Awaiting response from Stepchange

sb771985

Completed budget planner tool with Step change - advised IVA/DMP

Income 4100

Spending 3423.83

Unsecured Debt £84,000

Available for non priority debts 676.17

Estimated Contractual debt payments 2505.17

I am waiting to have the conversation with Step change and potentially setup an IVA or DMP in the meantime what shall I do with my debts as currently all payments up to date (struggling and reusing credit cards for essentials) and how long before step change typically contact me?

Grumpelstiltskin

OK Cancel all unsecured debt payments, then don't rush into anything, you need to get debts to default before you do anything.

No problem speaking to Stepchange now but do not agree to anything at the moment.

ADD Read through this thread and complete an accurate SOA, format for MSE and post on here.

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

sb771985

Can I ask why the default is important I understand the 6 year rule but will paying them on time make it less likely to be accepted for a DMP/IVA?

CMichaelC

What concerns me most is that you're having to use credit cards to cover everyday essentials despite keeping up with all your payments so far. That suggests your budget is already stretched beyond what’s realistically manageable. I’d be honest with StepChange about how much money you actually have left after covering your essential expenses, rather than trying to keep up with every payment at all costs.

Brie

If you stop paying and the debts default then there will be no interest charged and you will have a fixed target to clear. Defaulting can take a few months but meanwhile you can build up your emergency fund so that you have room to deal with unexpected bills. Frankly from your numbers it sounds like you are about to default in any case as you can't afford the full monthly payments that are expected. And you no doubt are paying a lot of interest every month and not really hitting the actual borrowed amounts.

Most people do best with a DMP rather than an IVA as there is more flexibility with a DMP. If your circumstances change, for better or worse, then you can change how much you pay. If you are in an IVA and can't keep up the payments (& many people can't) then the IVA fails and you need to start over.

sb771985

[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......... 3
Number of cars owned.................... 0[b]

Monthly Income Details[/b]
Monthly income after tax................ 4100
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 4100[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 1950
Secured/HP loan repayments.............. 300
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 112.5
Electricity............................. 113
Gas..................................... 0
Oil..................................... 0
Water rates............................. 42.5
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 600
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............ 166
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 10
Life assurance ......................... 20
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 3324[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 525000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0[b]
Total Assets............................ 525000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 371000...(1950).....0
Secured Debt.................. 80000....(300)......0[b]
Total secured & HP debts...... 460000....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
(Unnamed debt).................84224.....2505......0[b]
Total unsecured debts..........84224.....2505......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,100
Expenses (including HP & secured debts). 3,324
Available for debt repayments........... 776
Monthly UNsecured debt repayments....... 2,505[b]
Amount short for making debt repayments. -1,729[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 525,000
Total HP & Secured debt................. -460,000
Total Unsecured debt.................... -84,224[b]
Net Assets.............................. -19,224[/b]

Partners income not included 2100 and her half of bills not included

Grumpelstiltskin

If you start a DMP before the debts have defaulted your credit record is marked ' Arrangement to Pay' This means if it takes 5 years to pay off it stays on your credit record for 11 years.

Once a debt has defaulted it goes after 6 years from that date even if you never pay another penny off it.

Grumpelstiltskin

The SOA is missing all the debt details, we need creditors, amounts, interest rates etc. and it is better to see the family income and expenditures.

fatbelly

That does look suited to an IVA but there appears to be a lot missing from that soa. No transport costs, no phone costs, clothing, hairdressing, holiday... You are going to be in an IVA for six years (make sure you all understand the implications of that). You want to keep the monthly spend on it as low as possible.

RAS

Your SOA is missing a huge number of items. For this purpose, you need to add in your partner's income and list the full cost of all items.

If you do an IVA or a DMP through a debt charity, they'll generally expect you to each pay a portion of the total costs, in line with the portion of your income.

Does your wife have her own debts?

As for stopping paying consumer debt, you are currently in a £84k hole and adding to that by nearly £2k per month. Stop digging the hole.

ManyWays

Partners income not included 2100 and her half of bills not included
What about other essentials like groceries, clothes, presents etc, is you partner pay a lot for those?