Large Debts - Will my plan work?

Debtguy84

Hi guys, 

First time poster here, so please be nice! Just incase it is important, I am a 40 year old male with NO assets. 

This will likely be a long one, but I want to make sure that you get a clear picture of what has happened so far, then my plans for the future. 

So, the problems started when my limited company began to fall into difficulties during covid. Sales dropped and I ended up supporting myself on personal loans and credit cards. In December 2022, the company officially entered voluntary liquidation. 

The liquidation process is ALMOST over, like months away, and I it has been confirmed by the liquidators (not yet in writing) that they will not persue me for any business related debt (Directors Loan) as they are very familiar with my financial situation. 

Now, onto my personal struggles.

In 2023, I entered into a DMP with a company called step change. I pay £100 a month, of which they take a £44 fee and distribute the rest to my creditors (of which there are many). 

Unfortunately, not all the money has been sent to my creditors, or has been sent to the old creditors after the debt was sold. The one I am most upset about is that I have a CCJ against my name, and it appears they have not received a penny. Debt correct are looking into all this for me. 

Anyway, below I have listed all my debts and who they are with (some still with original lenders). Not all of them are in the DMP as they have ONLY just surfaced in the last few days. 

Intrum - virgin (clydesdale bank) - £7,619.87 - NOT IN ANY DMP

Lowell - MBNA - £8,302 - are receiving payments

Next - Brecon Debt Recovery - £116.97 

Lendable - original creditor - £8108.91

lawsons - £1335.36 - CCJ - with thomas higgins 

M&S - still with creditor - £998.60

PRA Group - Barclaycard - £7,543.65 (£3,200 to settle)

Nationwide - £700.00



I also have another debt to Lowell - Capital On Tap to the hideous sum of £21,726.43. This was a business credit card which I assume I have personally guarenteed. I am challenging this though, as my liquidators had told Capital On Tap and Lowell that this debt is to fall part of the liquidation. I have sent proof to Lowell that the company is in fact insolvent and all the proof they requested. 

My hope with this debt is that I can challenge whether it can be enforced without a copy of the personal guarentee, or that I am responsible once sold to a 3rd party, but need to wait on their response from my initial email with proof this debt was to disolve with the company. 

I appreciate it is VERY unlikely, and am fully expecting to have to pay it - it is just my luck. 

As you can see, my combined debt is in the region of £56,000, or £34,725.36 if Capital On Tap one drops off with the business. 

I have discussed my options with business debt line and stepchange, and all have suggested an IVA. We ruled out Bankruptcy because of my plans to move in with my girlfriend within 14 months and I don't want her income/expenditure etc to be involved. This is my issue, not hers. 

The issue with an IVA for me, is that I have absolutely no control, ironic I know, but I want to be able to live even whilst managing a debt like this. 

So, my plan. 

I wanted to either remain in an DMP or set up my own. I only have about £150 to my name after all bills and living costs are paid, so cannot offer much, but it may keep the wolf from the door for a while. 

The reason I want to remain in a DMP is that I would like to be able to negotiate settlement offers with each and every creditor. 

This thought came into my head as I was offered a settlement by Lowell of £3,200 (see above) approx 50% off the existing debt. 

My Dad is the only person who knows about my situation, and has offered to gift me money to clear off what I can. 

If I were to call all my creditors, and say that I have a small amount available to settle the debt, then work out the combined total, would I be able to do this? The way I see it, even if the debt is £50,000, a settlement offer from each would see that figure maybe drop to £40,000 or even £30,000. 

I know that you will all say, why bother, when I can just enter into an IVA and pay £200 odd pounds for 5 years and it will be done, but this way I have control, and no matter how my circumstances change - pay rise, windfall etc, I CONTROL what I pay and negotiate, not anyone else who manages my DMP. 

Am I absolutely mad to think this is possible? Yes, it will long out the debt for many many more years, but even if one of the creditors refuse a settlement fee, they will only get what i can afford on a DMP anyway. 

I am in emotional distress about this, but I am a fighter, and want to be able to manage this my way without both hands tied behind my back. 

