IVA or DMP long post

CJcollage

I’m looking at options and read some great advise on here but just wanted some advise based on personal experiences to help me decide 
I’ve avoided all the companies such as PayPlan ans step change so far as want to feel I know what I’m doing when. I start talking to them 

I have £34k debt .. my monthly payments are nearly £900 a month so need to consolidate 

I have a property shared with husband .. his debts are less than 5k but he has the car finance in his name an important part of his job is a car he gets a “car allowance” from work so we can’t just drive a old car he has to use the allowance  for a car which we lease .. we share a car so one car family .. 

after reading info and some online calculations I have the option of
1)  DMP of £300-£350 a month subject to the final SOA being agreed and 9-10yr paid off ..
2)  IVA which I assume could be around same sort of payment but done in 5-6 years 

Can’t decide what’s best between these as seen benefits and cons of both
my important aspect in all this is my home being safe for the family I have and not having bailiffs etc at my door .. I’m terrified of this and loosing my home .. my relationship is very rocky as I’ve come clean to my partner and we are just say on speaking terms as he’s worried I’ve ruined his finances and I can’t answer that and need to get a solution to solve our issues 


in the IVA I’ve read about the equity release which I feel is confusing .. so we have a deal with our mortgage now but it’s fixed for another. 3 year … we are in no doubt that in 3 year we won’t get a better offer because of my credit file being a mess but understand we can stay with our mortgage company provided we keep up payments and take the standard variable monthly payment with them .. they can’t effectively cancel our mortgage ? ..  I’ve read some people have still managed to renew a deal with their mortgage company whist in a DMP or  IVA if it’s the same one ? not sure if this is true ?  Any experiences of this ? And does the IVa / DMP impact mortgages ? 

So the equity clause I believe would mean that if my house is worth approx 210k in 5 yrs time and our mortgage balance is £120k mortgage my 85% equity is approx £42k (predicated) so I can be asked to try release up to-that amt with a remortgage or secured loan is that right? But I don’t see where it says how they calculate what you can be asked to release ? Is that based on the value of the remaining debts ? Ie if I have 34k I pay £350 for 60 months I’ve paid 21k I could be asked to release the £13k from my home ? If I can then I’ll pay that secured loan agreement if not due to being declined by lenders etc then  I could be asked to pay another year at £350 and done after 6 years ? 

I’m not sure what’s the right way to go ? I may have some money windfall in the next few year from shares my husband has that can’t be touched yet due to tax and possibly some inheritance I’m due 

really struggling to see what’s the best route … I want to protect my house and my partner ( due to his job) but I can’t survive on this current monthly payment I’m drowning and getting so stressed I need to sort a solution 

Grumpelstiltskin

OK If you do an IVA you don't just pay back the total of your debts you basically pay the total plus the IVA fees which can run into thousands.

A DMP run either by yourself or one of the debt charities has no fees.

Forget bailiffs knocking at your door, that isn't going to happen, don't believe what you see on TV.

Don't rush into anything, nothing is going to happen even if you stop paying your unsecured debts.

Start by reading this thread

In Debt and Wannabe Debt Free? First Steps! — MoneySavingExpert Forum

Do a SOA format for MSE and copy and paste on here.

sourcrates

Let me just address your worst fears first.

Assuming your debts are just run of the mill consumer credit debts, then your house is going to be fine, lenders don`t look to repossess houses for credit card debts, nor do courts condone such actions when better options are on the table, remember legal action works both ways, the court has a duty to find a compromise for both parties, in most cases, if a payment plan keeps you in your home, that would be what a court would grant as a way forward.

In the vast majority of cases, say 99%, non of that is going to happen.

In the UK, if you default on a debt, the lender goes through there own collection process, then they might assign or sell your debt, and whoever gets it next rinses and re-peats the same process.
By collection process, I mean letters and phone calls.

Legal action is only really taken if you ignore whoever buys your debt for a period of time, and then only if they think you have the money to pay it, bailiffs are rarely engaged in consumer credit debt recovery, and if they are, its normally just the county court bailiff, who works for the court, not these private companies you see on TV.

So whilst the collection process runs, you can ignore all communications except if you happen to be in that 1% and get a letter before action, again it would be very rare, but at that point you would comply with the letter.

