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DMP or IVA?

Hi,

So long story short I've stupidly racked up a chunk of debt on various things. I'm married but my partner does not work due to her English not being good enough just yet (This will change) and I have a step son but due to their immigration status we have no access to public funds, basically my salary is all we get.
We aren't home owners and currently rent, there is one car however it is a salary sacrifice vehicle which is required for work.
I spoke to moneywellness with a view to obtaining a DRO, they stated the salary sacrfice vehicle would prevent me from obtaing a DRO and recommended an IVA at approx £83 per month. I'm not so sure it's the correct choice, surely a DMP would be better because I have nothing to protect, what are people thoughts on this?
Debts circa 37k, unsecured, mixture of credit cards and loans.

None Priority debts are as follows:
Capital One (Europe) Plc £1,531.00
Zable£ 847.00
Zopa Limited £2,115.00
Virgin Credit Cards £1,587.00
Capital One (Europe) Plc £2,108.00
Lloyds Bank Plc - Consumer Deb £2,043.00
Santander UK plc £7,434.00
HSBC Bank PLC £3,745.00
Lowell Financial £3,952.00
National Westminster Bank Plc £5,997.00
Lendable £4,759.00
118118 Credit Card £60.00
Halifax £487.00
MBNA £490.00

SOA:
Total Income 2,652.00 (After Salary sacrifice vehicle which is £471 net)
Total outgoings 2,569.00
(Savings contribution) 0.00

Total available for priority creditors
Total available for non-priority creditors 83.00


Salary or wages (take home) 2,652.00
Partner Salary or wages (take home) 0
Other earnings (including self employment) 0

Total salary and wages per month 2,652.00
Benefits and tax credits Amount (£) Notes
Universal Credit 0
Jobseeker's Allowance (income based) 0
Jobseeker's Allowance (contribution based) 0
Income Support 0
Working Tax Credit 0
Child Tax Credit 0
Child Benefit 0
Employment and Support Allowance or Statutory 0
Sick Pay 0
Disability Benefits 0
Carer's Allowance 0
Local Housing Allowance / Housing Benefit 0
Council Tax support 0
Other benefits/tax credits (e.g. maternity benefits) 0
Pensions Amount (£) Notes  0
State pensions 0
Private or work pensions 0
Pension Credit 0
Other pensions 0
Maintenance or child support 0
Boarders or lodgers 0
Non-dependants' contributions 0
Student loans and grants 0
Other income 0

Monthly Outgoings: Fixed Costs
Home and contents Amount (£) Notes
Rent 667.00
Council tax/rates (including water charge if you
live in Scotland and rates in NI) 162.00

TV licence 14.00

Total home & contents costs per month 843.00

Gas / Electricity 186.00

Water supply 72.00 (Yes It's stupidly high, we're on a meter)

Childcare costs 0
Adult-care costs 0
Child maintenance or child support0
Prescriptions and medicines 29.00
Dentistry and opticians 10.00
Total care and health costs per month 39.00
Transport and travel Amount (£) Notes
Public transport (e.g. work, school, shopping) 0
Hire purchase and conditional sale vehicle 0
Car insurance 120.00 (Wifes insurance)
Road tax 0
MOT and ongoing maintenance 0
Breakdown cover 0
Fuel, parking and toll road charges 150.00
Other costs (including taxis) 0
Total transport and travel costs per month 270.00
School costs Amount (£) Notes
School uniform 13.00
After-school clubs and school trips
Other costs

Total school costs per month 13.00
Pensions and insurances Amount (£) Notes
Pensions payments
Life insurance 15.00
Buildings and contents insurance 5.00
Health insurance (medical or accident or dental)
Other
Total pensions and insurance costs per month 20.00
Professional costs Amount (£) Notes
Professional courses
Union fees
Professional fees
Other

Total professional costs per month

Other essential costs Amount (£) Notes
Other essential costs

Total other essential costs per month

$tmsection$>StandardFinancialStatement<$tmsection$

Monthly Outgoings: Flexible Costs
Communications and leisure Amount (£) Notes
Home phone, internet, TV package
(incuding film subscriptions) 50.00
Mobile phone 65.00
Hobbies, leisure or sport (e.g. socialising,
eating out, outings, clubs, leisure courses) 50.00
Gifts (e.g. birthdays, festivals, charity donations) 42.00
Pocket money 43.00
Newspapers, magazines, stationary and postage
Other costs

