Not sure which option...

flashdance43

Hi all,

I need some unbiased 3rd party opinions. I'm £70k in Loan in and Credit Card debt. 

Asset free, and about to take on a council flat due to succession.

I get paid £3k per month, and have fixed outgoings of £1.5k.

This isn't enough to pay off the debts, so I reached out to StepChange who offered an IVA, or also as an alternative DMP or BR.

I have no fixed assets, other than a moped and car on finance, which I'm 70% of the way through.

Barclaycard wrote to me today reducing my limit from £5k to £100... so I'm now over my limit here.

I want to get it cleared, and think the IVA option is best, as I can afford the suggested payments. 

Any ideas? The stress is unreal!

Grumpelstiltskin

IVA without a mortgage not a good idea. BR car may be the problem, but DMP could last a long time.

Read this thread.
In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Go across to the Debt Free Wannabe board and post your SOA then you will get the best advice.

ManyWays

How much is the car on finance worth, what are the monthly payments and how long until it ends? Is it HP or PCP because this makes a big difference in insolvency (BR or IVA)?
What did StepChange suggest you might pay a month in a DMP or IVA? 

RAS

Without assets an IVA doesn't make sense, it's bankruptcy for those with something to protect.

If the only thing preventing you going bankrupt is the car and moped, what are their values and finances?

IVA budgets are tight and get squeaky over the next 6 years (without assets you have to pay another year).

Bankruptcy budgets are more generous and the IPA lasts 3 years.

flashdance43

Thanks all.

The car is £4.8k outstanding, a VW UP, on a HP agreement.

StepChange are recommending an IVA... 

But, a DMP would be 5 years and 5 months and fully repaid (if the creditors agree).

I've taken the 60 days breathing space today... to see how things are shortly. 

A DMP would be the best situation having considered everything, but the IVA looks somewhat tempting knowing it is almost all cleared within 5 years. 

Is there any reason StepChange would push an IVA over a DMP... could the creditors say 'no' instead?

The big reason behind this is American Express... I was on an instalment plan with them. For reasons unknown to me (and them... complaint pending) they've reduced the term of the plan from 12 months to 3 months meaning instead of an affordable £400p/m its now £1.6k p/m. When their financial hardship team open on Monday I will call and see if we can just agree a payment plan instead, as that might mean I can sort this all out myself. just.

RAS

Amex are often more difficult as creditors. They've not yet defaulted from what you say? 

I'd suggest you go to the main debt free wannabee sub- forum and complete a Statement of Affairs, or check the one on
 www.lemonfool.co.uk , format for MSE and post there. Not because we are nosy but because you may well be asked for one by Amex.

Classically, new posters fail to make adequate provision for some of life's essentials, or miss them off entirely, which means their budget doesn't cover living costs. Some getting some experienced eyes over it quickly might help with your discussions with Amex.

ManyWays

There is no good reason to consider an IVA if a DMP would be fully paid in under 6 years. Especially as there are ways that may speed a DMP up, see my reply here to someone asking about switching from a DMP to an IVA https://forums.moneysavingexpert.com/discussion/comment/81218653/#Comment_81218653

flashdance43

Thank you. I've spoken with Stepchange and DMP will the course of action.

My intent is to not pay the Credit Cards or Loans during the 60 day breathing space, and set up the DMP towards the end of it to form an emergency fund.

Realistically it can be paid off sooner if I get the Water meter fitted and the TV package reduced, alongside some modest cuts in my monthly shop for food.

Thank you for all your help.