Now I am not a fan of IVA`s, far too restrictive, they do protect your home from legal action, but as I have already said, that would be an extremely rare occurrence, any windfall/overtime/extra cash or spare money of any kind, would need to be declared to your IP and be paid into your IVA, if your income goes up, or your house increases in value giving you more equity, all of that would need to be released to the benefit of your creditors, you may end up repaying all of the debt, plus all of the fee`s associated with an IVA, which can be considerable.

Your debt is 34k, I would say don`t do an IVA, unless your debt was at least twice that figure.

If I were you I would opt for a self managed debt management plan, it remains firmly under your control, you decide who and what you pay and when, any extra money is yours to do with what you please.

And it wouldn't be for 10 years either, the way it works is your debts will be sold, the specialist companies that buy them nearly always offer settlement terms at some point, if you make space in your budget to save a settlement/emergency fund, you can wrap it all up in under 6 years if you are lucky, with full and final settlement offers.

A lot of folk opt for this approach, as its the most flexible choice and works best all round.

CJcollage

Thank you that makes sense I think I see the DMP as less formal it worries me more .. I’ve taken the step to stop payments this month to save some money and then start to make agreements etc 
my debt is Barclaycard who at the first missed payment has issued a termination notice and a default already the rest have been told why I’ve missed like I have Barclaycard and have been understanding to see advice my debts are MBNA (CC)  Nationwide ( CC & Loan )  PayPal, Virgin (loan) and the odd couple of store cards with a couple hundred pounds id thay 

sourcrates

None of it should worry you, once a plan is in place, no matter what it is, it will continue until settled, with little or no drama, you just continue to pay your debts, but at a reduced rate over a longer period of time, there is nothing to worry about, life continues as per normal.

MBNA usually sell to Link Financial, Barclaycard to Lowell or Cabot, Nationwide are looking to purchase Virgin, so debt collection for both accounts could go to same company, but could be anyone.

PayPal, only ever equitably assign debts to collectors, they never take legal action in this country or appear to sell there bad debts, although with them becoming FCA certified recently, that may change.

Good to know your enemies intentions I think.

Grumpelstiltskin

You are going about things the right way.
Once you have stopped payments save as much as you can into an emergency fund and wait for defaults to come, the sooner you get them the better.

What ever you do don't speak to any creditors on the phone, they will try and get you to pay them. Don't answer any calls, block their numbers don't worry about any threatening E Mails they need to contact you by snail mail if they in the rare case decide to take you to court, they can't just magic a CCJ out of thin air.

If you can do a SOA as it shows in the thread I linked  and post it on here we can see exactly your best way forward.

CJcollage

Thank you 
I will take a look at that and try post it up 
I’ve a new job well promoted at work so waiting to see what the wage is after the tax and student load stuff so I’ll sort that with the new income also my husband is going down in May as his bonus period is done so not sure what his will be … is it based on my wage and share or his aswell ? PayPlan took his wages and wanted £800 a month but didn’t consider his commitments and step change told me £300 as it’s just me .. so what should I do the SOA on ? 

We work out house on 50% mortgage each and council tax and utility like gas water and shopping  he pays for the car the mobiles the internet insurances etc so not sure how to approach it 

sourcrates

Approach it from the point of view of going self managed, just budget for what you pay for, and whatever disposable income you have left can go to creditor payments.

See if you can include an emergency fund of say £50 a month, or more if you can.

The beauty of self management is you can budget how you see fit, not how some debt charity of advice service tells you to do it.

CJcollage

One last thing as you have been so helpful 
what about mortgages when on DMP… my partner is worried how this will impact us ? And is reluctant for me to take this path and feels we could struggle on .. I don’t think we can we are literally living pay day to pay day .. this month I put the £350 I feel I can afford away and so far I’ve felt much better financially being able to get shopping and not use credit cards and being able to feel I have some money aside ..so I feel this DMP is right or it will get worse .. 

We have a joint mortgage we have 13 yrs left and 3 years until we need to renew our fixed deal ? Is it ok to stay with your lender on their standard variable rate ? Do they consider new deals as your already a customer and assume that don’t need a credit check as your already a customer l? We are with nationwide so a good high street brand ..

we are hopefully planning to try pay it off in 7 /8 years as my partner is going to try cash in some of his pension(he can take 1/4 of it early as a lump sum) but we don’t know what this will be like till closer to the time 

sourcrates

Re-mortgaging with an existing lender does not normally require a credit check, many 1000`s of homeowners are on DMP`s and they all have to renew at some point, not heard anyone having any issues to date.

Different story through if you were to try and change providers, but not impossible with a good broker.