecting again (unplanned, but I'm done panicking now... mostly) has made it inevitable; so may as well get on with it sooner rather than later. As things stand we are up to date with all of our payments on everything, though I think we're going to have to prioritise some things (car repairs, car insurance, maternity wear...) over at least some payments from this month onwards. Part of me feels like just stopping all debt payments right now...

Income-wise I'm on 26,500, and my wife on 12,000. We get 268/4wk TC and 192/4wk CB, but as this is child number 4 these won't change. The major problem with income is that we doubt it's going to be economically viable for my wife to return to work until some free childcare kicks in - meaning when the baby is 2 as far as I know. So in 10 months, after the 6 weeks of initial maternity her income will drop by about 300 a month for another 8 months, and then probably stop entirely.

As to assets we own nothing of any particular value. The car is 18 years old and worth around 1700 maybe but other than that we are renters just with general household stuff around - books, electronics, tools.

I've just opened a new account with NatWest to get away from Lloyds as we owe them most of it and will be getting all of our payments etc. moved into there very shortly.

I had originally thought that the IVA would be joint between us, but since discovering they can't be, I'm not sure if an IVA would work for my wife with the fact that we know her income will be changing. Is that something we should tell an IP, or better to set up based on current income and then hope to change it when it happens? Obviously I'm going to be getting actual advice from StepChange over this, just wanted some other opinions/insights. Someone has said to my wife that an IVA is the worst of all options, but I'm not sure why they would say that.

The other thing concerning me a little is PayPal - anyone have any experience about what they do if you take the PayPal credit balance into an IVA? Can I still use my account to make payments (I don't really receive any anyway)?

Me:					Wife:
Creditor	Balance	Limit	Min		Creditor	Balance	Limit	Min
Lloyds (Loan)	25300		545		Barclaycard	11700	1200	295
Barclaycard	7450	7500	190		MBNA	5630	6000	120
MBNA 1	5250	5600	160		Lloyds (Card)	5000	5500	210
Lloyds (Overdraft)	2500				Lloyds (Overdraft)	2500
MBNA 2	2500	2800	80		Total	24830		625
Lloyds (Card)	1400	1500	35
PayPal	1200	2500	30
Welcome Finance	1700		10
Total	47300		1050
Student Finance (Overpayment)	4900		10

sourcrates

Hi,
IVA`s are designed for homeowners who cannot go bankrupt, due to owning property.
Its a way to protect assets they may have, such as a house.

You could possibly do one, your wife no, its not viable for small amounts of debt, and you cannot do a joint one, you also need a stable income, as any missed or reduced payments, must be made up, they are added to the end of the arrangement.

As you have not yet filled out a full statement of affairs, its difficult to comment on your options, bankruptcy is one option, or more likely, an IVA for you, a DMP for the wife.

Post up an SOA and we can comment further.

Naf

I was looking for a SOA template, I thought there used to be one on the forum somewhere?

Naf

Found it

Most common Income

Take home pay - 1710 + 980 = 2690
Child Benefit  - 192
Child tax credit - 268

Most common outgoings

Rent/Mortgage - 525
Water (supply & waste) - 50
Council tax - 130
Electricity - 193 (E7. current payment with supplier of less than 1 year, actual usage more like 175)
Building and contents insurance - 5
Internet - 24
Mobiles - 75 (2 adults + 1 child)
TV licence - 13
Childcare - 150 (averaged from annual, including transport costs to/from in-laws during holidays which is cheaper than holiday clubs)
Spares/servicing - 35 (averaged from annual estimate, assuming no more big repairs come up)
Road tax - 30
Car insurance - 50 (averaged from annual estimate, hopefully will be lower when renewal comes)
AA, RAC etc - 5
Fuel & Parking - 20
Fares and travel - 40 (Mostly cycle servicing and repairs for 3 of us)
Food, toiletries & cleaning - 500
School meals
Meals at work - 50
Pet food/insurance - 20
Clothing and footwear - 50
School trips/activities - 10
Hairdressing - 30
Dentist - 15
Sports, hobbies and entertainment - 30
Eating out/take aways - 100 (yes, we need to stop this, but we've struggled to)
Children’s pocket money
Church/charity donations - 269 (we tithe in our church, though I fully anticipate that's not considered for debt solutions)

Obviously some of these are going to change in  9 months; wife's income, childcare costs particularly.

