We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
High debt - IVA or DMP?
itsallrigged
Posts: 5 Newbie
Hi All, here is my situation:
I am in the deep end with unsecured debt, have been spinning plates for months swapping payment dates & recycling credit card debt from cash machines to keep up minimum payments. Strangely enough I honestly didn't realise the full scale until I sat down and calculated it all. My SOA from lemon fool is below, a few things to add, I have approx. £6000 in savings, my partner owes approx. £6500 in credit cards too and her minimum payments are high £200-300 of her income each month
SOA:
I am in the deep end with unsecured debt, have been spinning plates for months swapping payment dates & recycling credit card debt from cash machines to keep up minimum payments. Strangely enough I honestly didn't realise the full scale until I sat down and calculated it all. My SOA from lemon fool is below, a few things to add, I have approx. £6000 in savings, my partner owes approx. £6500 in credit cards too and her minimum payments are high £200-300 of her income each month
SOA:
Statement of Affairs and Personal Balance Sheet[/b][b]
Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1[b]
Monthly Income Details[/b]
Monthly income after tax................ 3300
Partners monthly income after tax....... 800
Benefits................................ 170
Other income............................ 0[b]
Total monthly income.................... 4270[/b][b]
Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 408
Rent.................................... 800
Management charge (leasehold property).. 0
Council tax............................. 159
Electricity............................. 100
Gas..................................... 140
Oil..................................... 0
Water rates............................. 81
Telephone (land line)................... 0
Mobile phone............................ 73
TV Licence.............................. 15
Satellite/Cable TV...................... 39
Internet Services....................... 29
Groceries etc. ......................... 750
Clothing................................ 40
Petrol/diesel........................... 200
Road tax................................ 15
Car Insurance........................... 98
Car maintenance (including MOT)......... 60
Car parking............................. 5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 80
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 5
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 15
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 50[b]
Total monthly expenses.................. 3252[/b]
[b]
Assets[/b]
Cash.................................... 6000
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 6000[/b]
[b]
Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 19657....(408)......12.9[b]
Total secured & HP debts...... 19657.....-.........- [/b]
[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Glasses loan...................340.......14.91.....0
Sky Mobile.....................2000......72.83.....0
Nat West credit card...........9381......378.5.....26.9
Natwest overdraft .............1250......0.........0
VERY bnpl......................4999......0.........0
Payment assit BNPL.............637.......0.........0
Zopa ..........................259.......16.8......39.9
Novuva.........................2610......90........0
Savvy loan.....................1500......143.......0
Updraft........................12731.....404.......21.3
Next store credit .............600.......15........0
Marbles........................1191......62.05.....0
Fluid card.....................6999......262.7.....33
Klarna.........................754.......58........0
Jaja finance ..................1800......38.72.....29.9
Catalog - JD ..................3000......121.......54.9
Barclaycard....................1984......80........31[b]
Total unsecured debts..........52035.....1757.51...- [/b]
[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,270
Expenses (including HP & secured debts). 3,252
Available for debt repayments........... 1,018
Monthly UNsecured debt repayments....... 1,757.51[b]
Amount short for making debt repayments. -739.51[/b]
[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -19,657
Total Unsecured debt.................... -52,035[b]
Net Assets.............................. -65,692[/b]
[i]Created using the SOA calculator at www.LemonFool.co.uk.
I have a number of questions
1- The car, the HP agreement is approx. 1 year old, If i go in to an IVA, is this considered excessive payment and will I be told to get rid and how do I get rid if this is the case (car is worth approx £9000, settlement figure is approx 16500, as I am no where near 50% through agreement to hand back. Do I use the £6000 I have to hand to wipe some out and reduce the payment, thus making an IVA more acceptable with this payment, same question re DMP. I travel 200 miles per week to my remote place of work, no public transport during winter and my working hours don't match others so a lift share would be difficult and make school drop offs impossible, so I do need a car and this is making me most anxious out of all these issues at the moment. My insurance is as low as I can get it too, sadly I have points & previous claims so premium is high
2 - The sky mobile contracts, the payment is for my and my partners phone. The "sim" and "phone" elements are separate would the credit agreements for the phones be left as monthly payments or would this be add to the debt solution.
