Why everyone forcing IVA over bancrapcy

Czeskyy

Hello  and welcome everyone, 
Thank You for accepting my at this forum.

Probably as most people who end up posting questions here I'm in big ( for me ) debt , about 23k with my loan and credit cards.  It's all started going downhill during COVID where I have to top up every day expenses with credit cards. Same time my girlfriend got pregnant and we had second child forcing one of us to stay home and claim Universal credit.

Currently we are not able to pay anymore to any creditors and our budget is really tight basically no penny left from month to month.
We have asset of car on hire purchase where we pay around 200/month , we happy to give up on car ( although we need for kids and work trips ) car is not worth much around 3.5k ( 1800 still on hp ). However even if we give up on car we would have to pay for traveling it will end up pretty much same around 200/month for two adults bus/tube pass.

We contacted few debt help centers where all of them almost forcing us for IVA, offering only 100/month payment over 5-6 years, however our budget don't really allow for even 10 pounds extra, we already reduced everything to minimum and keeping only things we need for work or school etc 

Same time as we are on Universal credit we don't really get any extra money even if we start earning more unless our wages actually will double, basically any surplus money reduce universal credit hence balance is almost same every month.

All debts are on my name and I'm currently looking after our kids and manage to work from home as self employed, seling whatever I can to make in free time ( arts crafts) I'm very restricted by my kids ( my daughter 2, years and son 12 ) if comes to time I got for work. Previously I was working in hospitality sector but COVID make me jobless. 

My girlfriend she is working full time but not making much.

Mine , our main question is Bancrapcy good option for us ?? For me ?? 

I'm aware about initial fee, and potentially loosing car ( like mentioned it won't change our budget) and a restriction, only what we worry is how whole process will look like , what can be taken from us , how it will affect my girlfriend and kids ??? Bancrapcy sounds very serious but is this really like that.

When few debt advisor offered IVA for us , our budget look very poor like having 350 pounds for food a month for family of 4  just to squeeze this 100 extra for IVA and perspective of 5 years like that is bit depressing, and what happened if I won't be able to make those payments or chose is my daughter will get her milk or not ??? 

Please advise on bancrapcy.

We currently thinking of sealing car to we buy any car to settle finance and have money for bancrapcy fea and potentially start over without debt.
But like mentioned above we were concerned about how all process will go how consultation with official receiver will go , what happens to my bank accy where all benefits going etc ....

Thank You all for help.
We would appreciate honest opinions and possible experience share.

Thank You 

Martin. 

Grumpelstiltskin

Why do these so called debt advisors push an IVA?

A simple answer - they make money out of it.

Have you contacted the debt charities mentioned here?
IMPORTANT - Where to seek professional impartial advice about your debts. — MoneySavingExpert Forum

Let me guess you either googled debt help or saw adverts on Social Media.

sourcrates

You say you went to a "few debt help centres" for advice, well they were not debt help centres, they were likely to have been lead generators for companies that sell IVA`s, which is why they were recommended to you.

They make large amounts of money from the fee`s associated with setting up IVA arrangements you see.

Debt advice should only be sought from reputable debt charities such as the ones in my signature.

You don`t say if you rent or are a homeowner, bankruptcy (note the spelling) is not ideal for homeowners, as your house will be at risk, even if you rent, going bankrupt for 23k is a little bit over the top.

There is something called a DRO (Debt Relief Order) which may be better suited to your circumstances, or, if you don`t meet the criteria for that, then a DMP (Debt Management Plan) is always an option for you.

Look on the stepchange website to see your options.

RAS

If you rent, an IVA would be stupid for that amount of debt, as might be bankruptcy.

Under £30k debt you need to ask one of the free debt charities about a DRO. Have you spoken to either Stepchange or National Debtline? 

The slight issue might be the car, so you need to dig out the documents and see if you can return it etc? You are allowed a car valued £2k for a DRO in England or Wales.

Oh, and set up a basic bank account with one to which you owe nothing, and owe nothing to an bank in its group.

Czeskyy

sourcrates said:

You say you went to a "few debt help centres" for advice, well they were not debt help centres, they were likely to have been lead generators for companies that sell IVA`s, which is why they were recommended to you.

They make large amounts of money from the fee`s associated with setting up IVA arrangements you see.

Debt advice should only be sought from reputable debt charities such as the ones in my signature.

You don`t say if you rent or are a homeowner, bankruptcy (note the spelling) is not ideal for homeowners, as your house will be at risk, even if you rent, going bankrupt for 23k is a little bit over the top.

There is something called a DRO (Debt Relief Order) which may be better suited to your circumstances, or, if you don`t meet the criteria for that, then a DMP (Debt Management Plan) is always an option for you.

Look on the stepchange website to see your options.

Thank You for replying, 

Thank you to anyone who replied here, I didn't expect so many replays in such sort time.

I do apologize for perhaps chaotic explanation of my situation to clarify.