Total communications and leisure

costs per month 250.00
Food and Housekeeping Amount (£) Notes
Groceries (e.g. food, pet food,
non-alcoholic drinks, cleaning) 715.00
Nappies and baby items
School meals and meals at work 41.00
Laundry and dry cleaning
Alcohol
Smoking products
Vet bills & pet insurance 20.00
House repairs and maintenance
Other costs
Total food and housekeeping costs per month 776.00
Personal costs Amount (£) Notes
Clothing and footwear 50.00
Hairdressing 25.00
Toiletries 25.00
Other costs

Total personal costs per month 100.00

Total Income 2,652.00
Total outgoings 2,569.00
(Savings contribution) 0.00
Debt admin fee (if applicable)
Total available for priority creditors
Total available for non-priority creditors 83.00



Comments

  • Dma76
    Dma76 Posts: 26 Forumite
    10 Posts First Anniversary Name Dropper
    Just to add, I've stopped paying the debts circa January 2024 because it became unserviceable, a number have defaulted.

  • OK Under no circumstances consider an IVA, 2 reasons, you don't own your own home and your debts are not high enough.


    If you go down to the woods today you better not go alone.
  • sourcrates
    sourcrates Posts: 30,611 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    DMP every time.

    IVA`s are awful things, unless you owe 100`s of thousands of pounds and have a house to protect, forget an IVA.

    I could go on and give my reasons but they are many and varied and I have posted them dozens of times before, look on any IVA thread on the insolvency board.

    Self managed gives you the most freedom, use one of the debt charities if you can`t or don`t want to do this yourself.

    Best to get everything defaulted first, but won`t always happen, save a good emergency fund, you will need it.

    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Brie
    Brie Posts: 13,465 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Agree about the DMP.  Can you DIY it?  Or will you be paying someone to help?  Do check what charges they have, if any.  No point in paying money if it's not all going towards your debt.  Not sure that the firm you mention takes a slice of the money or not.  Other debt charities don't.  

    fyi - it would be the value of the car you have not the fact that it's salary sacrificed.  That it is implied it's fairly new and therefore worth more than £4k which is the max amount allowed for a vehicle for a DRO.  
    I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards.  If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

    "Never retract, never explain, never apologise; get things done and let them howl.”  Nellie McClung
  • RAS
    RAS Posts: 34,446 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    MoneyWellness were Gregory Pennington, a major IVA provider.

    When Stepchange stopped managing DRO, they won a huge Government contract for DROs.   

    If you want to do a DMP, then choose a debt charity like Stepchange, National Debtline, CAB, CAP, or self manage.
    If you've have not made a mistake, you've made nothing
  • fatbelly
    fatbelly Posts: 22,140 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    edited 27 July 2024 at 9:14PM
    The reason you can't do a DRO is that your surplus income is too great.

    It cannot be the value of the car as you do not own it. It is a car that you have the use of but you do not own. 

    It is possible to get a DRO with a salary sacrifice lease vehicle but you have to show that the expense is essential and there is no alternative.

    It sounds like this wasn't very well explained to you or MW are making up their own rules to try to push an IVA (again)

    RAS. It was the other way around. SC decided to stop doing DROs when the Money and Pensions Service decided they wanted two new megafunded DRO hubs and instead of giving those contracts to the two biggest providers, decided to award them to CA (sensible) and Money Wellness (questionable). Part of the deal was that MW must also provide free dmps
  • Karonher
    Karonher Posts: 954 Forumite
    Part of the Furniture 500 Posts
    There are a few things that stick out in the SOA. £1200 a year for your wifes insurance is unaffordable if it is not being paid to allow her to get to work. Why is she being insured if you need it to get to work?

    Food as well should be cut. It should be possible to half this.
    Aiming to make £7,500 online in 2022
  • Dma76
    Dma76 Posts: 26 Forumite
    10 Posts First Anniversary Name Dropper
    Hi, thanks for the replies guys, it's much appreciated.
  • DisabledDan
    DisabledDan Posts: 144 Forumite
    100 Posts First Anniversary Name Dropper
    Dma76 said:
    Hi,

    So long story short I've stupidly racked up a chunk of debt on various things. I'm married but my partner does not work due to her English not being good enough just yet (This will change) and I have a step son but due to their immigration status we have no access to public funds, basically my salary is all we get.
    We aren't home owners and currently rent, there is one car however it is a salary sacrifice vehicle which is required for work.

