Advice on starting

Champdog

Hi everyone, I took the massive step a few days ago to total up all of my debts (all unsecured via credit cards and loans). Having spent days on the case, Payplan are chomping at the bit to set me up on an IVA and having completed the same information with Stepchange this morning, they are suggesting I declare bankruptcy. 

The difference between both results is likely due to Payplan being aware that I am about to receive £3000 from my husband following a redundancy payment meaning they are suggesting to use £3000 towards a lump sum IVA in order to write off my debts. 

Either way, I applied for Breathing Space this morning and have been granted this to end on 17 January 2024. 

I guess I'm trying to wrap my head around whether there is any other option to manage this rather than IVA/bankruptcy. I've completed an SOA below. All debts are in my sole name. The household bills are my contribution rather than entire amount (husband and I go 50/50 on these).

Any words of wisdom gratefully received!

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

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2 - both in husband's ownership[b]

Monthly Income Details[/b]

Monthly income after tax................ 2308

Partners monthly income after tax....... 0 - made redundant last month, currently looking for work

Benefits................................ 172.90 - child benefit

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

Total monthly income.................... 2480.9[/b][b]

Monthly Expense Details[/b]

Rent.................................... 797.50

Council tax............................. 124.58

Electricity/Gas............................. 67.37

Water rates............................. 20

Mobile phone............................ 42.49

TV Licence.............................. 6.62

Internet Services....................... 12

Groceries etc. ......................... 225

Clothing................................ 90

Petrol/diesel........................... 300

Road tax................................ 20.56

Car Insurance........................... 52.16

Childcare/nursery....................... 320

Other child related expenses............ 35

Medical (prescriptions, dentist etc).... 10.81

Pet insurance/vet bills................. 72.92

Contents insurance...................... 1.99

Presents (birthday, christmas etc)...... 50

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

Entertainment........................... 50[b]

Total monthly expenses.................. 2319[/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

Nationwide CC..................7415.32...222.4.....19.9

Nationwide Loan................5058.41...146.7.....2.9

Sainsbury's Bank CC............7204.21...216.1.....22.46

M&S CC.........................5067.4....152.......0

MBNA CC........................5609.89...168.3.....27.73

First Direct Loan..............12771.4...277.7.....15.9[b]

Total unsecured debts..........43126.63..1183.2....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,480.9

Expenses (including HP & secured debts). 2,319

Available for debt repayments........... 161.90

Monthly UNsecured debt repayments....... 1,183.2[b]

Amount short for making debt repayments. -1,021.3[/b]

[b]Personal Balance Sheet Summary[/b]

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

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

Total Unsecured debt.................... -43,126.63[b]

Net Assets.............................. -43,126.63[/b]

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

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

Champdog

Sorry, the formatting on that is terrible! My first post - successfully messed up!

sourcrates

Hmmm, a 3k lump sum IVA to settle 43k of unsecured debt, you would need to convince First Direct and Nationwide that offer would be better for them, than if you declared bankruptcy, as they are the majority debt holders.

If, it succeeded, it would be a coup for you, but as you are a grand per month short on your debt repayments, it could just work, you would have to make them see that the few quid a lump sum IVA would provide, will be more beneficial than if you went bankrupt, not by much granted, but at least they would get something back.

In bankruptcy there would not be an IPA granted on those figures anyway, so your creditors would get nothing.

I`d go for it, if it fails, you always have a fall-back option.

Champdog

Thanks Sourcrates. I have more to throw at the IVA lump sum if needed but Payplan seemed to be adamant that the minimum amount of £3k should be fine. 

sourcrates

You may find some negotiation will be necessary, they may take your offer under advisement, then come back to you and say, the 3k is just not enough, but if you could just increase it to 5k we might have a deal.

That`s how these things usually work.

fatbelly

I agree with sourcrates that that sounds too good to be true, but Payplan do have a reasonable reputation - not a perfect one.

When you say that you have more to throw at an iva, do you mean a gift from a third party?

Certainly stop paying the non-priority debts and move your banking to someone unconnected to the debts.

Best of luck. Let us know what happens

Champdog

Thanks fatbelly. When I say more to throw at the IVA, it's actually an amount from my husband due to his redundancy payout which we are expecting next week. It would only bring the total up to £6k rather than £3k as Payplan have suggested. 

I've literally just opened a joint account with an unconnected bank so I may transfer everything into there for now or open up another sole account. My credit rating is through the floor so I may not be too lucky!

I've still got all my direct debits active for the loans and credit card repayments - is it worth cancelling them for the meantime?

sourcrates

Champdog said:

I've still got all my direct debits active for the loans and credit card repayments - is it worth cancelling them for the meantime?

Yes, that is a priority, get them cancelled, I think myself and fatbelly sing from the same hymn sheet on this, breathing space means you make no payments for that period, but its best to remove the mechanism that allows them to take payment in the first place, just to be certain.

If bankruptcy or insolvency is going to be the way forward, best get into line now and treat everyone the same, by not paying any of them.

Champdog

Thank you! This is most helpful!

fatbelly

I'd be really reluctant to use husband's redundancy payment on this. It's a once-only payment to see him through a difficult time.

Even in a conventional IVA that was in his name they wouldn't take all of a redundancy payment. You can keep the equivalent of 6 months pay.

Champdog

fatbelly, the total redundancy figure he is receiving is far greater than £6k. He simply owes me £6k for a vehicle I sold and leant him the money to purchase a new one (last week) while waiting for the redundancy payment to come through. I was going to use this money to pay off a credit card but Payplan are suggesting otherwise.