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

Naf
Naf Posts: 3,183 Forumite
Part of the Furniture 1,000 Posts Combo Breaker
edited 7 March 2020 at 9:08PM in IVA & DRO
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




Never argue with stupid people, they will drag you down to their level and then beat you with experience.
- Mark Twain
Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
«1

Comments

  • sourcrates
    sourcrates Posts: 31,014 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    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.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Naf
    Naf Posts: 3,183 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    I was looking for a SOA template, I thought there used to be one on the forum somewhere?
    Never argue with stupid people, they will drag you down to their level and then beat you with experience.
    - Mark Twain
    Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
  • Naf
    Naf Posts: 3,183 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 7 March 2020 at 3:44PM
    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.
    Never argue with stupid people, they will drag you down to their level and then beat you with experience.
    - Mark Twain
    Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
  • sourcrates
    sourcrates Posts: 31,014 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    edited 7 March 2020 at 5:10PM
    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’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • mwarby
    mwarby Posts: 2,048 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Just added some totals to above

    Income £3150
    outgoings £2419
    Available for debt £731
    Available for debr if takeaways and charity excluded £1100
  • mwarby
    mwarby Posts: 2,048 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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
    Naf Posts: 3,183 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    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.
    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.
    Never argue with stupid people, they will drag you down to their level and then beat you with experience.
    - Mark Twain
    Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
  • mwarby
    mwarby Posts: 2,048 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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
    Naf Posts: 3,183 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    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.
    Never argue with stupid people, they will drag you down to their level and then beat you with experience.
    - Mark Twain
    Arguing with idiots is like playing chess with a pigeon: no matter how good you are at chess, its just going to knock over the pieces and strut around like its victorious.
  • mwarby
    mwarby Posts: 2,048 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Is worth considering a DMP via payplan or similar if you can't persaude the lenders to freeze the interest
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 349.7K Banking & Borrowing
  • 252.6K Reduce Debt & Boost Income
  • 452.9K Spending & Discounts
  • 242.6K Work, Benefits & Business
  • 619.4K Mortgages, Homes & Bills
  • 176.3K Life & Family
  • 255.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.