3 - as mentioned above my partner has her own credit debt (2 cards) approx. repayments 200-300 per month that isn't listed on the SOA I don't think she Is willing to enter any debit relief of her own, I think she is looking to plug away at this herself. Do I put the £6000 here, at least one of us can be debt free If not, Can she keep credit debt whilst I am in an IVA if this is an appropriate route, will her repayments be considered in our household budget, therefore my available cash closer too 700 per month
4 - Rumours of approx. 5% pay increase at work for myself, may be due soon.
5 - Not sure if my budget looks acceptable / realistic above this was a quick draft
6 - other factors to consider is my rent is very low for my area, we have lived here for 7 years and have good relationship[ with landlord but if rug is pulled for any reason, equiv rents in area is £1200+ pcm.
7 - My job is secure as far as I can tell with 12 years tenure but again if rug is pulled somehow, my salary may not be achievable at 48k , I've worked my way to management in a niche role. my expected salary for a new non management role is probably closer to 40,000
8 -Likelihood of inheritance windfall in next 5-10 years is slim, fortunately, my parents seem in good health and I have small family, there is no great aunt Rita with millions stashed away sadly.
9) I have already opened a basic bank account and transferred my non credit essential dds and salary payments to this starting this month, taking advise I have seen on other posts. I plan to start missing all credit payments from today, I cant spin the plates any longer!
Bit long winded and thanks for reading. Any advise and help is appreciated.
I have a number of questions
1- The car, the HP agreement is approx. 1 year old, If i go in to an IVA, is this considered excessive payment and will I be told to get rid and how do I get rid if this is the case (car is worth approx £9000, settlement figure is approx 16500, as I am no where near 50% through agreement to hand back. Do I use the £6000 I have to hand to wipe some out and reduce the payment, thus making an IVA more acceptable with this payment, same question re DMP. I travel 200 miles per week to my remote place of work, no public transport during winter and my working hours don't match others so a lift share would be difficult and make school drop offs impossible, so I do need a car and this is making me most anxious out of all these issues at the moment. My insurance is as low as I can get it too, sadly I have points & previous claims so premium is high
2 - The sky mobile contracts, the payment is for my and my partners phone. The "sim" and "phone" elements are separate would the credit agreements for the phones be left as monthly payments or would this be add to the debt solution.
3 - as mentioned above my partner has her own credit debt (2 cards) approx. repayments 200-300 per month that isn't listed on the SOA I don't think she Is willing to enter any debit relief of her own, I think she is looking to plug away at this herself. Do I put the £6000 here, at least one of us can be debt free If not, Can she keep credit debt whilst I am in an IVA if this is an appropriate route, will her repayments be considered in our household budget, therefore my available cash closer too 700 per month
4 - Rumours of approx. 5% pay increase at work for myself, may be due soon.
5 - Not sure if my budget looks acceptable / realistic above this was a quick draft
6 - other factors to consider is my rent is very low for my area, we have lived here for 7 years and have good relationship[ with landlord but if rug is pulled for any reason, equiv rents in area is £1200+ pcm.
7 - My job is secure as far as I can tell with 12 years tenure but again if rug is pulled somehow, my salary may not be achievable at 48k , I've worked my way to management in a niche role. my expected salary for a new non management role is probably closer to 40,000
8 -Likelihood of inheritance windfall in next 5-10 years is slim, fortunately, my parents seem in good health and I have small family, there is no great aunt Rita with millions stashed away sadly.
9) I have already opened a basic bank account and transferred my non credit essential dds and salary payments to this starting this month, taking advise I have seen on other posts. I plan to start missing all credit payments from today, I cant spin the plates any longer!
Bit long winded and thanks for reading. Any advise and help is appreciated.