I should add that we run a small home bakery as a partnership. It hasn't posted any annual profit as yet; it might do this year if we don't put any rent or car repair bills against it.

sourcrates

You don`t want to be looking at Bankruptcy if you have interests in a business.
I would also be hesitant at opting for insolvency (IVA).

You know what i`m going to say about the church donation, £269 is a lot of money that could be used to reduce your debt, you can also knock a couple of hundred off the grocery bill, that would free up almost £500 a month !!

If you can maintain the minimum payments, then pay off individual accounts as and when funds allow, using savings from your budget, its either that or enter debt management, and do a DMP.

I assume donations can stop and start at will ? I`m not religious, so i don`t know how it works, but i do know your debts should be your 1st priority, you do have options here, depends how committed you want to be.

mwarby

Just added some totals to above

Income £3150

outgoings £2419

Available for debt £731

Available for debr if takeaways and charity excluded £1100

mwarby

Could your wife be eligible for a DRO, if yiu could sort out a DMP and you could make £1100 a month in payments you could be clear in around 4 years, also if things improved with your busines, it could maybe be even quicker

Naf

Thanks for the replies. Your suggestions are what I've been trying to do, with limited success, for almost 2 years now; and they are what I would continue to do, except for the new baby coming. Within weeks of that we'll lose about £300 a month, and 6 months after that another £5-600 as it won't be viable for my wife to go back to work and pay for childcare. That's what's precipitated this.

sourcrates said:

You don`t want to be looking at Bankruptcy if you have interests in a business.
I would also be hesitant at opting for insolvency (IVA).

You know what i`m going to say about the church donation, £269 is a lot of money that could be used to reduce your debt, you can also knock a couple of hundred off the grocery bill, that would free up almost £500 a month !!

If you can maintain the minimum payments, then pay off individual accounts as and when funds allow, using savings from your budget, its either that or enter debt management, and do a DMP.

I assume donations can stop and start at will ? I`m not religious, so i don`t know how it works, but i do know your debts should be your 1st priority, you do have options here, depends how committed you want to be.

I understand you can continue as a sole trader through bankruptcy? It's only a partnership so that I can legitimately run deliveries without having to be classed as an employee, and as it hasn't (and isn't likely to in the near future) made anywhere near £1k in a year we shouldn't really need to declare it at all - it's just that we started before that came in. But what would be wrong with an IVA in those circumstances either? The business owns nothing but a few pans and ingredients.

Yes, the donations we can obviously work with; but I can't see how £500 a month for a family of five is at all extravagant; nor how we could shave it down by more than maybe £100.

mwarby said:

Could your wife be eligible for a DRO, if yiu could sort out a DMP and you could make £1100 a month in payments you could be clear in around 4 years, also if things improved with your busines, it could maybe be even quicker

My understanding is that a DRO is for balances under £20k, which I now notice I've put the wrong number in my sheet for her total; it should be £24,830.

And while we can scrape £1,100 now, in 12 months that'll be £800, and 6 months after that £300ish - which is the root of why I'm trying to find a solution.

mwarby

The fact that the amount available for repayment is going to be quite variable (downwards) over the course of next 18 months I would worry that an IVA would fail. Yes some of stuff mentioned could be covered in the agreement, but what about the unforeseen changes ? 

I’m not sure exactly how it works, but some do work for themselves during bankruptcy. It would stop you being a director of a limited company though 

Naf

I think we're just going to do a DMP ourselves for now, then; and in about a year my wife's should be low enough to make it a DRO, the result of which will depend if she goes back to work or not. And mine we'll just have to keep paying and see how it goes.

mwarby

Is worth considering a DMP via payplan or similar if you can't persaude the lenders to freeze the interest