DRO/IVA/Bankruptcy advice

Dazed_n_Confused99

I may be in line for a promotion and a payrise by the end of the year but can't bank on that at the moment. I've managed (just about) for the last 12 months to not get into any further debt (although I do occasionally get financial support from friends and family), so I'm fairly confident I can keep up the payment for my children's football for the time being. They have gone through enough over the last 18 months with me and their mum splitting up without me being the cause of them having to give up something they love (and is good for them). I appreciate my debtors may not see it like that but my kids will always come first.

I've gone through my income and expenditure several times with both Step Change and Money Wellness and there is honestly nothing else I can look strip back on, unless is child maintenance or paying for my kids sports. The absolute most I am left with at the moment is around £90 pm (see my SoA below).

I suppose the advice I'm really looking for is will the cost of my car stop me from being able to apply for a DRO or IVA, or if I go down the bankruptcy path will the official receiver have the power to force my company to stop me paying for this (which would likely result in me losing my job). I also assume they will insist that I don't pay any more than the max Child Maintenance rate but does this include not being able to take them out or give them any pocket money etc?

Statement of Affairs and Personal Balance Sheet

Monthly Income Details[/b]

Monthly income after tax................ 3460

Partners monthly income after tax....... 0

Benefits................................ 0

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

Total monthly income.................... 3460[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 950

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Telephone (land line)................... 0

Mobile phone............................ 25

TV Licence.............................. 14

Satellite/Cable TV...................... 25

Internet Services....................... 35

Groceries etc. ......................... 320

Clothing................................ 40

Petrol/diesel........................... 200

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 85

Childcare/nursery....................... 0

Other child related expenses............ 1300

Medical (prescriptions, dentist etc).... 45

Pet insurance/vet bills................. 80

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 30

Haircuts................................ 25

Entertainment........................... 80

Holiday................................. 30

Emergency fund.......................... 0

Gym and sports.......................... 35

Smoking/Vaping.......................... 40

Charitable donation..................... 10[b]

Total monthly expenses.................. 3369[/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

Credit cards...................36000.....0.........0[b]

Total unsecured debts..........36000.....0.........-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,460

Expenses (including HP & secured debts). 3,369

Available for debt repayments........... 91

Monthly UNsecured debt repayments....... 0[b]

Amount left after debt repayments....... 91[/b]

[b]Personal Balance Sheet Summary[/b]

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

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

Total Unsecured debt.................... -36,000[b]

Net Assets.............................. -36,000[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

fatbelly

You don't need to rush into any strategy. Just default on the payments and get those defaults on to your credit file.

Save the £90 until you have £680 then look at the situation. That sum is either an emergency fund or the bankruptcy fee.

Your soa looks odd to me. Lots of things at £0 that should have a figure on them

Grumpelstiltskin

Sourcrates asked you what you had against a Debt Management Plan and you haven't answered that yet.

You can run one yourself and unlike a DRO or Bankruptcy is doesn't show as an insolvency.

Brie

Your soa shows

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Do you not pay any of these or are they in with your rent?

Also no contents insurance?  

I want to suggest to cut out the gym and the smoke/vaping but know that those are sometimes the glue in a person's life

And it would be great to get the full breakdown on your credit cards as that's where people might be able to offer some ideas for you.

Finally - Money Wellness as far as I'm aware is a profit making company so it's in their interest to suggest something that will get them ££ like an IVA.  A DRO won't but a leased car seems to put you beyond one of these.  That leaves a debt management plan which you could DIY with a bit of help from either the lovely people here or one of the other charities - Community Money Advisers (CMA) help with DIY DMPs.  Not sure about StepChange or NationalDebtline.  Or Christians Against Poverty (CAP)

fatbelly

Brie said:

Your soa shows

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0





Finally - Money Wellness as far as I'm aware is a profit making company so it's in their interest to suggest something that will get them ££ like an IVA. 

Well...

They are Grant Thornton under a new name since the Government's Money and Pensions Service chose to give them (rather than Stepchange) a large sum of money to do DROs and free dmps.

They promised that they would not use this as an opportunity to mis-sell IVAs.

ManyWays

Dazed_n_Confused99 said:

I suppose the advice I'm really looking for is will the cost of my car stop me from being able to apply for a DRO or IVA, or if I go down the bankruptcy path will the official receiver have the power to force my company to stop me paying for this (which would likely result in me losing my job).