0
Comments
-
Somehow I missed a debt, this is the SOAHousehold Information[/b]Number of adults in household........... 2Number of children in household......... 2Number of cars owned.................... 1[b]Monthly Income Details[/b]Monthly income after tax................ 3300Partners monthly income after tax....... 800Benefits................................ 170Other income............................ 0[b]Total monthly income.................... 4270[/b][b]Monthly Expense Details[/b]Mortgage................................ 0Secured/HP loan repayments.............. 408Rent.................................... 800Management charge (leasehold property).. 0Council tax............................. 159Electricity............................. 100Gas..................................... 140Oil..................................... 0Water rates............................. 81Telephone (land line)................... 0Mobile phone............................ 73TV Licence.............................. 15Satellite/Cable TV...................... 39Internet Services....................... 29Groceries etc. ......................... 750Clothing................................ 40Petrol/diesel........................... 200Road tax................................ 15Car Insurance........................... 98Car maintenance (including MOT)......... 60Car parking............................. 5Other travel............................ 0Childcare/nursery....................... 0Other child related expenses............ 80Medical (prescriptions, dentist etc).... 30Pet insurance/vet bills................. 0Buildings insurance..................... 0Contents insurance...................... 20Life assurance ......................... 5Other insurance......................... 0Presents (birthday, christmas etc)...... 20Haircuts................................ 15Entertainment........................... 20Holiday................................. 0Emergency fund.......................... 50[b]Total monthly expenses.................. 3252[/b][b]Assets[/b]Cash.................................... 6000House value (Gross)..................... 0Shares and bonds........................ 0Car(s).................................. 0Other assets............................ 0[b]Total Assets............................ 6000[/b][b]Secured & HP Debts[/b]Description....................Debt......Monthly...APRMortgage...................... 0........(0)........0Hire Purchase (HP) debt ...... 19657....(408)......12.9[b]Total secured & HP debts...... 19657.....-.........- [/b][b]Unsecured Debts[/b]Description....................Debt......Monthly...APRGlasses loan...................340.......14.91.....0Sky Mobile.....................2000......72.83.....0Nat West credit card...........9381......378.5.....26.9Natwest Loan...................403.......4.3.......12731Natwest overdraft .............1250......0.........0VERY bnpl......................4999......0.........0Payment assit BNPL.............637.......0.........0Zopa ..........................259.......16.8......39.9Novuva.........................2610......90........0Savvy loan.....................1500......143.......0Updraft........................12731.....404.......21.3Next store credit .............600.......15........0Marbles........................1191......62.05.....0Fluid card.....................6999......262.7.....33Klarna.........................754.......58........0Jaja finance ..................1800......38.72.....29.9Catalog - JD ..................3000......121.......54.9Barclaycard....................1984......80........31[b]0
-
Seems I have made another error - Natwest Loan...................403.......4.3.......12731 in the wrong columns !0
-
Those would be the choices if you owned property, but it appears that you do not, so let's rule out IVA as an option.
Do a dmp, review things when the car is paid off
I can post info on hp but it looks like you want to keep this and it is affordable if you pay less to the nonpriority debts so
1. Stop paying the nonpriority debts
2. Do not blow your 6k emergency fund on anything at the moment.
3. Start payments when you get the defaults
Well done on sorting your banking out
While you are waiting for defaults, consider affordability claims on the loans
1 -
A quick comment. Groceries £750, how old are the children as this looks like a huge amount?If you go down to the woods today you better not go alone.0
-
Agreed Grump, even if you've got two hulking teenagers your food bill is very high and your phone are high. It appears that your family has been living beyond it's means for some time. So you and the missus need to sit down and work out how to get the family back on an even keel.
Can your wife work more hours? Can she deep dive into meal-planning and bulk cooking to reduce costs. Can you look at some draught proofing at low cost and everyone wear more clothing?
At least you've got an emergency fund and that'll allow you to pay the higher rent/weather short-term employment issues/cooker packing up.
When you default, make sure that £1k goes into a separate ISA account which you do not touch. Chance are that you can pay off some of these debts at a reduced rate in a couple of years, and that's your fighting fund.If you've have not made a mistake, you've made nothing1 -
Hi thank you all for your comments and rapid reply. regarding groceries that was a bit of quick math, honestly it’s likely less maybe 500 with kids school pack ups, if I chat with the missus. Did you see I missed 12k off, so my unsecured total is more like £65k is a dmp still best do you think?Regarding defaulting, my bnpl are 9/10 months away so I can’t miss payments to cause it to default. Does this mean I should start a dmp with that debt included but then it will be classed as a reduced payment plan as I understand?0
-
If they are not expecting any payment for 9/10 months, then there seems no reason to include them till then
A dmp gives you the most flexibility and although a 6-year plan seems a bit long, with some affordability complaints and settlement offers, it could be less than that
If you really wanted an insolvency solution then it would be bankruptcy with a 36-month income payment order but you would lose your car and emergency fund, and any windfall.