Thank you to anyone in advance that may be able to offer some advice. 

elsien

You shouldn’t be paying a fee to anyone for managing a DMP. Stepchange (the charity) don’t charge fees?
If you want to stay in a DMP then you need to find someone who doesn’t charge or self manage and do it yourself.

with regards to the IVA, given that you have no assets, what is the reason it has been recommended to you? How much disposable income do you have?

if you want proper advice on here about options, people will be asking you to post an SOA with all the details. 

fatbelly

I will try not to make this a long post.

Stepchange do not charge a fee for their dmps so the company you are with are a scammer. You should drop them and complain. Refer the complaint to the FCA and FOS if they will take it

Presumably they are also the company who now recommend an IVA, with its fees of several thousand. Have they told you that the rules change on 1 July?

Your reason for avoiding bankruptcy do not make sense. No 3rd party can be forced to disclose. In a  relationship the default position is a 50/50 split of expenses.

Trying to use someone else's money for speculative full & final deals also is not a good plan

If you do not own property, do not have a high surplus income, and Dad wants to help, I suggest he pays your £680 fee for bankruptcy.

This will have the huge advantage of protecting you against personal claims from creditors connected to your business.

RAS

Stepchange do not charge fees for DMPs. They are one of the cheapest for IVAs. Please find whatever documents you can about this firm you are paying and cancel the deal. Then complain about the fees.

If you want to use an insolvency option, with nothing to protect, bankruptcy looks like the better option. Apart from anything else the living allowances are higher and and any payment would last 3 years instead of 6 years. And the fees are a lot lower.

ManyWays

You mentioned Debt Correct - they are a fee-charging commercial DMP Stepchange would give you the same DMP without any charges (and it sounds as if they would also be more competent about paying the creditors!)

If you must have an IVA (whoch doesnt sound like a good idea at all) then go to StepChange not whoever Debt Correct suggests

"I have discussed my options with business debt line and stepchange, and all have suggested an IVA. We ruled out Bankruptcy because of my plans to move in with my girlfriend within 14 months and I don't want her income/expenditure etc to be involved. This is my issue, not hers. "
Some points about an IVA vs Bankruptcy.

1) you have no assets to protect (or at least none that you have mentioned) so bankruptcy gets you debt free sooner and much cheaper, IVAs are not completely flexible, abiout a quarter of them fail. Bankruptcy doesnt fail, if your finances get worse, any monthly payemnts are reduced, to zero if necessary and do not simply prolong the bankruptcy

2) Bankruptcy has the major advantage for you that it covers all your debts, even ones you have forgotten about or are arguing with a creditor/liquidator about. So anything that surfaces later will alos be written off by the bankruptcy. An IVA only covers the debts you list in it. You could go bankrupt now and not wait for the liquidation to be completed and for the argument about the Lowell debt to be resolved. There is no merit to waiting, the sooner you go bankrupt, the sooner you get a clean start

3) Having bankruptcy on your credit record makes it very hard for you to get a private tenancy without a guarantor, but an IVA has exactly the same problem. And the CCJ also creates problems. 

4) You are asked about your partner's income in bankruptcy, not so that they can pay your debts, but to check you are paying a "fair" proportion of the household bills. If you refuse to disclose (perhaps you dont actually know your girlfriends income) then the official receiver will assume the bills should be split 50/50. An IVA firm will usually follow the same approach.

5) Your creditors have to vote on an IVA.  This would give Lowell a veto because of large disputed debt - a good IVA firm like StepChange can usually predict pretty well how a creditor will vote, but this is a potential problem.

Basically nothing you have said suggests that there are any advantages to an IVA, and there are plenty of disadvantages. 

My Dad is the only person who knows about my situation, and has offered to gift me money to clear off what I can. 
Unless he is rich, dont consider this. You need a clean start, now a 50% settlement on some bits. It would be kind of him to pay your bankruptcy fee.

sourcrates

You need to get out of this scam DMP you are in, stepchange are a debt charity, and charge no fee`s for debt management.

Unfortunately there are a lot of scam companies out there, that use a similar name, and it appears you have been targeted by one.

Cancel your payment to them today, and then reassess your situation based on advice from this forum.