    I spoke to moneywellness with a view to obtaining a DRO, they stated the salary sacrfice vehicle would prevent me from obtaing a DRO and recommended an IVA at approx £83 per month. I'm not so sure it's the correct choice, surely a DMP would be better because I have nothing to protect, what are people thoughts on this?
    Debts circa 37k, unsecured, mixture of credit cards and loans.

    None Priority debts are as follows:
    Capital One (Europe) Plc £1,531.00
    Zable £ 847.00
    Zopa Limited £2,115.00
    Virgin Credit Cards £1,587.00
    Capital One (Europe) Plc £2,108.00
    Lloyds Bank Plc - Consumer Deb £2,043.00
    Santander UK plc £7,434.00
    HSBC Bank PLC £3,745.00
    Lowell Financial £3,952.00
    National Westminster Bank Plc £5,997.00
    Lendable £4,759.00
    118118 Credit Card £60.00
    Halifax £487.00
    MBNA £490.00

    SOA:
    Total Income 2,652.00 (After Salary sacrifice vehicle which is £471 net)
    Total outgoings 2,569.00
    (Savings contribution) 0.00

    Total available for priority creditors
    Total available for non-priority creditors 83.00


    Salary or wages (take home) 2,652.00
    Partner Salary or wages (take home) 0
    Other earnings (including self employment) 0

    Total salary and wages per month 2,652.00

    Benefits and tax credits Amount (£) Notes

    Universal Credit 0
    Jobseeker's Allowance (income based) 0
    Jobseeker's Allowance (contribution based) 0
    Income Support 0
    Working Tax Credit 0
    Child Tax Credit 0

    Child Benefit 0


    Monthly Outgoings: Fixed Costs
    Home and contents Amount (£) Notes
    Rent 667.00
    Council tax/rates (including water charge if you
    live in Scotland and rates in NI) 162.00
    TV licence 14.00

    Total home & contents costs per month 843.00

    Gas / Electricity 186.00
    Water supply 72.00 (Yes It's stupidly high, we're on a meter)

    Prescriptions and medicines 29.00
    Dentistry and opticians 10.00
    Total care and health costs per month 39.00
    Car insurance 120.00 (Wifes insurance)
    Road tax 0
    MOT and ongoing maintenance 0
    Breakdown cover 0
    Fuel, parking and toll road charges 150.00
    Total transport and travel costs per month 270.00
    School uniform 13.00

    Total school costs per month 13.00

    Life insurance 15.00
    Buildings and contents insurance 5.00

    Total pensions and insurance costs per month 20.00


    Monthly Outgoings: Flexible Costs
    Communications and leisure Amount (£) Notes
    Home phone, internet, TV package  50.00
    Mobile phone 65.00
    Hobbies, leisure or sport (e.g. socialising,
    eating out, outings, clubs, leisure courses) 50.00
    Gifts (e.g. birthdays, festivals, charity donations) 42.00
    Pocket money 43.00

    Total communications and leisure costs per month 250.00
    Food and Housekeeping Amount (£) Notes
    Groceries (e.g. food, pet food, non-alcoholic drinks, cleaning) 715.00
    Nappies and baby items
    School meals and meals at work 41.00
    Laundry and dry cleaning
    Alcohol
    Smoking products
    Vet bills & pet insurance 20.00
    Other costs
    Total food and housekeeping costs per month 776.00

    Personal costs Amount (£) Notes
    Clothing and footwear 50.00
    Hairdressing 25.00
    Toiletries 25.00
    Other costs

    Total personal costs per month 100.00

    Total Income 2,652.00
    Total outgoings 2,569.00
    (Savings contribution) 0.00
    Debt admin fee (if applicable)
    Total available for priority creditors
    Total available for non-priority creditors 83.00



    There is no shaming here, it is surprisingly easy to get into the situation you find yourself in and it is mostly the fault of the Lenders who's goal is to get you into a place where you can just about afford to service the debt but not pay it off.

    Forget IVA's in my experience this are just commission products when applied to people in your situation 

    You might be able to forget the DMP or at least weigh up the pros and cons so you go in with your eyes open.

    So are all of those creditors Credit Cards, some seem to be loans??

    What is missing from the SOA is the interest rates for each of the debts, this is critical in order to determine the best solution and to make sure we consider loans properly we need to know the age of each loan as well as the interest rate.