I also assume they will insist that I don't pay any more than the max Child Maintenance rate but does this include not being able to take them out or give them any pocket money etc?

I don't know how the deduction from salary for the car would be treated in a DRO or bankruptcy. But I don't think an adviser would put forward a DRO application with your child costs 300 a month more than the child maintenance calculator says. And I doubt an official receiver in bankruptcy would see that much as an allowable expenditure.

Money Wellness have a long experience of IVAs and which creditors will reject an IVA proposal. This is hard for outsiders to assess so I think you should assume they have got this right and that an IVA would not be approved.  If they could have squeezed an IVA through they would have wanted to do that. 

The obvious option now is to look at a DMP and plan to increase the amount you can pay to when you get promoted. When the lease ends, you may be able to get a cheaper one that would also give you more money to pay into a DMP.

RAS

The budgets for bankruptcy are more generous than IVAs and last 3 years but you need advice as the whether your car costs and maintenance costs are acceptable. They used to accept one low cost activity per child. You might be able to load other elements to cover the cost. Add that BR budgets can be adjusted up and down if your situation changes.

IVA payments last 6 years if you have no equity and cannot be reduced by more than 15% without creditor approval, which is unlikely.  Budgets are tighter and think about RPIs over 5-6 years and you'll see why the pips squeak by the end of the period. And the IVA provider would want a large chunk of any pay increases, bonuses and windfalls.

DMPs, you decide the budget and the creditors accept the payments if you self manage. You might want to use one until 2026 and then re-assess?

Dazed_n_Confused99

sourcrates said:

An IVA would be madness, Bankruptcy insane, a DRO impossible due to the car and your spending.

Debt management plan ticks all the boxes, why are you so adverse to it?

You can continue to make payments for your kids, you have a high wage, so its just a case of paying what`s affordable over a longer period of time, thus retaining your current spends, albeit according to budget, repaying your debts, and you retain control.

what`s not to like about that?

Sorry for the late reply

I suppose with a DMP it is just the thought of debt hanging over me for years and years. However, maybe it is something I should consider and will look into this further.

Dazed_n_Confused99

Brie said:

Your soa shows

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

Oil..................................... 0

Water rates............................. 0

Do you not pay any of these or are they in with your rent?

Also no contents insurance?  

I want to suggest to cut out the gym and the smoke/vaping but know that those are sometimes the glue in a person's life

And it would be great to get the full breakdown on your credit cards as that's where people might be able to offer some ideas for you.

Finally - Money Wellness as far as I'm aware is a profit making company so it's in their interest to suggest something that will get them ££ like an IVA.  A DRO won't but a leased car seems to put you beyond one of these.  That leaves a debt management plan which you could DIY with a bit of help from either the lovely people here or one of the other charities - Community Money Advisers (CMA) help with DIY DMPs.  Not sure about StepChange or NationalDebtline.  Or Christians Against Poverty (CAP)

Thanks for your reply.

My rent includes all bills and that's why my SoA shows zero for these.

I am going to try and cut out vaping (nicotine addiction is !!!!!! to kick though) but the gym is what keeps me sane and helps with my mental health.

I did think Money Wellness may be a profit making organisation!

Dazed_n_Confused99

ManyWays said:

Dazed_n_Confused99 said:

I suppose the advice I'm really looking for is will the cost of my car stop me from being able to apply for a DRO or IVA, or if I go down the bankruptcy path will the official receiver have the power to force my company to stop me paying for this (which would likely result in me losing my job).

I also assume they will insist that I don't pay any more than the max Child Maintenance rate but does this include not being able to take them out or give them any pocket money etc?

I don't know how the deduction from salary for the car would be treated in a DRO or bankruptcy. But I don't think an adviser would put forward a DRO application with your child costs 300 a month more than the child maintenance calculator says. And I doubt an official receiver in bankruptcy would see that much as an allowable expenditure.

Money Wellness have a long experience of IVAs and which creditors will reject an IVA proposal. This is hard for outsiders to assess so I think you should assume they have got this right and that an IVA would not be approved.  If they could have squeezed an IVA through they would have wanted to do that. 

The obvious option now is to look at a DMP and plan to increase the amount you can pay to when you get promoted. When the lease ends, you may be able to get a cheaper one that would also give you more money to pay into a DMP.

Thanks. I'm going to look into a DMP