Major Trouble - £23K debt

lixhul

Long story short I invested heavily into crypto and lost £30K. I paid off £7K of loans during it's run, but I am now in £23K of unsecured loans debt, all of which are 5 months unpaid.

Without an SOA, I have roughly £100 spare each month, have a mortgage which needs renewing in 2025, and I own my car which is worth about £7K.

My question is what do I do? These loans will default soon and I can already hear the phone calls coming my way. I am of the mindset to wait til they are 1 year old and apply for an IVA? The other option is bankruptcy? The third option is a DMP but that'll be so low paid each month and I'll never pay it off and they add interest until defaulted if I am not correct?

Thank you 

kimwp

What has changed since you posted about your debt in October?

EssexHebridean

Redo the SOA you had in your previous thread with the up to date information, and update us on what has changed with your general position since then as Kim mentions, and we’ll be in a far better position to offer help and suggestions. 

If going for a DMP the advice is to let the debts default first, thus stopping the interest. 

fatbelly

If you are a homeowner with equity then bankruptcy is not an option.

You would need to think very carefully about an IVA.

dmp is the safe route

RAS

If the debts are 5 months unpaid, then you should get defaults sooner. That'll halt the interest.

Put that £100 into an emergency fund, for when something blows up. Then set up your budgeting account for the annual stuff, rather than leaving in the main account, as that gives you a false sense of security.

Once the defaults come in, you might want to start a a DMP. Speak to Stepchange again.

enthusiasticsaver

I have taken a quick look at your old threads and you seem to  have dug yourself into a hole.  If the loans are 5 months  unpaid have they not already defaulted? Your option is a DMP really as you have a house so an IVA is not recommended.  As the years go on you may get F and Fs.  An soa is needed to see how much spare you have to offer on a DMP.  Second job to increase income might be a good idea and you need to save for emergencies as you will not have access to credit. 

fatbelly

lixhul said:

Long story short I invested heavily into crypto and lost £30K. I paid off £7K of loans during it's run, but I am now in £23K of unsecured loans debt, all of which are 5 months unpaid.

Without an SOA, I have roughly £100 spare each month, have a mortgage which needs renewing in 2025, and I own my car which is worth about £7K.

My question is what do I do? These loans will default soon and I can already hear the phone calls coming my way. I am of the mindset to wait til they are 1 year old and apply for an IVA? The other option is bankruptcy? The third option is a DMP but that'll be so low paid each month and I'll never pay it off and they add interest until defaulted if I am not correct?

Thank you 

What's the logic on the one-year wait for an iva?

You can try an IVA. £100 per month is enough to cover the IP fees and give a very low return to creditors. Your car and house could be protected, though you would be asked to release equity in the final year..

On balance I agree with the others that a dmp is safer unless you have done your homework and fully understand all the risks that come with an IVA 

lixhul

I will do an SOA. What's changed is that everything has gone up, my energy, my food, my petrol. My mortgage fixed rate ends in 2025 and that'll add £200 a month I am sure.

I considered an IVA because it'll be written off a bulk of it? A DMP would be going on for years. My credit rating will already be shot for 6 years so that doesn't matter, I won't be able to borrow anything.

One bit of good news is that on Tuesday I am being trialled for a major promotion at work, which sounds like if it works I will be on substantially more money (currently data analyst and this role is Inventory Planner Analyst). If I get that, I may be able to tackle this fairly with a DMP. But what's the point if my credit is already bad, wouldn't the option to write off X amount be better through an IVA?

Anyway I'll get an SOA sorted. Thanks.

JCS1

The issue is the majority of your creditors may not agree to the IVA. 

But SOA will be a starting point

RAS

The other issues are:

In year 6, you will have to release any equity in the house. You appear to be the sole owner so may be expected to take out an expensive secured loan on top of your mortgage.
If your income increases or you get a windfall, you could end up paying more than you owe; the full whack plus the OR fees of £9k ish.
If you get into a fix, the IVA fails and you are back to square one and on the Insolvency Register.

fatbelly

Most IVAs are sold through 'lead generators'. These are basically marketers who just want a sale. So obviously they talk about the good points of an IVA, not the downsides.

That's why I say to do your homework. Many IVAs fail, maybe around a half of them.

https://debtcamel.co.uk/more-than-third-ivas-fail/

Many go on for longer than the headline 5 years.

Many are forced to take out a remortgage or a secured loan, at interest and over an extended period.

Some, a very few, end in bankruptcy.

If you want to move property during the period, or come into a lump sum, you may end up paying more than the value of your debts as you will also be liable for the IP fees.

That's just off the top of my head.

https://debtcamel.co.uk/hard-choices/iva-dmp/