Debt Problems, don't want an IVA but seems the only solution

worldpeace25

I'm currently considering an IVA through StepChange and would really appreciate some advice from anyone who's been in a similar situation.

I have £46K of unsecured debt spread across three loans and three credit cards, and I’m feeling stuck despite trying multiple options.

Here’s my situation:

• I own a house with around £360K equity  168K plus 90K HTB, but it’s a Help to Buy property, which complicates things.

• I’ve tried to remortgage, but the bank declined due to affordability issues.

• I looked into a secured loan, but no lender wants to take a third charge on the property, apart from one predatory lender offering 11% interest over 20 years with £5K in setup fees — which I’m not willing to take on.

Selling the house isn’t an option because my partner owns 50% and has made it clear that this is my problem to solve. We also have a teenager, so uprooting them would be a last resort.

Thinking about an IVA, I’d need to make payments for five years. If my partner refuses to remortgage, I’d need to do an additional sixth year of payments.

I’ve already done everything I can to cut back:

• I’m working two jobs, earning £51K from my main job and £6K from a part-time job.

• I made an extra £2K last year from car boot sales.

• I’ve sold my car and now rely on public transport.

Despite all this, I’ve not made any real progress in reducing the debt. I’m 48 years old and have been paying into a well-funded pension since I was 24 (contributing 14% of my salary). I’ve got 15 years left on my mortgage, and my plan is to pay that off and retire — I have no intention of borrowing again in the future.

I’m physically struggling to keep working two jobs. I need a way forward, and I’m open to any solutions or advice.

I've contacted StepChange and they are saying do Debt Management Plan (DMP), realistically that going to take me 10 years, also not protect my house from creditors  

Has anyone been in a similar situation? Is an IVA the best option, or is there something I’ve missed?

Thanks in advance for any insights — it’s much appreciated.

Grumpelstiltskin

OK an IVA may be the answer, but more information needed, your partner is on the mortgage?

Do you have any joint accounts?

How was the debt accrued?

Totally for you or any for the family?

RAS

Why do you think a DMP threatens your house? 

Do you understand that if you default on your unsecured debt, the interest halts? And down the line you will probably get discounted settlement deals that reduce the time you need to clear the debt?

worldpeace25

Grumpelstiltskin said:

OK an IVA may be the answer, but more information needed, your partner is on the mortgage?

Do you have any joint accounts?

How was the debt accrued?

Totally for you or any for the family?

Partner  is on the mortgage 50/50

We have a join house account, current account no overdraft 

wife has a couple of grand on a credit card she is slowly paying back  on a 0% deal - she doesn't have a big income, also not a lot of debt.   

debt accrued by over spending and i tried to start a business ( to increase my income) that failed and i threw good money after my losses 

Thanks, 

RAS

Sorry to hear of your problems. From a practical point of view, you need jointly to sort out a clear budget covering your essential spends and to sort out any over-spends. And then to cut back more to allow overpayment of the debts. An IVA budget is very tight and will get tighter over the years. They will probably apportion living costs pro-rata depending on your incomes.

And whatever debt solution you choose, you need to close that joint account now, as the financial association will affect your wife's credit record.

worldpeace25

RAS said:

Sorry to hear of your problems. From a practical point of view, you need jointly to sort out a clear budget covering your essential spends and to sort out any over-spends. And then to cut back more to allow overpayment of the debts. An IVA budget is very tight and will get tighter over the years. They will probably apportion living costs pro-rata depending on your incomes.

And whatever debt solution you choose, you need to close that joint account now, as the financial association will affect your wife's credit record.

What do reckon DMP or IVA?

RAS

This is not something about which you should be making a decision without a lot more information. Not least as without your spouse's support, your need her to fully understand the consequences of both options.

I'd suggest that you do a Statement of Affairs and ask some more of the experienced posters here to advise whether your expenditure would be acceptable to DMP providers or IVA providers. Bear in mind that DMP budgets can be adjusted easily. IVA adjustments exceeding 10% need creditor approval.

Grumpelstiltskin

Whatever you do do not rush into anything without a lot more research yourself.

Nothing is urgent, you don't want to make the wrong decision.

sourcrates

Both are on the table still, both have their advantages, and disadvantages, for an IVA to work, you need to have a stable income over the next 6 years, your IVA will swallow much of any bonus/overtime/windfall you may have during this time, but your home will be legally protected from creditors.

A DMP is a lot more informal, you can choose what to pay to whom, any extra money is yours to keep, in reality lenders do not go after houses if they are being paid on a regular basis, your debts will likely be sold, and bought for pennies in the £, so settlement offer will almost certainly be available later on in the process.

That can save you some cash, but you must remember to save an emergency fund for possible settlement later on.

A DMP will take longer, but can be ended earlier if offers are accepted, its down to you really if you want a formal solution in the IVA, or an informal, flexible one in the DMP.

Having had both options in the past, I would veer away from the IVA, as they really only benefit the IP, I would opt for the DMP as its flexibility and informal nature are more appealing, than the strict budget regime of an IVA.

ManyWays

 RAS said:

And whatever debt solution you choose, you need to close that joint account now, as the financial association will affect your wife's credit record.

I think getting rid of the joint account is a good idea, but they are financially linked anyway for credit records because of the joint mortgage. 
 

ManyWays

Have Step Change said an IVA isnt an option, if so its probably because they think your creditors will reject one as you have too much equity.

Lets see your SOA.