Is a IVA the right choice?

ChelseaWoody27

Hi guys, 

I'm really confused about my options and I wonder if someone could help me. 

I have unfortunately racked up debt of around 15k, 13 of which is on credit cards. I am struggling with this debt if I'm honest but that's because I've been stupid and not taken it seriously, which is finally about to change. 

I am lucky enough to not have too many outgoings ( 1000 overall that I NEED to spend ) and am lucky enough to be on a decent salary for my age (46,000 at 28) 

Is this kind of debt something where an IVA would be an option? I was almost stung by a salesperson but did my research independently and through a charity and they said my best option would be to continue to pay it off. 

Fortunately I have pretty shocking credit so for now it doesn't seem like a debt consolidation loan is possible at any acceptable level of APR, plus I would like to give myself a year to prove that I have changed before I consider an option that could lead me down an even darker path. 

I'm just struggling and need some hope and structure to finally tackle this. Any help would be so appreciated. 

Grumpelstiltskin

Quick answer IVA for £15.000    NO

Also Consolidation loan    NO

Hang on and the experts will be along soon.

ChelseaWoody27

Grumpelstiltskin said:

Quick answer IVA for £15.000    NO

Also Consolidation loan    NO

Hang on and the experts will be along soon.

Thank you, this was where my research was heading but I just wanted to get some other voices. 

I will wait to hear a few other voices before I continue researching. 

sourcrates

IVA out of the question, they are meant for homeowners with massive debts 30-100kplus, who can`t go bankrupt, not for 15k of credit card debt, although they are poorly regulated, and the fee`s charged make them quite profitable, so get flogged to death as being the best solution for you, when they are not always so.

Without seeing your SOA, its difficult to be accurate, but your on a good wage, and 15k is not that much, better budgeting may work, combined with lowering your outgoings, you won`t qualify for a DRO, but debt management might be an option if things are tight, really with that kind of money coming in, and your essential spend being so low, you should have no problem fixing this.

Sonic101

Hi there 

As said above, £15k of debt with a £46k salary isn’t that bad, an IVA would not be a good solution at all - in fact you should be able to find a remedy that doesn’t involve insolvency, possibly a debt management plan. 

if you put you use this tool to generate. statement of affairs - https://www.stoozing.com/soa.php - and then post it here, people will be able able to advise. This is a good tool because it makes you think about all your outgoings.

ChelseaWoody27

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

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 0

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 2600

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

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 2600[/b][b]

Monthly Expense Details[/b]

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

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

Rent.................................... 600

Management charge (leasehold property).. 0

Council tax............................. 100

Electricity............................. 100

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

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

Water rates............................. 50

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

Mobile phone............................ 0

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 0

Groceries etc. ......................... 200

Clothing................................ 0

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

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

Childcare/nursery....................... 0

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

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

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

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

Contents insurance...................... 0

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

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 20

Entertainment........................... 200

Holiday................................. 100

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

Total monthly expenses.................. 1370[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 0

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

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

virgin credit..................6000......180.......23.29

capital credit ................1500......78........30.34

halifax credit.................5000......135.......24.64

aqua...........................1200......65........31[b]

Total unsecured debts..........13700.....458.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,600

Expenses (including HP & secured debts). 1,370

Available for debt repayments........... 1,230

Monthly UNsecured debt repayments....... 458[b]

Amount left after debt repayments....... 772[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

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

Total Unsecured debt.................... -13,700[b]

Net Assets.............................. -13,700[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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

ChelseaWoody27

Sonic101 said:

Hi there 

As said above, £15k of debt with a £46k salary isn’t that bad, an IVA would not be a good solution at all - in fact you should be able to find a remedy that doesn’t involve insolvency, possibly a debt management plan. 

if you put you use this tool to generate. statement of affairs -and then post it here, people will be able able to advise. This is a good tool because it makes you think about all your outgoings.

sourcrates said:

IVA out of the question, they are meant for homeowners with massive debts 30-100kplus, who can`t go bankrupt, not for 15k of credit card debt, although they are poorly regulated, and the fee`s charged make them quite profitable, so get flogged to death as being the best solution for you, when they are not always so.

Without seeing your SOA, its difficult to be accurate, but your on a good wage, and 15k is not that much, better budgeting may work, combined with lowering your outgoings, you won`t qualify for a DRO, but debt management might be an option if things are tight, really with that kind of money coming in, and your essential spend being so low, you should have no problem fixing this.

Think I've done the above correctly. Thank you so much for all of your help so far, it's greatly appreciated.

Sonic101

ChelseaWoody27 

Think I've done the above correctly. Thank you so much for all of your help so far, it's greatly appreciated.

No worries. Okay, some initial observations/suggestions: 

A. You have no sums listed for the following - I am surprised you don’t pay any of these: 

Internet?

mobile?

