11k debt

Nenusia

Hey everyone, I am hoping you would be able to help me please. I got 11k in debt however my loan of £8500 has now got a default since early July ( made last payment in June,). I was trying to get my debt sorted and reached out to Money Wellness Group, which I found out about as PayPal sent me an email on how to manage debt. Now MWG is offering me a final and full IVA which sounds too good to be true. To have my debt written off, I would need to withdraw all my savings in Moneybox saving account (set up way before I started to struggle financially). All together I got about 3k (after penalty of 25% will be deducted). After reading MSE forum and reviews for Money Wellness Group, I am more confused than before. Any help would be appreciated. Thanks 😊

Brie

Why an IVA?  Why not a debt management plan or a debt relief order?  

Why would you lose 25% of your £3k from Moneybox?

Nenusia

Could not get DRO due to 3k on savings. Moneybox has been set up to buy first home and for 25% Government bonus each year, which would allow me to get a Mon wed y for deposit quicker. If I withdraw any money, 25% will be deducted as I won't use the money towards deposit. 

Grumpelstiltskin

Start by reading this thread.

In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Complete a SOA, format for MSE and copy and paste on here. Then when we see the full picture we can advise you the best way forward.

Nenusia

Should I leave in peace my loan(which has a default since July) or should I still make small payments? All my credit cards still have a 0% interest rate, but one only till December. Should I wait till end of November and do another balance transfer cards 0%? Sorry for asking so many questions and thanks for your reply 

Nenusia

[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......... 0

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 1550

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

Benefits................................ 350

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

Total monthly income.................... 1900[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

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

Rent.................................... 927

Management charge (leasehold property).. 0

Council tax............................. 141

Electricity............................. 125

Gas..................................... 0

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

Water rates............................. 65

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

Mobile phone............................ 60

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

Satellite/Cable TV...................... 40

Internet Services....................... 25

Groceries etc. ......................... 375

Clothing................................ 0

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

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

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

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

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

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

Medical (prescriptions, dentist etc).... 24

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

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

Contents insurance...................... 25

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

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

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

Haircuts................................ 25

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

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

Emergency fund.......................... 500[b]

Total monthly expenses.................. 2347[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 0

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

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

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

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Loan...........................8500......228.......0

Pay Pal .......................330.......15........23.9

Barclaycard ...................83........10........35.3

Lloyds ........................620.......25........0

M&S............................740.......50........0

Virgin ........................995.......25........0[b]

Total unsecured debts..........11268.....353.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,900

Expenses (including HP & secured debts). 2,347

Available for debt repayments........... -447

Monthly UNsecured debt repayments....... 353[b]

Amount short for making debt repayments. -800[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -11,268[b]

Net Assets.............................. -11,268[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

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

sourcrates

A full and final settlement IVA is quite a rarity, but I have seen a few, it works by paying a lump sum to the arrangement which your creditors then accept and write off the remaining debt.

No 6 years of payments, just one lump sum, but I would advise caution, make certain this is the deal on offer, and do as much research as possible first, there is no rush here, do not allow Money wellness to bully you into signing on the dotted line.

See what @fatbelly thinks first.

Nenusia

I'm trying to do research however it is so overwhelming and confusing. MWG send me a proposal already and it seems to be too good to be true. They want 88% of the lump sum towards their fees and remaining 12% for all of my creditors.

sourcrates

Nenusia said:

I'm trying to do research however it is so overwhelming and confusing. MWG send me a proposal already and it seems to be too good to be true. They want 88% of the lump sum towards their fees and remaining 12% for all of my creditors.

That does not leave much for your creditors, remember, they have to approve this deal first, if they say no, its not going to happen.

Please do not rush into this and regret it, take your time, as it doesn`t sound appealing from your lenders point of view.

The majority of your debts are small, and insignificant really, its just the loan at 8.5k.

I`d be tempted to pay the small debts out of your savings and just default on the loan, then make affordable payments from your budget, I would ditch the IVA idea.

Nenusia

That's exactly what I said to MW. If creditors won't approve the deal apparently I won't need to pay any admin fees for money wellness but it's sounds dodgy as why would they go through everything, paperwork, meeting with creditors and if not accepted, they would not expect any payment? 

Altior

Looks like the expenses are higher than the income, even before debt repayments. So the IVA would only provide a very short term relief. The rent is a very high proportion of total income. 

Two adult household with no kids, but seems like the other adult is not contributing (based on the SoA). Probably also needs digging into as that income seems low enough to support two adults without property ownership.