Looking for the best path forward

Murphy0207

Hi all, I’m looking for some guidance about whether an IVA or temporary reduced-payment arrangement is more appropriate for me.

I’ve got a few debts in my own name and two in my wife’s name that I’m responsible for (I spent the money, so I’m paying them).
The mortgage is currently joint but is likely going into her sole name soon.

At the moment, I’m struggling with cashflow because all the payments fall awkwardly across the month although im currently trying to sort this out. I’ve missed some instalments recently. I’m planning to speak to my lenders to ask for temporary reduced payments or lower interest under the normal FCA forbearance rules to get a breathing space of maybe 4–6 months.

My worry is whether an IVA would work for me, because although the IVA would only cover my debts, I still have to pay the debts in my wife’s name every month — and those payments reduce what I have available for an IVA contribution. I’m also opening a bank account in my own name because everything currently goes through hers.

So I’m basically stuck between these options:

• Try for temporary reduced payments / interest freezes under FCA rules to get stability, reorganise payment dates, and see if I can actually afford everything.

• Consider an IVA, but only if an IVA provider would accept the payments I make toward my wife’s debts as essential household expenditure (since I’m responsible for them, even though they’re in her name).

I’m looking for advice on whether an IVA firm would usually allow those payments as part of the budget as they are part of my regular outgoings, and whether anyone has experience choosing between short-term reduced payments vs committing to an IVA.

Thanks in advance — just trying to get straight about the best way forward.

sourcrates

Hi,
How much do you owe if I may ask?

IVA not the only choice for a homeowner, there is also debt management, depends on the answer to the above really.

Murphy0207

Thanks for your reply. My total unsecured debt (credit cards and personal loans) is approximately £43,000.

I’m exploring options to manage it responsibly, and I wanted to understand whether a debt management plan or an IVA would be more suitable given my situation as a homeowner.

Any guidance would be much appreciated.

ManyWays

temporary reduced-payment arrangement
Why would this be temporary, do you expect your situation to improve pretty quickly? If you do, then you should not be considering an IVA at all.

The mortgage is currently joint but is likely going into her sole name soon.
Does your wife have enough income to pass the affordability checks that a mortgage lender will make, ignoring your income completely? If she doesnt, then a lender would not allow you to go off the mortgage

I’m looking for advice on whether an IVA firm would usually allow those payments as part of the budget as they are part of my regular outgoings
I think that would be unusual, why would your lenders think its OK for them to get less but for you to repay other debts, not in your name, in full?

It would help if we could see your complete situation? Could you complete a Statement of Affairs and post it here?

Murphy0207

im new to this, im looking for help not combat, respecful and helpfull advice is welcome, im not an expert. 

Murphy0207

ManyWays said:

temporary reduced-payment arrangement
Why would this be temporary, do you expect your situation to improve pretty quickly? If you do, then you should not be considering an IVA at all.i want to use fca rules to reduce interest payments and make it easier to repay the debt

The mortgage is currently joint but is likely going into her sole name soon.
Does your wife have enough income to pass the affordability checks that a mortgage lender will make, ignoring your income completely? If she doesnt, then a lender would not allow you to go off the mortgage  yes 100% she does

I’m looking for advice on whether an IVA firm would usually allow those payments as part of the budget as they are part of my regular outgoings
I think that would be unusual, why would your lenders think its OK for them to get less but for you to repay other debts, not in your name, in full? because its a normal expenditure for me. 

It would help if we could see your complete situation? Could you complete a Statement of Affairs and post it here?

ManyWays

i want to use fca rules to reduce interest payments and make it easier to repay the debt
OK, there are two sorts of FCA rules that can help you. The first are the rules about fair treatment of customers in arrears, eg in payment arrangements or a DMP, where stopping new interest is normal. (Reducing interest is rare in the UK, it is either charged in full or stopped.) The second is making a complaint that the original lending was unaffordable and asking for a refund of interest, which if there is still a balance is given by reducing that balance.

yes 100% she does
I am not trying to be difficult, but actually managing to do this is rarer than you might expect. Do you want to do this to remove any chance of your creditors going after the house, or is there some other reason? Typically, you need to wait until the end of the current fix (to avoid early repayment charge) and then agree with the mortgage lender that you legally gift your share of the house to your wife (stamp duty isnt payable unless the mortgage is large) and she takes out a new mortgage which is used to repay the current one. 

because its a normal expenditure for me. 
That isnt how IVAs normally work. Nothing is impossible in an IVA (hence the name "individual") but allowing these payments as part of your expenses would be unusual. 

I asked for a Statement of Affairs as seeing your full position, with the lender names can help people here say more about all of these points. 

RAS

There simply isn't enough information in your first posts to advise properly.

Income, family structure, secured debts, expenditure, how was debt accrued, future earning potential for both of you? Does your current income cover your essential living costs?

So an SOA is very good idea. Based on past experience, you will need to tweak it as you discover annual or irregular expenditure that isn't factored into you first few attempts.

If your interest in an IVA is inspired by adverts on media or social media, please ignore them. The advertisers are sales merchants whose income comes from the referral fees. The IP providers then take their fees before they pay back your debts. 

So if your income increases over the next 6 years you could end up paying back the whole debt plus the fees, rather than reducing the total payments. 

There are some cases where a protocol IVA is useful for people with mortgages but these are limited, the protocol advises against in some instances. But you also need to understand the downsides, including that insolvency is a public act rather than a private one.

So, provide more information and we can give you better information.

If you just stop paying unsecured debts, nothing much will happen for several months, so take your time to get informed and make decisions.