DRO/IVA/Bankruptcy advice

Dazed_n_Confused99

RAS said:

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?

Thanks for your replay and advice, much appreciated

RAS

Dazed_n_Confused99 said:

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]

You said you pay £300 for the kids sport, is that in the £1300?

You need contents insurance, almost certainly some car parking and I'm not sure £30 covers birthday presents and Christmas with three kids?

What death in service and pension benefits do you have? At your age and with a family, term life insurance could be very cheap.

sourcrates

The thing with debt management, in particular, self managed, is that you call the shots, no one else.

Debts will be sold on, debt purchasing companies don`t like to keep accounts on their books forever, they only pay a fraction of the face value for these accounts, so most will offer settlement deals at some point in the future.

This is where a fighting/emergency fund becomes important, you can hopefully settle your accounts with good discounts much sooner than you would have.

katsu

It won't be a magic wand, but:

What's the £80 entertainment? If you keep gym can you reduce that?  I appreciate it might be with the kids but if they have the sport they might need to understand things are less available? Maybe skip the holiday this year or cover it in entertainment as combined this is £110 a month.

You've got £35 Internet so can you cancel the £25 satellite TV?

This pet costs over £1K a year. Can you reduce those costs? 

Your £25 mobile phone can come down if the handset is paid. You can get sim only under £10

These can all seem like not much money but if you can free up extra cash you will have options that help you save to make full and final offers in a DMP over time, or possibly to get closer to making a reasonable payment to your debts now. 

Your SOA suggests you aren't paying any debt repayments now so are you paying nothing or are you paying minimums and then using the cards all month?

What are your minimum payments and can you get any debts into 0% interest or has this already gone too far for that? 

Dma76

I know this is an old thread but there is specific guidance on salary sacrifice vehicles, particularly if it's required for work you may be able to get a DRO if the guidance advisor is satisfied it's a reasonable cost:

https://www.gov.uk/guidance/debt-relief-orders-guidance-for-debt-advisers#salary-sacrifice--leased-vehicle

I'm in a similar situation where my vehicle is required for the job and I'm specifically given a car allowance for the vehicle meaning the money woud not be available for the debtors if I did not have the salary sacrifice, the allowance would cease and I would revert to a company vehicle. Like you I went with Money Wellness who sent me straight down the IVA route due to the vehicle situation, after seeking advice here I quickly rejected that route as I've nothing to protect.

It may be worth looking at one of the other DRO providers if you're still in the same situation. Unforunately there's little info on DRO's and salary sacrifice vehicles on forums, it's a grey area with lots of if's and buts. At the moment I'm self managed dmp due to the length of the contract remaing on the vehicle, I should really heed my own advice and try a different DRO provider.