IVA or DMP ???

jamesm5094

If i could get a friend to loan me the money to pay off all the smaller unsecured debts and theb just do a DMP for the £25,000 & £17,000 one. Would this be better option? Or would it be better just to do DMP for all the unsecured debts. 

Obviously i have have to pay the friend monthly aswell. 

katsu

Remortgaging isn't clearing your debt, it is just moving it. If you remortgage and pay off debt, you still have to pay the new higher monthly mortgage payment until the mortgage is fully repaid. 

I'm not sure why you think it will be best to keep increasing your mortgage?

Also if the work is 80% done, how do you plan on finding the remaining 20%?

fatbelly

katsu said:

Remortgaging isn't clearing your debt, it is just moving it to a more dangerous place


?

Added a bit for the op's benefit!

Really the two logical options are as MW suggested to you. They should be giving impartial advice as that is what the government has funded their helpline to do, when they opted not to give the contract to Stepchange

By all means talk to Stepchange but you are likely to hear the same

If you can get an IVA, and you really want a protocol-compliant IVA, then you pay maybe 15-20k over 6 years and the rest is written off. I would say that that is a better option than the ones you are coming up with.

If you opt for a dmp then it controls things but does not repay the debts in a sensible timeframe. That may be the option you are left with if your advice agencies cannot deliver an IVA

13thlegion

Things that are more dangerous and scary than you think: turning unsecured debt into secured debt. It puts your home on danger and on most cases doesn't change your behaviour. We see consolidation efforts fail consistently on here.

Things that are a lot less dangerous and scary than you think: defaults of unsecured debt and negatives on your credit record.

This thread is very useful as a starting point https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

Grumpelstiltskin

Do not think about borrowing money from a 'friend'

Sure as houses they won't be a friend any more, you have no chance of asking for a CCA, going for affordability claim. It is the next worse thing to adding it to your mortgage.

RAS

You need to clear your debt. 

Moving some of the debt to a friend, is not clearing your debt, just shifting it sideways a bit. It's even worse than an IVA or a DMP.

Unsecured licensed credit providers have to accept reduced payments, either informally or occasionally through the courts. Your friend's only option, assuming you can find one daft enough, is to take you to court. Which'll wreck for credit record for a while longer.

And neither a DMP or IVA provider are going to allow you to fully repay your friend and then share the dregs with other creditors. IVAs prohibit favouring of any creditor.

You've already used a second mortgage to consolidate unsecured debt. You might be paying less per month (over a longer timescale) but you could have just stopped paying unsecured debt without major implications.

Try doing that with the mortgage and you'll lose the house eventually.

When does the 5 year fix on the second mortgage end?

You need to get your head round the fact that you are not going to be able to borrow to pay for the 20% work still needed. Certainly not until the IVA is completed and the defaults are off your credit record.

And you'll pay a premium for any credit, now or for some time in the future. 

You are going to have to budget for savings and then do essential work gradually and live with it for a while.