    It seems that you bought a new car (no MOT) and if there is no road tax one assumes it was an EV???  If I have that wrong you need to update the SOA.

    My understanding is that in some cases Child Benefit is an exception to No Recourse to public funds

    "An eligible parent may claim Child Benefit regardless of the child’s immigration status. However, when a child has leave to remain with NRPF, legal advice should be obtained from an immigration adviser before an application for Child Benefit is made to find out whether this may adversely affect the child’s current or future immigration position." 


    "Some benefits, such as Child Benefit, can be claimed by a person whilst they are subject to a maintenance undertaking. However, most benefits can only be claimed after five years or if the sponsor who provided the maintenance undertaking dies before the end of the five year period."   

    https://www.nrpfnetwork.org.uk/information-and-resources/rights-and-entitlements/benefits-and-housing-public-funds/benefits/public-funds-exceptions#guide-content

    For the DMP side you need to know that you will be trashing your credit record, this is no bad thing for self discipline but it would affect any mortgage or car finance for up to 6 years.

    Ideally as part of this process you burn the debt from both ends, the SOA has some things that are maybe wanted rather than needed, the things that stand out are mentioned below, this is not judgement just potential to cut back on to add to your emergency fund or to reduce the debt.

    You need to get your partner on board by explaining you have been living beyond your means and need to reduce or eliminate debt to avoid paying huge interest rates.

    Gas / Electricity 186.00  
    Water supply 72.00 (Yes It's stupidly high, we're on a meter)

    You might have a water leak or your water company may be estimating the bills, find the meter and check it is accurate, it seems very high.  The energy also has some potential to be reduced, based on the rent I would not imagine you lived in a large house and there are only the three of you.

    For the prescriptions it may be worth getting a prepayment certificate iff all of the £29 a month is spent on one person

    A prescription costs £9.90 per item, but a PPC costs:

    • £32.05 for 3 months
    • £114.50 for 12 months

    This means if you’re going to buy 4 or more prescriptions in 3 months, or 12 or more prescriptions in 12 months, it may be cheaper to buy a PPC.

    https://www.gov.uk/get-a-ppc

    If the car is an EV then the Fuel, parking and toll road charges seem high at £150.00

    School uniform at £13.00 a month seems high when they are offering them for £5 each at LIDL 

    Your Home phone, internet, TV package  at £50.00 could be reduced to £25 for broadband on MSE deal if you are paying for Sky that should be considered a luxury and I would choose between a single streaming service and cut the TVL.  There are deals on MSE for shuffling subscription TV packages.

    Mobile phone looks expensive unless you are buying a phone on contract, I spend around £3 a month on a Lebara sim, it is currently £2 and I think I can terminate at 6 months to get another deal at £2.  My phone is old but it meets my needs, I am not saying you have to do this but there is a halfway point.  I bought a refurbed Apple iPhone on Amazon, it turned out he was still under contract but went back his old phone. It was at least a year old and I have had it for around 6 years.

    The next three seem high as if they are guesses, I would never pay  child pocket money but your Partner will need some income for their own self respect, I would expect this to be higher than £43

    Hobbies, leisure or sport (e.g. socialising, eating out, outings, clubs, leisure courses) 50.00
    Gifts (e.g. birthdays, festivals, charity donations) 42.00
    Pocket money 43.00

    The next three also seem like guesses or maybe they are what your partner is spending.  I won't get into these other than to say add it together with the pocket money for your partner.

    As for the DMP, if you can post the interest rates it may be possible to determine if it is needed depending on some serious cut backs for some time.  £37k is a lot of debt and even at zero percent paying over £700 a month it would take 44 months,  the most important thing is that you have turned off the spending that caused all this debt.  The sheer number of cards suggest desperate spending and I am left wondering if the following were previous attempts at debt consolidation loans

    Santander UK plc £7,434.00
    HSBC Bank PLC £3,745.00
    Lowell Financial £3,952.00
    National Westminster Bank Plc £5,997.00
    Lendable £4,759.00

    If there is some underlying reason for your spending it will need to be addressed first, otherwise the DMP will just be another attempt to make space for more debt which will not be forthcoming.  If on the other hand you have resolved the issue and this is an attempt to get out of debt and never take it again then DMP is a good solution.  You will need the discipline of a ninha in terms of paperwork management, preparation with new overdraft free unrelated new bank accounts and not engaging.with creditors.

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