Considering entering an IVA but not sure if this is the right thing to do.

Ukmum21

So I am currently in around 37k of debt. 

Bank loan (obtain previously to pay off credit card debts which later reused) 
Credit cards 
One store account 

I am a single mum of 3 and I am overwhelmed with embarrassment that I have let it get to this stage. I feel like a terrible person.

My goal is to be able to afford to live with my children without constantly relying on debt. 

To be able to provide a decent life style. 

I have a decent job but as I only work part time my income is topped up with UC. 

I currently pay around 869 in debt repayments and when looking at a realistic income expenditure I have minus left at the end of the month which would make sense as to why I keep relying on credit. All though my credit is morealess maximised. 

I have a few issues which are preventing me from going full steam ahead. 

1. I currently rent my home from someone I know and had a verbal agreement to purchase the property in 5 years. This would be extremely embarrassing if I am
unable to do. This was meant to be my long time family home. If I am unable to buy it we may loose it and if I enter an
IVA or another Plan I’m not sure I’ll be able to rent elsewhere. 

2. I am a chartered Accountant ACCA, will I look my membership. And do I have to inform work, currently working as a management accountant. 

3. How will I fund a car currently have a lease but if I enter into a IVA or other debt plan I am also certainly unlikely to be able to renew this. 

I feel like I can’t speak to anyone I know personally about this. One I am a very private person and I am riddled with embarrassment. It shouldn’t have got to this. 

I’m not sure what I’m asking really but some advice from someone who has been in a similar position. 

Pros, cons etc. 

sourcrates

Hi,

Your story is little different to many on these forums, you get into debt, try consolidation, it fails, rack up more debt, payments rise, very soon your reliant on borrowing just to live, its not good, and needs nipping in the bud now.

Unfortunately there is no gain, without the pain, all debt solutions, regulated or informal, will affect your credit files to some degree, there is no getting away from that, also regarding your job, you will need to check your employment contract to see what you need to tell them about, and what you don`t.

You don`t give us your income, so these suggestions are what your options are, as per your current circumstances.

Personally, after going through a 6 year IVA, I'm not a big fan of them at all, its a long time to pay, and circumstances change, lots of IVA`s fail due to affordability, and other issues.

Now to further complicate matters you have a verbal agreement to purchase a house in 5 years, well that won`t happen unless you get rid of the debt first, if paying off the debt is leaving you with nothing, and you are using credit to live on, no one in there right mind will give you a mortgage, you will fail on affordability.

You may as well go flat out for bankruptcy and have done with it in 12 months (if it doesn't affect your work).

Your only other choice is an informal debt management plan, where you pay back what you owe, at a lower monthly rate, hopefully with all interest and charges stopped.

Stepchange is a debt charity, National Debtline offer similar services, put your case to each of them, see what they recommend in the circumstances.

fatbelly

I agree with the above but I suspect insolvency may affect your employment so you should check as both bankruptcy and IVA are forms of insolvency and on a public register - and those are the two you qualify for.

In bankruptcy (and in theory the IVA too) you would be expected to pay your surplus income for 3 years (5 in an IVA). Now we're not sure how much that is except it's less than £869.

Say it's £700. In bankruptcy you would pay 25k, in an IVA  42k, which is probably about might as you would pay the whole debt plus the IP fees.

Whatever you do there will be a mark or marks on your file that will stay 6 years.


A debt management plan (stepchange or payplan) may make the most sense here, for as little as you can. Run it for 2 years or so, try to save on the side and finish off with full & final settlements.


That way with a lot of discipline you can be debt-free and have a small savings pot in 5 years. You will still have some defaults on file but they will be ancient and a good broker should be able to get you sorted with a mortgage as you clearly have a good income.

You should still be able to lease a car but that sounds an expensive way to get your wheels. However it may be the least worst option.

If you wanted to post a statement of affairs, we could make more constructive comments

JCS1

An IVA is considered differently to Bankruptcy by ACCA, more details in this link (hopefully it will work!)

https://www.accaglobal.com/content/dam/ACCA_Global/Technical/fin/financial-difficulties-2013.pdf

fatbelly

Interesting. No mention of a Debt Relief Order at all!

jonesey1985

fatbelly said:

Interesting. No mention of a Debt Relief Order at all!

Erm.

A bankruptcy event is defined as “a bankruptcy order, a bankruptcy restriction order, a bankruptcy restriction undertaking or an equivalent event in any country or jurisdiction.”

I'd say a DRO is an "equivalent event."

sourcrates

jonesey1985 said:

fatbelly said:

Interesting. No mention of a Debt Relief Order at all!

Erm.

A bankruptcy event is defined as “a bankruptcy order, a bankruptcy restriction order, a bankruptcy restriction undertaking or an equivalent event in any country or jurisdiction.”

