Debt advice DMP,IVA,DRO

4A414B45

Hello,

Looking for a bit of impartial advice really on which route is the best suited for my position.

Bit of background, long term health issue which I had a operation on to remedy short term(expected to last around 15 years), ten years on I was in good line of work £65K, £80K+, took an unsecured loan, started self employed as health had deteriorated and was struggling with the physical nature of the job and needed some start up funding took two more unsecured loans, had a plan to start another business totally different sector of work that was less physical but over the course of a year my health deteriorated rapidly and I was forced to start the new business sooner than I would of liked as I was no longer able to carry out the physical work, I cant physically do the job I used to anymore and cant get work doing that.

This has been difficult as I wasn't ready with equipment or facilities which would of been paid for from my other self employment income and I have had to struggle getting things from people I know or had family buy things etc.

The new business is just starting to take regular bookings for work, from the start of July I have three good months booked in all pre paid work.and see this carrying on through the winter creating a steady income.(so far has been very sporadic due to focusing the work in the wrong area)

onto the debt, I took payment breaks from my loans in December time to give me a chance to get the equipment I needed and give the new business chance to get going, and also I didn't have enough coming in to pay them all.

I am now at a point where some have been passed to collectors and I have spoke with them and they have referred me to the likes of step change and NDH, one mentioned a OOCRO? out of court resolution order I think it was.

I have three main debts:

Loan 1 already with collectors around £8k

Loan 2 not with collectors around £3K

Loan 3 not with collectors around £22K (£10k is interest over 5 years)

HMRC which is with collectors which mentioned the OOCRO.

the Loan 3 is my biggest concern as my intention with this was to pay it off as fast as possible to reduce that interest, but if it goes to collectors I will have to pay the full interest.

I am not sure which route would be best to go down and if I do go for a DMP if I would be best trying to come to an arrangement myself with Loan 3 or to just include it in the DMP.

I think I've covered everything but its all a bit of a mess at the moment

Grumpelstiltskin

Firstly do you rent or do you have a mortgage?

4A414B45

just realised I missed a lot of vital information.

neither rent or have a mortgauge stay between places at the moment friends family etc.

0 dependads, single

the debt is my main outgoing, nothing I can really cut back on (I have about £40 a month of regular bills other than the debt, I dont spend anything on clothes etc, I run an old vehicle have paid insurance and tax for the year and spend around £80 month on fuel)

I have no assests other than my vehicle which may have to go anway to pay friends family etc

Although the debts were In hindsight high, the outgoings they were managable with my previous line of work and income.

my issue has been having to change that and the income hasnt picked up yet, last months income was £150

fatbelly

Then I don't think the debts are your main problem. Even Universal Credit will give you more income than that, and can also help with housing costs.

Are you hoping to get your own place?

4A414B45

fatbelly said:

Then I don't think the debts are your main problem. Even Universal Credit will give you more income than that, and can also help with housing costs.

Are you hoping to get your own place?

my issue is starting a business too soon in a totally different line of work which takes time to get set up buy the right equipment, make the right connections, get work in, last month was terrible, this month doesn't look much better. Its not a liveable income. so far, July however has around £4k of work booked with still in talks of around another £2k, then that carries on for the two months after that, I'm yet to take a booking for October. I'm not sure about universal credit I'm not really in the knowledge of how benefits work and how they work with having an income.

at some point yes but realistically not for a few years.

fatbelly

Could you go part employed, part self-employed till the business gets going?

stymied

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/192667/universal-credit-toolkit-quick-guide-self-employment.pdf

4A414B45

fatbelly said:

Could you go part employed, part self-employed till the business gets going?

I have had a look for part time employment but due to my circumstances theres not been anything suitable.

stymied said:

Thanks thats a helpful guide.

well the Loan 3 is now with collectors so i suppose the main question now is DMP or IVA?

with a DMP this has been proposed at 24 years without early repayments so i presume until that 24 years is up it will appear on credit file as part payments? and then for a further six years? so 2054 until the credit file is clear?

an IVA is six years from first arrangement? so would be 2030?

DMP is 100% of Debt value

IVA has upto 75% wrote off? I think


I can make early repayments on DMP to reduce term

is this possible on IVA or will it still be a set term and I just pay as much towards the debt as possible in that time?


Any other Impacts to be aware of?

Grumpelstiltskin

Debts will disappear 6 years from the date of default whether they have been paid or not.

If you start to pay before they have defaulted then yes it is 6 years from final payment.

A DMP doesn't always mean you will pay 100% of the debts, down the line you may be able to get a reduction.

Before you start a DMP you need an emergency fund, no access to credit if the washer and cooker break down in the same week so think about that.

4A414B45

DMP is unoffical so creditors do not have to stick to it can still take further actions

IVA is official and creates secure situation. what about assests? is there a set level allowed

Grumpelstiltskin

OK creditors can in theory take further action, what is the point of pursuing you for more money when you are paying what you can afford?

IVA is not a magic bullet, remember you will be paying the IVA company's fees on top of what you owe and it is an official insolvency where a DMP is not.