Travel - how do you get to work, go shopping etc? 

TV licence? 

Medical - prescriptions, dental, opticians? 

Contents insurance? 

Tv licence? 

Clothing? 

Netflix, etc? (Under Sky.Allowable expense within reason) 

B. You haven’t catered for any  medical expenses or insurances, and you haven’t got an  ‘emergency fund’ either that might cover these. What if something goes wrong - you need emergency dental treatment or to replace something that gets lost or breaks? 

C. £100 per month for holiday - that’s £1200 year - is quite high and would not be an allowable expense in a debt management plan or insolvency solution - a small amount say £20-30 at most might be allowed. 

You could reduce this by £50.

£200 for entertainment is also quite high. You could reduce this to £100.

Right there you’d free up £150 to go towards your debts 

D. The interest on your cards is very high, have you tried switching any of them to 0% deals? (If you do that, you must close the cards you’ve got to avoid the temptation to spend on them again). 

ChelseaWoody27

Sonic101 said:

ChelseaWoody27 

Think I've done the above correctly. Thank you so much for all of your help so far, it's greatly appreciated.

No worries. Okay, some initial observations/suggestions: 

A. You have no sums listed for the following - I am surprised you don’t pay any of these: 

B. You haven’t catered for any  medical expenses or insurances, and you haven’t got an  ‘emergency fund’ either that might cover these. What if something goes wrong - you need emergency dental treatment or to replace something that gets lost or breaks? 

C. £100 per month for holiday - that’s £1200 year - is quite high and would not be an allowable expense in a debt management plan or insolvency solution - a small amount say £20-30 at most might be allowed. 

You could reduce this by £50.

£200 for entertainment is also quite high. You could reduce this to £100.

Right there you’d free up £150 to go towards your debts 

D. The interest on your cards is very high, have you tried switching any of them to 0% deals? (If you do that, you must close the cards you’ve got to avoid the temptation to spend on them again). 

Thanks for your reply. 

A.) No I have to admit although the total outgoings is accurate, I didn't go through each thing individually. I pay in to a pot with my partner who deals with the bills, so although outgoings is accurate on these things, it may look like I'm missing prices. 

B.) No, I've never thought to cater for medical expense, it's a good point. 

C.) Again this is a little bit of fabrication. It's a year of weddings that I'm required to attend so that's why it's slightly higher, but I agree I can reduce this. 

D.) Unfortunately my credit is so bad I'm not eligible for any 0% interest cards. 

With this in mind, is the play here to buckle down and overpay on my Virgin Card first, improve my credit rating over the next several months/ half a year, before checking in again and seeing if 0% interest cards or debt consolidation loans are now available to me? 

Grumpelstiltskin

You do need to know exactly where your money is going.

It is obviously going somewhere or you would be able to service your debts.

No. 1 No spending on any credit card

No 2 I would personally hammer the Aqua card first, it appears to be the highest interest rate and lowest balance.
you should be able to clear that by the end of the summer with determination.

You won't be the only one among your friends and family who are finding it difficult at the moment so don't worry about saying ' i would love to do that/go there but money is tight'

No 3 As I said earlier forget debt consolidation, all it does it move the debt around it doesn't reduce the amount.

RAS

ChelseaWoody27 said:

A.) No I have to admit although the total outgoings is accurate, I didn't go through each thing individually. I pay in to a pot with my partner who deals with the bills, so although outgoings is accurate on these things, it may look like I'm missing prices. 

B.) No, I've never thought to cater for medical expense, it's a good point. 

C.) Again this is a little bit of fabrication. It's a year of weddings that I'm required to attend so that's why it's slightly higher, but I agree I can reduce this. 

D.) Unfortunately my credit is so bad I'm not eligible for any 0% interest cards. 

With this in mind, is the play here to buckle down and overpay on my Virgin Card first, improve my credit rating over the next several months/ half a year, before checking in again and seeing if 0% interest cards or debt consolidation loans are now available to me? 

You do need to go through each thing individually if you want to take control of your finances. And just paying into a pot that your partner manages is not the way to take control of anything.

Get 6 months bank statements and go through it? Coffees, lunches, the odd drink on the way home from work? You need to account for them.

Sit down with your partner and go through those finances together. Are they happy with the situation? Or also struggling with balancing the budget? Then agree what's joint and what's sole funded. Please get contents insurance.

The Virgin card is the one you need to pay off last. Start with the card with the highest rate first, as that makes your money work faster. Set up standing orders to pay the minimum on the other cards, plus £1, each month, and concentrate on the Aqua one. 

Once that's gone, give it a few weeks and do a soft search to see if you can get a lower rate card.

Regarding the weddings; look at borrowing outfits or buying second hand rather than a new one for every event. And maybe agree with your partner to use budget rather than statement hotels. You'll only be dressing and sleeping there anyway.