So I think a dmp makes most sense but if you ask an IVA-pusher they will disagree.1 -
Do you absolutely need the car? You say it is HP, can you read the terms and conditions? Usually you can return at the 50% mark. If so, you need to save some money toward a cheaper replacement over the next two years and then get shot.
If you've have not made a mistake, you've made nothing1 -
Well done for addressing this and posting, it also sounds as if you and your wife are willing to work together.
A couple of observations on your SOA;
- as already highlighted, at £750 your groceries are high, £500pm seems much more reasonable
- how old are your kids, and could your wife increase her income? Do you have anything you can sell?
- water bill is very high, are you on a meter?
- mobile phone is high, are you in contract?As others have pointed out, you do appear to have been living beyond your means for a good while. Your SOA appears to be aspirational, and not what you’ve actually spent over the last few years. Have you had a chance to review your old bank statements together and understand how you came to be in this position?
Doing this will really help you to make changes to your lifestyle together
Good luck and keep postingI’m a Forum Ambassador and I support the Forum Team on the Pension, Debt Free Wanabee, and Over 50 Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the Report button, or by e-mailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.1 -
Hi, all, thanks again for your comments.
- kids are 6 & 9- mobile contract cost is both mine and my partners phones / sims
-Regarding selling items, we have been scraping the barrel a bit getting rid of old toys clothes etc to keep a float before deciding this month enough is enough- regarding partner working hours, she does overtime where possible during school term time, but out of term the kids need looking after, we lack family help to so only Option here is childcare that costs more an hour than my partner earns or she remains part time and has flexibility for school holidays and end of day pickups etc. until the kids are a bit older and more self sufficient we don’t see this changing in the short term.- regarding water meter it’s a bit of a contentious issue with our landlord. He won’t allow upgrade of the electricity meters to smart metering or the water meter change. I don’t know where I stand legally with this, it is his property after all and he made it clear he does not want it done, but I don’t want to get in a row with him about it, as i mentioned before my rent at £800 (just increased so fixed for 12 month) is very reasonable compared to prices locally and my concern is simply being served notice to move on if we have a disagreement about it. There’s not much protection for renters and whilst I can stand up for myself, getting in to a dispute and being “moved on” would cost circa +400 per month. You will notice my gas is high, same issue we have a lot of single glazing, landlord won’t change his stance on it, again a feel a trapped weighing up paying more for renting a better insulated house versus higher gas costs in this cheaper property.
- regarding the car, I don’t need this car, I just need A reliable car. My commute is about 10,000 miles per year, roughly 40 per day. If it wasn’t for this we would go without. The only saving grace i have here is this one has had all new brakes, timing chain, 4 new tyres and good mot recently, so I’m hopeful if I keep on keeping on with the payments for now hopefully its going to be hassle free motoring for a while. I can’t lift share and my place of work is remote , bus service 6 months of the year for part of the working day only. I will happily hand back when I can at 50% paid and get a cheap run about with cash if it gets me out of this hole, I’m not at all precious about the car.The household section of the soa was rapidly thrown together myself on my lunch break today, I jumped the gun a bit for advise. I will have a sit down with my partner to get proper figures for household expenditure. Clothing / food shopping etc has always been her domain and priority bills / car etc my domain, our finances are no secret from each other these are simply the respective roles we fell in to over time
Thank you all again for your time taken to reply.0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 350.2K Banking & Borrowing
- 252.8K Reduce Debt & Boost Income
- 453.2K Spending & Discounts
- 243.2K Work, Benefits & Business
- 597.6K Mortgages, Homes & Bills
- 176.5K Life & Family
- 256.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards