My situation, any advice appreciated

Murtle

Sorry I haven't read any of your other posts. So sorry if you have already done this.

What have the debt helplines suggested to you? An IVA/bankruptcy isn't your only option, the other one I'm afraid will take time, commitment and hard work.

I remember a thread on cheap glasses if you had the prescription, maybe finding this could help reduce your outgoings?

What is the contingency money for? - if anything this could be used to help build up your mortgage again, so a payment break could be open again in the future - this depends on T&Cs for your mortgage.

You haven't listed any of the APR's on the credit cards, what are these?

Your food bill should be possible to reduce. Can the children take packed lunch to school? if so, this would save some money.

What is the clothing allowance for, if it's just for the children then ok, but don't forget to shop around for it and use the sales wisely.

Have you looked at reducing your gas/elec/water bills? - again a good place to save money.

Is there a real reason you need broadband? or is a nice to have, cause another £20 a month for debt would be a real *nice to have*!!

In future remember, a good deal is only a good deal if you *need* it. In which case you could probably have done without the mobile and used the money towards your debt!!!

Although snowballing is normally recommended, in your case I would also look at the possibility of paying off credit cards, so they are clear and can be used for balance transfers, hopefully at lower rates then you have elsewhere - the Amex one is looking like a possibility for that one. But don't continue to spend on the cards. Have you taken a look in the Money Saving Old Style thread - there are heaps of ways in there to save money, and live well on very little. The WWII rationing thread has popped up again, could be a *fun challenge* to see if you could stick to it for a week or more? make it into some form of fun for the kids! They can also disect your shopping bill and help you save more, and help anyone daunted about cooking from scratch, using cheap raw ingredients.

Have you looked at the online vouchers board for money off items, that you can use towards your shopping, again every little helps, and I have noticed that some of the savings aren't so little!! £30 off your monthly shopping would be quite a lot!!

I guess, that last thing is you both really need to be looking at getting an additional part time job, just ensure if you do this that you don't loose any benefits, or that it pays more then the loss of the benefits. Could your wife, do ironing, or cleaning of other people homes? Neither is particulary glam, but would add addtional income, especially the ironing that could be done in the home, when she is minding the children. I'm assuming the children are too young to be put out to work yet These are also things that she could fit around other tasks.

I hope some of this is helpful, please don't be dis-heartened, I've also not seen any posters previously post comments such as 'ouch' and I don't find them very useful either, but keep at it and keep coming back, you can survive it.

I would be surprised if you could keep your house in a bankruptcy. - there is also a charge per person for bankruptcy. Whose name is the mortgage in??

An IVA could be an option, but it sounds like you might need some more money, even just for the fee???!

Good luck and PM me if you want to let off steam.

edited to add: could you let out a room in your house? where my Mum lives, she often gets flyers through the door for local schools requiring space for students? I don't know if this is the same in your area? or you could look for a Mon-Fri lodger (business person)? Not something that is everyones cup of tea, but worth a thought, for the extra cash.

Ebay/carboot sales - clear out the house, and sell any stuff you don't need, don't like (including the Christmas present that Aunty Jean bought you ) or can live with out. Use the money towards debt.

zAndy1

Thanks for the thorough reply, wow! To answer some of your questions, the contingency is there for things like:-

Washer breaking down
Car breaking down
Unforseen expense basically

To be honest we could probably save £100 pm tops by cutting back on things but considering our minimum payments/loan payments are £1100 more than our surplus income that wouldn't really help much!

As for broadband, at the end of the day I don't see it as a £20 cost as it saves me a fortune...

As for working extra hours, my wife already works 20hrs mon-fri part time and 10hrs on a Sunday night as well as doing courses to improve her career prospects. If she worked more during the day we'd have extra child care costs and I can't work in the evening as my wife is working.
And letting out a room really isn't a practical option, it just wouldn't work out with 2 young kids.
I thought we could keep the house even if I went bankrupt as long as somebody bought my share of the equity from the OR?

So as you can see it's a pretty desperate situation which we can't really ignore any more, I don't think we have any other option but an IVA or bankruptcy...

I'm still very confused about whether we're going to end up with 2 IVAs, one for me and one for me wife. It would seem that's the only legal way to do it but debt free direct are saying it's a joint IVA, I explicity asked them about that last night. If we do 2 IVAs then how will they decide how much each of our surplus income is? Would it just be the household income - the household expenditure split 50/50? If that was the case I'd only be paying £200 a month into my IVA and with me having the majority of the debt I can well see my creditors not going for it as I think the IVA would struggle to provide the required 25% dividend. Need to get on the phone tonight again I think and I feel a visit to the CAB is needed tomorrow!

Murtle

To be honest we could probably save £100 pm tops by cutting back on things but considering our minimum payments/loan payments are £1100 more than our surplus income that wouldn't really help much!

Have you contacted them about paying reduced amounts/freezing your interest on these?

What do you do for a living? is there anything you could do at home in the evenings? maybe ironing isn't your thing...but still a possibility?!! what skills do you have?? I think your wife is working enough unless she could get a job in a supermarket, dont' they do staff discount on food???!!! - you could get the kids clothing there too...?!

From reading on IVA's I'm not sure if you would have enough to repay for them to accept it?? but you won't know unless you ask! (Just don't pay for the advice....)

zAndy1

I have letters in envelopes at home that I'm going to post that explain our situation, set out our income and expenditure and list all our creditors , how much we owe and what the pro-rata payment is that we're proposing to make for now. I seriously doubt doing extra work would be cost effective due to increased childcare costs/loss of benefits etc.
If we have to do individual IVAs and the surplus income is split 50/50 then I agree I don't think it will be very attractive to my creditors at least. Conversely my wifes creditors would get back almost all of what she owes them if she paid £200pm for 5 years...

Murtle

Barclaycard and Goldfish and Virgin credit cards off which would save us approx £600 per month, on top of the mortgage saving of £1000pm that's £1600pm better off straightaway. Or would we have to split the profit from the house sale pro rata between our creditors (which might not give us the greatest monthly saving).

yes they should be paid pro-rata.

Please also realise that even a £100 saving per month WILL help you in the long run. Please don't take offence, but part of the reason you are in this situation is through overspending. To get out of it without loosing the house, you are going to have to seriously underspend for the forseeable future. I can understand your desire to keep the house, but you will have to make sacrifices to achieve this dream.

We are still here to help you though, but you really need to start looking at either reducing expenses or increasing income - or preferably both! An IVA will only be the start, if you can get them to agree to it (if you choose to go down that route)

Still here though, and keep your chin up - people love a success story at the end, yes we're all soppy.

edited to add - what I meant to say initially was get those letters sent!! NOW!!!! honest, they're no good at home..... :rotfl:

zAndy1

What I am wondering about is this:-

Assuming a joint IVA is accepted and we pay £24000 over the next 5 years in monthly payments. We're also expected to release any equity in the house , now assuming the mortgage including the secured loan goes down to a balance of approx £135000 from the £148000 it's currently at, and also assume the value of the property increases to say £200k from the £180k it is now (only a 10% increase which is realistic). That would mean we'd have £65k of equity in the house. If we were expected to release even 75% of that to our creditors that would mean we'd have pretty much paid them back in full (less interest of course) and would also have an extra £50k worth of mortgage payments to make (say £250pm) for the next 20-25 years. To me that doesn't look like a very good deal to be honest!
If a relative is prepared to buy my share of the equity in the property then does that make bankruptcy an option I can't really ignore, especially in light of the figures above? The only potential problem I suppose is that if I declare myself bankrupt my wife will get lumbered with the whole of the tesco loan debt of £19k, now in theory my wife could pay the tesco loan monthly payment and her credit card payments out of her salary and benefits but would she be allowed to do that do you think? I suppose tesco could file for my wifes bankruptcy as well and that would mean we could still lose the house.

