Debt Advice - Help

Red_Helen

I have been in a Stepchange DMP for some time and have managed to get a 25K debt down to about 13K. Unfortunately, my work situation changed and my earnings went down, and after some massively bad luck, I ended up with a couple of BIG bills (Needed new roof, Car Blew up, Huge Vet Bill) I STUPIDLY ran up more credit card debt (around 9K) plus loaned some money from a family member (5K). I am still keeping up my DMP payments, and paying the minimum on my credit cards as well as slowly paying my family member back but I am really struggling. I am looking for a part time job, but not having any luck due to the hours I work in my full time role and the amount of travelling I have to do on a daily basis. I am thinking of going for an IVA, but worried about the fact that they can ask you to remortgage and release equity in the property at the end of the IVA. I worry that I wont be able to get a decent mortgage (if at all!) if I swap lenders! Should I approach stepchange and explain my situation and see if I can add to my existing DMP? Any advice would be greatly appreciated.

StepChange_Aidan

Red_Helen said:

I have been in a Stepchange DMP for some time and have managed to get a 25K debt down to about 13K. Unfortunately, my work situation changed and my earnings went down, and after some massively bad luck, I ended up with a couple of BIG bills (Needed new roof, Car Blew up, Huge Vet Bill) I STUPIDLY ran up more credit card debt (around 9K) plus loaned some money from a family member (5K). I am still keeping up my DMP payments, and paying the minimum on my credit cards as well as slowly paying my family member back but I am really struggling. I am looking for a part time job, but not having any luck due to the hours I work in my full time role and the amount of travelling I have to do on a daily basis. I am thinking of going for an IVA, but worried about the fact that they can ask you to remortgage and release equity in the property at the end of the IVA. I worry that I wont be able to get a decent mortgage (if at all!) if I swap lenders! Should I approach stepchange and explain my situation and see if I can add to my existing DMP? Any advice would be greatly appreciated.

Hi Helen,

Thanks for your post. I’m sorry to hear about your situation.

Please give us a call, we can add the credit cards to your DMP. Our contact details are here.

We can also update your budget to reflect the change in income and discuss alternative options with you. If an IVA is a solution that we recommend we have a specialist team who can support you through the process.

If you have equity in your property you’ll be asked to re-mortgage six months before the end of the IVA which could result in a higher interest rate. If this is not possible, you’ll usually be asked to make an additional 12 monthly payments.

There’s some more information on how an IVA can affect your mortgage here.

I hope this helps.

Aidan

Galloglass

I am thinking of going for an IVA

You don't "think" about an IVA or a DMP or bankruptcy. You work out your debts, your [future] income and your [future] expense. Then the options both narrow to the point that one is apparent. And it may not be an IVA.

You should also be aware of how Stepchange and other debt charities are funded. Stepchange uses "Fair Share" which, if someone wants to correct me, is a commission scheme in all but name. With an IVA, the costs are front loaded with the IP's fees being taken off before the debt is paid back. If an IVA fails early on, there is little by way of progress in reducing debt.

Do a SOA here and take soundings as there are some [qualified] advisers here who can double check your thinking before you sign up. If it is still an IVA, then Stepchange are a respected organisation in that respect. Or if you decide on another different DMP then others work on the "Fair Share" method too.

sourcrates

In an IVA, basically all the money is paid into a pot, from which disbursements are made on an ad hoc basis, your correct in that fee`s, charges, VAT and any other fee, all come out of that pot first, then at certain times, payments are also made to your creditors.

I`ve found myself having to explain this quite a few times of late as the number of people already in these arrangements that don`t know how they actually work is astonishing.

Most think their monthly payment directly reduces the debt, the same as repaying a loan, but it dosen`t work in that way, you should always get all the facts before you say yes to anything.