We don own house, neither anything expensive except for car ( like mentioned is on HP for another 8 months). 
We have laptop which my son and girlfriend using for school ( laptop was purchased by me ) I personally have two budget 3d printers, bunch of tools etc  and using them to work ( I do sell arts and crafts), and we have old TV.
Summing up we have no valuable assets.

Our total income is around 4100-4300, this includes universal credit my wife's wages mine self employed and child benefit.

Our expenses are around 4400-4500
This includes car HP of 200 but loan and credit card repayments are not included.

Obviously we will be tighting out our budget but easy calculated we are really on the line specially now with all costs of living going up and where already British gas mentioned to me we are not paying enough....


I did learned about all options we have and called Citizen advise - they told me cuz I'm not in default with my creditors yet they can't do nothing and I can't do nothing basically I have to stop paying my creditors and perhaps then contact them where I explained that I will go on default now in January ( till now I was topping up expenses with cards hoping for improvement but it was mistake) 

We trying to contact stepchange however could not speak to anyone over phone for last week neither they contacted me, same time I had issues with onli forms as I'm self employed and I been directed to different business department but I feel it's not right call as I'm actually leading pattern and only making small profit from working from home. 

We did as well check debit advice services from internet and like mentioned all of them forcing for IVA , where I feel they should not. 
Same time I can see this is how they make money and when I ask about other options they literally scared me talking about bankruptcy or DRO.

Mentioning DRO, we best told is not a option cuz we have car , and another concern of mine is what will happen when at period of 12 when DRO is in place for month or two we will have surplus over 75 , will DRO be cancelled ??? I'm really concerned about specially working from home where one month I can make 200  another 700 and another I may be loss. ( Average I make around 500) 


All those uncertainty is why I ask here and I would like hear actually from people in perhaps similar situation or with intention of exploiting others.
Is bankruptcy so scary process where I be left without anything. How it can affect my girlfriend ??? Although we got in this situation together but everything is on my name and I was running finances I feel responsible don't want my girlfriend to be punished for this. 


We would really appreciate fair point of view on DRO or bankruptcy.

Thank You all 

luvchocolate

Please contact one of the debt free charities Stepchange or Debtline they will talk you through your options 

RAS

Can you clarify if you own or don(t) own your own house? This is important.

Czeskyy

We , not own home. We are private tenants. 

RAS

Ok. Looks like a DMP or DRO are your options. The one only reason most internet debt solutions recommend IVAs is because the companies earn money referring you to IVA providers, who earn money charging fees to run the IVA, typically £6-9k. Which may be why so many fail.

But you've a decent income and quite high expenses so seeing an SOA would be valuable. Will post the link here if possible.

You do need to find the documents regarding the car. That appears to be the barrier to the DRO. Excess income will be assessed on your average over a few months, so an individual month over is not necessarily an issue.

Even the DMP could be  a better option. The budget is more generous and although it looks like you may pay more over time, after a while most debts get sold on and some companies will agree discounted settlements.

Czeskyy

Thank You for replying, 
Im not sure who or what is SOA if You could explain ?? 
We consider DRO, and we looking to speak to stepchange perhaps they can help us with objective opinion on our situation.

Out income is quite decent, but need to remember we talking about family bof 4 in London where we have our baby in nursery and most of income comes from universal credit. To brake it down I make approximately 500 my wife as full time employee 1500 and rest is UC ( universal credit include money for nursery (my daughter is attending 2 days a week ) so I can actually work) , same applies to our expenses. High express cuz we pay 800 pounds for nursery( like mentioned above included in UC )  
Another factor is high rent but again universal credit pays for rent.


My biggest problem with DMP is fact i be stuck with it for so long and is more unofficial agreement with creditors , I'm hoping our situation get back on track as soon I be able to work full time ( in two max there years when my daughter will go to school full time based not like now only two days a week) 

Thank You for all feedback


Ps why You thinking bankruptcy is not right for me ??? 
We are planning to sale care settle HP and remaining money around 1500, use for bankruptcy feas.

Czeskyy

Same time I would like to add that I'm not trying to be cheeky or get away with debts , we are in debt for many years now but till now we kind of manage to be on top of all payments, we were moving money from one card to another to reduce interest or ever freezz interest for period of time, any excess money I had I put towards my depts etc but now with all inflation we can't cope anymore.
Its different when u r single and can work full time and expenses are 1000, 10% inflation make u pay 100 extra but when u are family of 4, and only one is working full time and u have additional 400-500 to pay a month cuz if cost of living rise, but wages and benefits don't go up inline u are in my shoes. 
Till now we are on top with all creditors but I'm not able to pay them from January, all my cards are on limits and this month is not best for my small arts and crafts buissnes as my daughter being sick and not attending nursery....

I'm sorry , I know it's loots to read and my situation is bit complicated hence I trying to get as much information and honest opinions as I can so I can make right decision taking my family at first than myself.

I really don't want ever be in situation like this , and if I not what happened over COVID and now Cost of living, we already would be debt free and happy, but unfortunately happened what happened.