I'd say a DRO is an "equivalent event."

I disagree, a BRO/BRU is a potential penalty of a Bankruptcy order if you fail to comply with an official receiver`s instructions.

This terminology is in regard to Bankruptcy alone, and a DRO is not Bankruptcy, it is different in every way possible.

There is no equivalent event to bankruptcy except sequestration in Scotland, which is most likely what the article refers too.

If you read the forward text it refers to Bankruptcy specifically, not DRO not IVA, just Bankruptcy.

jonesey1985

sourcrates said:

jonesey1985 said:

fatbelly said:

Interesting. No mention of a Debt Relief Order at all!

Erm.

A bankruptcy event is defined as “a bankruptcy order, a bankruptcy restriction order, a bankruptcy restriction undertaking or an equivalent event in any country or jurisdiction.”

I'd say a DRO is an "equivalent event."

I disagree, a BRO/BRU is a potential penalty of a Bankruptcy order if you fail to comply with an official receiver`s instructions.

This terminology is in regard to Bankruptcy alone, and a DRO is not Bankruptcy, it is different in every way possible.

There is no equivalent event to bankruptcy except sequestration in Scotland, which is most likely what the article refers too.

If you read the forward text it refers to Bankruptcy specifically, not DRO not IVA, just Bankruptcy.

I read it, and it absolutely does refer to IVAs.  It's your prerogative if you want to consider a DRO different, but your opinion isn't relevant, the ACCA's is.  And it's highly unlikely that "bankruptcy-lite" isn't considered an equivalent event to bankruptcy.

sourcrates

jonesey1985 said:

sourcrates said:

jonesey1985 said:

fatbelly said:

Interesting. No mention of a Debt Relief Order at all!

Erm.

A bankruptcy event is defined as “a bankruptcy order, a bankruptcy restriction order, a bankruptcy restriction undertaking or an equivalent event in any country or jurisdiction.”

I'd say a DRO is an "equivalent event."

I disagree, a BRO/BRU is a potential penalty of a Bankruptcy order if you fail to comply with an official receiver`s instructions.

This terminology is in regard to Bankruptcy alone, and a DRO is not Bankruptcy, it is different in every way possible.

There is no equivalent event to bankruptcy except sequestration in Scotland, which is most likely what the article refers too.

If you read the forward text it refers to Bankruptcy specifically, not DRO not IVA, just Bankruptcy.

I read it, and it absolutely does refer to IVAs.  It's your prerogative if you want to consider a DRO different, but your opinion isn't relevant, the ACCA's is.  And it's highly unlikely that "bankruptcy-lite" isn't considered an equivalent event to bankruptcy.

I`m not saying your wrong, that document was most likely written before the advent of the DRO which is why its not mentioned in particular.

Its likely a DRO would be viewed more along the lines of an IVA, than actual Bankruptcy, but either way, each case is determined on its individual merits.

MalMonroe

fatbelly said:

Interesting. No mention of a Debt Relief Order at all!

A DRO is only relevant up to £30k. OP says she owes around £37k so she wouldn't be eligible. But would be eligible for bankruptcy, if her job doesn't suffer.

MalMonroe

Hi, I'd just like to say please try not to feel embarrassed and I can assure you (I've been in a similar situation) that you are certainly not a terrible person.

You are raising three children alone and you are working as well. You're doing everything you can to stay afloat. I'd say that makes you a pretty great person. 

I would definitely advise you, as Sourcrates has done, to contact one of the free debt help agencies - details are at the end of Sourcrates' comments. I contacted StepChange when I was at the end of my tether and they offered me sensible, non-judgemental advice and listened carefully to everything I had to say. (I had quite a lot to say!) They really did help me to turn my life around when I thought there was no possible solution. 

If you try to put everything else out of your mind for a while and concentrate on speaking to someone at one of those agencies, I'm sure you will be reassured that there is a solution and that you can reach it. I'm not saying for one moment that it will be easy because I know it's not always easy but they can help you see the wood for the trees. 

It may be that you won't be able to buy the house after all. But you may be able to renegotiate your tenancy with the owner. Or if they don't want to, your council has a duty to house you since you have three children. You shouldn't feel bad about it, people's circumstances change and they're not always able to do what they promised to do. It really isn't the end of the world. 

When you do phone one of the agencies (please do, it's scary but it's really well worth it) just have a list of your incomings and outgoings in front of you That's all you need. I found it really therapeutic just unburdening myself to a stranger, like you I couldn't - and still can't - tell anyone who knew me. You're not on your own, many of us on this forum have been in similar situations so we do understand what it's like. I think you came to the right place  - and I wish you all the very best.