DMP or IVA with one person self employed?

Hummingbird0808

Hi,

my husband and I got into some debt buying our first home and it’s become completely unmanageable and unaffordable. We’ve been paying these debts for 2 years with no end in sight, it feels like we are trudging through mud. 

I contacted stepchange who said they couldn’t help us because my husband is self employed but stated that I could enter into a DMP for £190 a month for 5 years. 

We then contacted payplan who suggested an IVA for us both at around £100 a month. When I looked into the IVA in more detail, I didn’t like the impact on the mortgage and it will likely impact my husbands business premises as he has to let his landlord know about the agreement. Payplan didn’t mention a DMP at all as an option. 

I’m not sure what to do moving forward. I know I can’t afford to keep going as is but I want a solution that has the least impact on our assets and my husbands business. 

My debts are currently up to date, none have defaulted and are around £11k. My husband has defaulted on a few of his debts and they are around £10k. We also have a HP car loan of £6k and we owe a family member £5k which we are locked into paying £300 a month. 

fatbelly

Your debts are really not high enough to be considering an IVA and I can't see that you are technically insolvent from what you have told us. It sounds like both organisations may have been more interested in feathering their own nests.

I wonder how close the two of you are to not needing any 'solution' at all.

Why not put together a soa and post it on the dfw board?

https://www.lemonfool.co.uk/financecalculators/soa.php

gwynlas

You do not need to use an external agency for a dmp but can self manage so take longer than 5 years if that is what you can afford. 

Hummingbird0808

What would be the benefit of self managing a DMP over using step change as they don’t charge a fee? It seems like the easiest way moving forward as I don’t need to directly deal with lots of different creditors?

fatbelly

They won't deal with people who are self employed and they are unlikely to want to prioritise the family debt.

They won't like you to be saving a lump sum on the side, which is what we would advise.

They don't like to challenge creditors on Consumer Credit Act debts 

If you want to settle by part-payment they will want everyone treated equally.

Apart from that, they are ok

Hummingbird0808

Sorry, I’m so confused. Do you think it’s better if I deal with it on my own? Step change have suggested saving money. How do I settle with part payment? How is that arranged? Sorry for being so thick 

RAS

You wait until the debts are defaulted, and save an emergency fund meantime, expect 6-18 months.

The creditors often sell defaulted debts for a small proportion of the value. The purchasers buy knowing they'll get nothing for some debts, some back on others and hope some people will pay it all off.

If you pay back a percentage of the normal monthly payment, purchasers might be happy to take say 20% of the outstanding value as a full and final settlement. That's when your emergency fund comes in useful. Unless it's PRA who are unlikely to offer a 20% discount. 

fatbelly

And that's a strategy far easier if you do-it-yourself

Hummingbird0808

Ok thank you both so much. That’s what you’d recommend in this case? 

Hummingbird0808

My concern is the constant contact. The emails and phone calls and letters. I just want to make a plan and for them to leave me alone

sourcrates

Hummingbird0808 said:

My concern is the constant contact. The emails and phone calls and letters. I just want to make a plan and for them to leave me alone

The contact is all automated, the computer sends you letters, and emails, the auto dialler try's to ring you, sometimes you get a call handler, mostly you don`t, its all a game, and that`s how you should treat it.

Don`t take all this too seriously, its the worst thing you can do, just try and relax about it, its only money, and they can`t take what you don`t have, the collection process nearly always follows very similar patterns, and is very predictable.

Its much easier to wait until your debts default, get sold on, then you can quickly and easily set up payments on nearly all debt purchasers websites, save that emergency fund up with settlement offers in mind later on.

Calls can be blocked, so can emails, and the letters go in your big blue recycle bin.

The absolute worst that can happen with unsecured debt is that you get taken to court and are ordered to repay the debts at an affordable rate determined by your budget, if anything is not affordable, the court would not expect you to pay, its really is that simple, creditors can shout and howl as much as they want, in the end only a court has authority to make you pay, and affordability is paramount.

Honestly, what is there to worry about??