Xbigman

zAndy1 wrote:

What I am wondering about is this:-

If a relative is prepared to buy my share of the equity in the property then does that make bankruptcy an option I can't really ignore, especially in light of the figures above?

Do you mean sell your share of the house? I don't think you can do that in any practical way. The mortgage and secured loans have to be repaid first, so selling any part of the house simply pays someone off. If you then went bankrupt the OR could look at this as asset stripping. Not a nice prospect.

I think your options now are bankruptcy and give up the house or a joint IVA and pay it all back eventually. Don't forget that a timescale of 10 years or more would mean childcare costs eventually reducing to zero as your kids grow up.
Regards



X

vale_2

I am dealing with debt free direct at the moment for one of my clients and have dealt with other "IVA" companies in the past...on this basis and with reference your massive outgoings and debt I really think selling your house is the best option unless you are ready for tons of crap for the next 5 years.They are always nice when trying to sign you up...smell the coffee!!!!!!!!!!!

zAndy1

xbigman.. what I mean is that if I'm declared bankrupt my share of the equity in the house goes to the OR. It is then possible for somebody to buy that share from the OR to prevent the OR having to sell the property to realise that equity. My brother has already offered to buy my share from the OR should I go bankrupt.

I've now spoken to both Shaws and Debt Free Direct this afternoon and things do look a bit clearer. Shaws is definitely 2 individual IVAs, DFD is definitely one joint IVA. With Shaws my total debt will be approx £70000 and my wifes will be approx £26000 (as the tesco debt is included in both our IVAs for the full amount). They take 75% of the CURRENT equity in our property and include that in the proposal, also the surplus income is split between me and my wife so I'd probably be paying £300 pm and my wife £100pm. My total contribution into my IVA would therefore be £300 x 60 + £12000 (75% of my share of the equity) = £30000. My wifes total contribution would be £100 x 60 + £12000 = £18000. Obviously there are fees to come off those contributions, when they are taken into account I suspect we're looking at my proposal being 30% of the debt and my wifes just over 40% of her debt.

With DFD it's a joint IVA, total debt £75000 approx, £400pm x 60 months = £24000. They put it in the proposal from the beginning what percentage of the debt we are proposing to pay off but at the moment I don't know what that might be. They did say though that we wouldn't be expected to release all the equity available even if we could remortgage for that amount.
At the moment I'm leaning towards Shaws to be honest as I think they have a good reputation, vale I hear what you're saying and you're not the first person to give me a bad vibe about DFD , or does what you say go for all IVA companies?

Malestrom

Ask Shaws why they haven't recommended a joint IVA? The fee's for a joint IVA are substantially lower than the fees for two individual IVA's, which is probably the reason. Or am I just being overly cynical here....


With regard to you going bankrupt. A family member or even your partner could buy your share of the equity in your home from the official receiver. This is known as 'Beneficial Interest' but the mortgage MUST currently be in joint names. As far as I can tell, the secured loan is paid from the proceeds of the sale to your partner/relative/friend and whatever is left goes to your creditors. As you say, your wife would need to continue to pay the Tesco's loan AND you would need to maintain a payment to the OR for 12 months which also goes towards your debts. There is a little more info at the National Debtline website about this and some more detailed info at the Insolvency Service's website.

There seems to be an element of doubt in this approach though with the possibility of the OR forcing the sale of your house after 12 months if either your share of the equity isn't bought, for whatever reason, or the OR decides its not in his/her best interest to allow the beneficial interest to be purchased. Also, your mortgage company may not agree to the sale of your share of the equity so this is another thing to think about.

The above is only what i've ascertained from reading through the information at the links given, I would definately advise you to take professional advice from an insolvency practitioner if you are seriously considering this option.