Don't know what to do!!

MrFrugalFever

I am by no means a financial advisor but it sounds very much like an IVA would be a better suited solution, if your parents could forgo the £4K owed for 5 years or sooner if IVA can be settled in full and final then perhaps this is the route.

In some instances, 12 months bank statements are required to be presented to the company handling the IVA, but most request less than this.

An IVA will re-balance your finances and put you in control whilst in effect teaching you a lesson, your parents will not necessarily need to be involved providing you explain to them your intentions and that they are happy to wait for the £4K.

all this being said, you rent and perhaps don’t have and valuable assets? In which case bankruptcy really isn’t a bad idea for a quicker release from debt shackles.

Sillychap

Good morning  thank you for your comments. I will look into an iva if thats a better solution  i dont know to much about it to behonest with you.
I managed to do a Soa  if that helps.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 0

Partners monthly income after tax....... 0

Benefits................................ 2320

Other income............................ 490[b]

Total monthly income.................... 2810[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 800

Management charge (leasehold property).. 0

Council tax............................. 107

Electricity............................. 120

Gas..................................... 0

Oil..................................... 0

Water rates............................. 37

Telephone (land line)................... 0

Mobile phone............................ 82

TV Licence.............................. 13

Satellite/Cable TV...................... 32

Internet Services....................... 28

Groceries etc. ......................... 650

Clothing................................ 50

Petrol/diesel........................... 125

Road tax................................ 14

Car Insurance........................... 95

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 8

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 12

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 70

Haircuts................................ 40

Entertainment........................... 50

Holiday................................. 40

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2423[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 1800

Other assets............................ 0[b]

Total Assets............................ 1800[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Tesco bank loan................22000.....0.........0

Zopa loan......................16000.....0.........0

Creation store card............3500......0.........0

Littlewoods....................600.......0.........0

Very...........................800.......0.........0

Shortfall car finance..........5000......0.........0[b]

Total unsecured debts..........47900.....0.........-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,810

Expenses (including HP & secured debts). 2,423

Available for debt repayments........... 387

Monthly UNsecured debt repayments....... 0[b]

Amount left after debt repayments....... 387[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,800

Total HP & Secured debt................. -0

Total Unsecured debt.................... -47,900[b]

Net Assets.............................. -46,100[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

fatbelly

An Iva would not be so concerned about what happened to the redundancy money.

The downside is that you make payments over 60 months rather than 36 in bankruptcy, and it's not as if you have much of an asset to protect (I assume the 1k car limit in bankruptcy will rise to 2k to match DROs but anyway it's fine for an IVA)

so you would save the £680 bankruptcy fee but pay around an extra £9k in monthly payments, which is an expensive way to avoid your parents being asked for 8k but you maty want to go with it, having looked into it.

Sillychap

I spoke to step change they did another brake down and gave me an option of 48 pm dmp. Tbh that doesn't sound to bad.

Sonic101

Sillychap said:

I spoke to step change they did another brake down and gave me an option of 48 pm dmp. Tbh that doesn't sound to bad.

If you pay £48 per month it will take decades to pay off the debts, and that's assuming that the creditors continue to accept reduced payments and freeze the interest (I understand a DMP is like a "gentleman's agreement" rather than a legally binding contact that creditors have to stick to). But I guess there's always a chance they might agree to wipe out some of the debts, and with StepChange's support it will at least give you some respite from the worry. I hope things get better, keep us posted.  

Sillychap

Hi  im content paying small payments basically for the rest of my life, Obviously Drather not and want it all to disappear but after speaking to step change my options are limited. They sed also the OR can  get a ccj to my mum to make her pay back the money if i went bankrupt. So that kicks bankruptcy into touch basically.

fatbelly

Sillychap said:

Hi  im content paying small payments basically for the rest of my life, Obviously Drather not and want it all to disappear but after speaking to step change my options are limited. They sed also the OR can  get a ccj to my mum to make her pay back the money if i went bankrupt. So that kicks bankruptcy into touch basically.

I thought they would confirm that as a possibility.

It's not technically a ccj I think, and they would only get such an order if it was realistically going to be collected.

A low dmp is a bit of a 'holding' option - while you're on it see if you can save a lump sum on the side.

Also keep an eye on the DRO criteria and bear in mind that the relevant question on that scheme is 'In the last 2 years, have you ever preferred any creditors over others in your payments?'

Sillychap

 Not since last august. Speaking to step change as actually made me feel worse about the complete mess im in.

Jude57

@Sillychap I think what @fatbelly is saying is that bankruptcy needn't be out of the question for ever. While no-one here can say definitively what an Official Receiver will do, in a couple of years it's unlikely that the OR will dig deep into a straightforward BR, and the vast majority of BR's are straightforward, especially at the moment with so many facing financial difficulties. I'm thinking that, assuming your situation isn't likely to improve (financially) then a DMP with StepChange for the next couple of years will give you some peace of mind. After those couple of years, BR should be straightforward as you can honestly answer the question about preferential payment AND demonstrate how fair you have been to each creditor via your DMP.

There are also changes expected to the rules for Debt Relief Orders which as I'm sure you'll be aware, is a form of insolvency but without the same level of Official Receiver input during the 12 month moratorium period. These changes may not be enough to make a DRO viable for you but as @fatbelly says, keep an eye out anyway, just in case.

Hope this helps.

fatbelly

@Jude57 has got it! Things change so keep it in review. The limits for DROs have gone up twice. At some point they'll go up again. If you're on a dmp your debts will go down. In a couple of years things may well look different. Who knows? There may even be new solutions.