DMP or IVA advice needed

Incognito212

Hey all, im new to this thread and could really use your help and support in our situation and how to proceed, im embarrassed and feel so ashamed that it has come to this point but i need to act now as it is seriously affecting our quality of living. I feel 

I have made some bad financial decisions and with a house purchase and my partner being made redundant, have managed to rack up a total of 95k in CC and loans, My partner has 23k in CC debt 

The minimum payments are getting really difficult to pay and im literally at a point where im using CC’s to pay for essential living expenses 

We have a joint mortgage and all our borrowing is unsecured, to date i haven’t missed any payments and all our priority bills are upto date, i have reached out to stepchange and they have advised an IVA or DMP, 

ive had a read through the forum and im unsure if I should go down the insolvency route or manage a DMP myself or through stepchange.

Thanks in advance for all your help

Bee

Incognito212

After reading the first steps post on the top of the forum can i clarify in order to manage a DMP myself i meed to follow this process,

1. Create an accurate SOA which can be used to work out how much is affordable towards debts
2. Apply for a basic bank account to use for salary and priority bills
3. Cancel all DD’s and wait for all debts to default whilst saving a emergency fund
4. Once contacted by DCA agree payments at a reduced amount that is affordable 

Is that more or less what i need to do in order to manage it myself, im feeling quite scared of the harassing letters or phone calls from the lender and think it may be easier to let stepchange manage it 

RAS

Incognito212 said:

1. Create an accurate SOA which can be used to work out how much is affordable towards debts
2. Apply for a basic bank account to use for salary and priority bills 
3. Cancel all DD’s and wait for all debts to default whilst saving a emergency fund
4. Once contacted by DCA agree payments at a reduced amount that is affordable 

Is that more or less what i need to do in order to manage it myself, im feeling quite scared of the harassing letters or phone calls from the lender and think it may be easier to let stepchange manage it 

1. Yes, ensure that your new budget covers things like house maintenance, intermittent items like medical and dental etc.
2. This needs to be with banking group to which you owe nearly nothing. The Bank f Scotland and Lloyds are in the same group for example.
3. Correct. You need a savings account with someone to whom you owe nothing. Consider a n instant access ISA.
4. Once defaulted, the creditor may collect in-house, assign or sell the debt. Wait for the debt collector to advise of the new account number and banking details.

If you have time set up a new email account which you use for all the accounts you are going to stop paying. 

Advise your creditors to remove your phone number from their contact details. Important interactions are sent by snail mail, so you do need to open that, perhaps once a week. If they persist in phoning make a formal complaint.

The big issue being that if you want to do the above, Stepchange won't allow 3 and will do 4 themselves.

Stepchange insist on starting DMPs without waiting for the debts to default or waiting to accrue savings. This usually prolongs the period when your credit is impaired because AP markers are only removed 6 years after the debt is paid off, not 6 years after the default.

As home owners, you need a cushion to cover repairs etc, so you'll end up having to stop/start the DMP, which can be stressful in itself.

But once the debts are defaulted, there's no real difference between Stepchange and DIY.

Until you start getting settlement offers. Stepchange insist lump sums are spread between creditors, not used to settle one account at a discount. Some people take control of the DMP at that stage.

fatbelly

Those steps are needed whether you are heading for a dmp or IVA.

With 95k of debt and an asset to protect, an IVA could be the better option. The soa will show you.

ManyWays

The first decision here is DMP or IVA, as your thread title suggests. Only if a DMP is the better option is there any point in considering DIY or StepChange for the DMP.

So could you post a Statement of Affairs here? Our preferred format is https://www.stoozing.com/soa.php. Please put mine/partners/joint against the debts and include the lender names and interest rates if you know them. Compare this to the expenses you told StepChange about, did you miss any off?

What has StepChange said you would pay in a DMP or IVA a month? 

When does your current mortgage fix end? 
If you have a car on finance, is this HP, PCP or lease?

is there anything in your finances that is likely to get significantly better or worse in the next couple of years? 

Incognito212

Thank you all for your responses

no HP, mortgage is currently at the SVR and step change advised i will pay 180 or whats left in to the DMP

I would like to avoid an IVA if possible as my partner is due to start work next month and ive just secured another job that will help me to pay some of this debt down and if im in an IVA it will all go towards paying that

but if it comes to that it is what it is and i will have to go down that route 

Incognito212

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 3

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1891

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

Benefits................................ 583

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

Total monthly income.................... 2474[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 813

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

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 169

Electricity............................. 85

Gas..................................... 85

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

Water rates............................. 38

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

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

TV Licence.............................. 15

Satellite/Cable TV...................... 0

Internet Services....................... 50

Groceries etc. ......................... 500

Clothing................................ 30

Petrol/diesel........................... 80

Road tax................................ 14

Car Insurance........................... 99

Car maintenance (including MOT)......... 40

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

Other travel............................ 15

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

Other child related expenses............ 130

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

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

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

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

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 50

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2278[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 252000

Shares and bonds........................ 0

Car(s).................................. 3000

Other assets............................ 0[b]

Total Assets............................ 255000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 144300...(813)......6[b]

Total secured & HP debts...... 144300....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Natwest loan ..................36399.....0.........0

Natwest loan...................25229.....0.........0

Natwest cc.....................8230......0.........0

Tesco..........................1037......0.........0

Hsbc cc........................1928......0.........0

Lloyds cc......................4086......0.........0

Mbna partner cc................2909......0.........0

Mbna partner cc................3743......0.........0

Natwest cc partner.............1400......0.........0

Lloyds cc......................2129......0.........0

Barclays cc....................3836......0.........0

Virgin cc......................5495......0.........0

Mbna cc........................9129......0.........0

Mbna cc........................7982......0.........0[b]

Total unsecured debts..........113532....0.........-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,474

Expenses (including HP & secured debts). 2,278

Available for debt repayments........... 196

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

Amount left after debt repayments....... 196[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 255,000

Total HP & Secured debt................. -144,300

Total Unsecured debt.................... -113,532[b]

Net Assets.............................. -2,832[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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

ManyWays

mortgage is currently at the SVR
is there a reason for this?

I would like to avoid an IVA if possible as my partner is due to start work next month and ive just secured another job that will help me to pay some of this debt down and if im in an IVA it will all go towards paying that
That is an excellent reason to avoid an IVA. As is the fact that your mortgage costs will drop when you go on a fixed rate. 
It is easy to switch from a DMP to an IVA in a year if you feel the DMP will last too long at that point, at the moment you have no idea,

How old are your children? 

Incognito212

I havent got round to fixing my current deal but i will start looking into that,

thats what i was thinking, first try the DMP an if im not able to keep up then switch

My children are 10,7 and 9month old

fatbelly

£200 per month isn't going to clear 113,000 of debt in your lifetime.

An IVA would deal with it in 6 years if you could set one up

But by all means start a dmp and see how you go

Incognito212

Yes i know, i was thinking as im due to start a new job with additional income and my partner will be working soon i could pay more towards these debts.

once our debts have defaulted i could try and agree settlements, does that sound do able or will i be wasting my time an delaying the inevitable and just go with a IVA