28 and considering an IVA

colinrobinson22

Hi all,

I'd like to start out by saying I've always been quite realistic when it comes to my income/outgoings and considered 'sensible', but after around 10 years of building £23K unsecured debt, getting a mortgage and car finance, it's gotten to the point where I'm now thinking "I should have never gotten that credit card at 18".

A bit of an insight, I'm a freelance graphic designer and have always done fairly well. I'm married and my partner also brings in a good income self-employed, but I've been struggling with MH issues for a few months now and it's bringing my income down considerably.

I've never missed a payment, but as of today I will, and it's gotten me in a state of panic. I've spoken to PayPlan who have suggested an IVA, which all looks good, but I don't know if I'm being too impulsive as I'm aware it will drastically affect my credit score (which I've always been proud of) and god knows what else in the future.

I've put together an SOA to the best of my knowledge below, but if anyone can offer any advice or answer my questions below then I'd be very grateful. Thank you.

• How will an IVA affect future mortgages?
• How will an IVA affect my car finance agreement? (For context, I have a finance agreement with VW, and they tend to offer a new car every 3 years using my equity. Will I be eligible for a new car if they offer me one under an IVA?)

_______

Household Information[/b]

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

Number of children in household......... 0

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

Monthly Income Details[/b]

Monthly income after tax................ 1000

Partners monthly income after tax....... 3000

Benefits................................ 0

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

Total monthly income.................... 4000[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 860.5

Secured/HP loan repayments.............. 299

Rent.................................... 1000

Management charge (leasehold property).. 0

Council tax............................. 161

Electricity............................. 100

Gas..................................... 70

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

Water rates............................. 30

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

Mobile phone............................ 38.59

TV Licence.............................. 0

Satellite/Cable TV...................... 50

Internet Services....................... 20

Groceries etc. ......................... 600

Clothing................................ 50

Petrol/diesel........................... 50

Road tax................................ 16.62

Car Insurance........................... 53.46

Car maintenance (including MOT)......... 0

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

Other travel............................ 0

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

Other child related expenses............ 0

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

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

Buildings insurance..................... 33.96

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

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

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

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

Haircuts................................ 30

Entertainment........................... 0

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

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

Total monthly expenses.................. 3463.13[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 220000

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

Car(s).................................. 0

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

Total Assets............................ 220000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 169066...(860.5)....4.41

Hire Purchase (HP) debt ...... 17000....(299)......0[b]

Total secured & HP debts...... 186066....-.........-   [/b]

[b]Unsecured Debts[/b]

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

VIRGIN.........................11098.....160.......0

ADMIRAL FINANCIAL..............7137......221.......0

Creation.......................272.......28.89.....0

LLOYDS BANK CURRENT............3000......95........0

KLARNA.........................714.......28.59.....0

HOME RETAIL GROUP CAR..........926.......45........0[b]

Total unsecured debts..........23147.....578.48....-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,000

Expenses (including HP & secured debts). 3,463.13

Available for debt repayments........... 536.87

Monthly UNsecured debt repayments....... 578.48[b]

Amount short for making debt repayments. -41.61[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 220,000

Total HP & Secured debt................. -186,066

Total Unsecured debt.................... -23,147[b]

Net Assets.............................. 10,787[/b]

Isthisforreal99

First up, any form of debt relief is going to trash your credit file and be visible for 6 years but sometimes needs must.

Don't take this the wrong way but you say you have always done fairly well in your field but your income is stated as £1000 per month? A full time job, even a basic office job would be more than double that. Time to reconsider, even on a short term basis?

Why is there mortgage and rent in your SOA?

£600 per month on groceries is way too much for 2 people.

colinrobinson22

Isthisforreal99 said:

First up, any form of debt relief is going to trash your credit file and be visible for 6 years but sometimes needs must.

Don't take this the wrong way but you say you have always done fairly well in your field but your income is stated as £1000 per month? A full time job, even a basic office job would be more than double that. Time to reconsider, even on a short term basis?

Why is there mortgage and rent in your SOA?

£600 per month on groceries is way too much for 2 people.

Thanks for your reply.

£1000 a month is just based on the last few months as I'm being realistic, but in the past it's been £2.8-3.5K. 

Rent is my husband's shop for his business.

The £600 also includes business expenses (there wasn't anywhere else to put this).

Isthisforreal99

So just to be clear, all these debts are in your sole name and none joint?

Is your husband a sole-trader or Ltd company?

Going back to the 2 original questions you asked,

Mortgage - unlikely you would get any decent remortgage options for a few years and you may be stuck with your current lenders retention products.

Car - unlikey to be offered in the short term, which is maybe a good thing. Do you really need a new car every 3 years?

RAS

OK, a number of things very quickly.

An IVA for this amount is most unlikely to be a good idea. So please don't do anything more about that at the moment.

And an IVA depends on you having a secure stable income for the next 6 years which isn't really possible with two people both working self employed.

Your SOA is a mess. Your husband's business rent and any other payments associated with his business are NOT part of your household expenses. 

You need him to do a proper assessment of his business expense and income. The only money that belongs in your family SOA is the income he takes monthly from the business. Not the profit but the clear income. I've a strong suspicion that's going to be less than £4k?

Now if the SOA is correct and you cut that massive grocery bill, you are solvent, so you are not eligible for an IVA. Before you remove the business rent.

You need to separate business and home income and expenditure. If he needs advice on business debt, he needs to talk to businessdebtline directly. 

Does he have any personal debt? Or is that you've listed joint, partly his, partly hers? You also need to check that you have money set aside to cover your next HMRC payments.

You need to pull out your car agreement. Some will be terminated by the provider if you do an IVA, some could lead to the equity being extracted by sale and some might be allowed, depending on the type and details of the contract. It's unlikely you'll be able to get another similar car deal on an IVA. Renewing your mortgage deal with your current provider will be OK as long as the mortgage is paid regularly.

Have you been to see your GP about your mental health, talked to any other support networks?

ManyWays

• How will an IVA affect future mortgages?
  An IVA is a form of insolvency like bankruptcy. It won't stop you getting a new mortgage fix from your current lender, but you will have to be declared for future mortgage applications even after the IVA has dropped off your credit record. 
• How will an IVA affect my car finance agreement? 
  This is a PCP deal I assume. You are very unlikely to be offered one at a reasonable rate when this ends. 

What are Paypal saying you would pay in an IVA?

Darina32

It’s a tough decision, and it’s great that you’re seeking advice and considering all the consequences. Make sure you fully understand all the implications of an IVA, and keep in mind that rebuilding your financial health will take time. If you’re unsure, it might be helpful to speak to a financial advisor to ensure you're making the best choice for your future.

Grumpelstiltskin

Darina32 said:

It’s a tough decision, and it’s great that you’re seeking advice and considering all the consequences. Make sure you fully understand all the implications of an IVA, and keep in mind that rebuilding your financial health will take time. If you’re unsure, it might be helpful to speak to a financial advisor to ensure you're making the best choice for your future.

Forget financial advisor, wrong person to talk to.

sourcrates

Darina32 said:

it might be helpful to speak to a financial advisor to ensure you're making the best choice for your future.

I think you`re referring to a debt advisor, not a financial advisor, they are the ones who get you into debt in the first place.