Dmp advice

Magicjaguar

Hi im new here and dont no how to do a post to get dmp advice

fatbelly

Well you've made your first post ok, and in the right place. What do you want to know?

RAS

Welcome, just start by telling us your basic information, renting or buying, employment, family, amount owed for consumer debt, any priority debt like housing, CT, HMRC, secured loans? And family income?

sourcrates

https://forums.moneysavingexpert.com/discussion/6681943/dmp-advice

You`re doing ok so far, ask away.

Magicjaguar

Ok here goes.....

Im currently in around 47k of credit card debt. I left an 18 year abusive relationship around 2 yrs ago with my 3 kids and i walked away with nothing... stupid i know but i just wanted to get away. Ive had to rebuild my life from scratch all we had were suitcases of clothes. Me & my ex partner owned a house in wigan (in my name only) and moved to Leeds and bought another house 2yrs before we split (in his name only) i rent the house in Wigan out on a buy 2 let interest only mortgage. My house in Wigan is worth around £190k with £134.496 mortgage left on it after remortgaging last year to fund a new start. I currently rent a home in Leeds that me and the kids live in and have not moved back into my home in Wigan as the children are settled here and i really dont want to try to co parent with a 4hr round trip in distance. The split has been hard enough on the children and i dont want to be the one to move them away and to come between their relationship with their father (despite how he treated me) somehow it feels the blame would fall on me!

My credit card bills are now around £890 per month and with the mortgage, rent and supporting the kids on my own (csa claim he can only afford £7 per week per child!!) i just simply cant afford to pay them. All my 0% intrests are coming to an end and with my job being commision based my income is very up and down and im just stuck in a cycle of overdrafts and using cards to get by i just dont see anyway out. I do recieve some universal credit but as i work full time its not much and goes down if i earn more on a good commision month. I have done a SOA on lemonfool and i have around £250 pm avaliable to go towards the credit cards. I suppose what im asking is do you think a dmp is possible for me as im scared of loosing my house if i go down the IVA route. Also ive read its best to let the cards defult before i go to step change? Ive not paid any cards this month as i simply did not have the money and ive missed other essential bills too. Im so scared and cant sleep over all this pressure i just dont know what to do to get out of this mess. The stress is really effecting my mental health and i feel so stupid for burying my head in the sand and letting it get this far. I cant get anymore cards or balance transfers and im sick of this cycle of more debt to try to pay debt!! Thanks for reading, sorry if ive waffled on and not given any relevent information

ManyWays

What essential bills have you missed this month?

How much is the rent you are getting on the BTL? And how much is the mortgage?
Is the house a suitable size for you and the 3 kids?
How old are the kids?
Wigan and Leeds are not that far apart. Could you work from Wigan or would you need to change jobs?

How erratic is your income? Your SOA, was that based on an average month or a low month?

Magicjaguar

Hi

Ive missed elec gas car finance car insurance and counsil tax. Ive paid rent mortgage and food. As its just been 6 weeks school holiday ive had to take more time off work, even though i get holiday pay commision has been basically non existant

Rent after agent fees is £1000 pm mortgage is £515 and i like to keep a buffer for any repairs which has been drained due to new oven and some plumbing work that was needed

Kids are twins age 8, and girl age 9. I would need to find a new job if moved and i have a stable job now with a great pention, very understanding manager to my childcare needs allowing me to work from home 3 afternoons a week so i can be home for school run and work from home days if kids sick. It would also be a decent wage without the £890 pm credit card debt. Ive only been with the company 6 months and i really wanted this job. Its so hard to find a job thats understanding and flexible towards my kids

I based the soa on a average of the last 6 months wage and universal credit as income plus the rent i earn then the mortgage as a outgoing

The distance between the 2 houses is 1hr 50mins on a good day... due to school they could only visit their dad at weekend which would mean waiting until after 6pm on a friday then with friday traffic would mean the round trip could easily be 5 hours on a fri then again on a sunday and i know he would not do the journey hence why i said it would put strain on their relationship with their dad. I just want whats best for the kids and my twin boys are close to him

sourcrates

Firstly, welcome to the forum, so you are paying both a mortgage on the house you rent out, and rent where you live now, a double whammy, does the rental income cover the cost of the mortgage, or does it leave you short?.

Also, please allow me to clarify one important point, you asked:

"I suppose what im asking is do you think a dmp is possible for me as im scared of loosing my house if i go down the IVA route".

An IVA is basically insolvency for homeowners, you are legally protected from any further recovery action by your creditors, so you go down the IVA route to protect your home, not to lose it.

If you can`t make the credit card payments, then the world will not end if you don`t pay them, they are classed as non essential debts, these lenders may make a lot of noise when not paid, but its the only retort they have for unsecured borrowing, court action would be a long way off, and very little will happen if you don`t make payment for 6 months or so.

RAS

Car insurance and Council Tax are both high priority debts. You need to confirm that the insurance is still valid, urgently.

Also contact the Council and try to stave off a demand for full payment. You need to get that in order to prevent a liability order with additional costs mounting up.

You wrote partner, so are you married, civil partners or unmarried, as divorce might help or hinder your finances.

It's worth asking Women's Aid about financial advice coming out of an abusive relationship.

And since you are in a large city, for the future research things like second hand uniform hubs, community pantries, langar at Sikh temples, community cafes. And work out when local shops put out yellow stickers. It might not be what the kids are used to eating, but particularly in school holidays, it can reduce your food costs. Small things in the scheme of things.

You need an SOA that allows you to pay all essential costs on a low income month. Even if that means cutting back some months at the early stage of you recovery. You'll then need to save in good months to give you a buffer, and juggle discretionary expenditure like clothes.

Given how much tax you are paying out rental property, what do the real sums look like after you've allowed for repairs and maintenance and things like insurance? I'm mindful that a few months voids or a non-paying tenant can ruin things.

Magicjaguar

Thank you for your responses. I have contacted my car insurance

and my mum has lent me the money to pay it. I will call counsil this week to hopefully sort out a payment plan.

I thought as my house was on a buy to let and im renting it out then it was at risk on a iva? If ive got that wrong would an iva be a better option for me than a dmp?

We were never married so nothing legally linking our finances. Should i work my SOA out on my worst month not an average of the last 6 months? If i work it out on a no comission month theres nothing left to offer to pay the cards.

Should i talk to step change now or wait for my cards to defult and build an emegency fund and buffer to cover my no commision month?

ManyWays

IVAs are "individual" arrangements. An IVA firm may be prepared to set up an IVA to exclude the BTL as an asset.

But my concern would be that this feels like a very precarious situation in which to commit to a 5 or 6 year IVA. Many IVAs fail; a flexible DMP may be better.

Building a buffer for a no commission month is a great idea. But is that feasible?