IVA or Bankruptcy

jcmufc · 19 September 2019 at 7:28PM

Hi looking for a bit of advice,, please help.

I have been struggling with my debt for a few years and made things worse instead of better. Samaritans have helped me a lot as i was thinking of just ending my life at one point, still do if being honest.
I have 3 credit cards, 2 loans and a catalogue account. I had the one card which i used to manage ok then about 4 years ago i got made redundant and had to change career and pay cut. I started putting everyday costs onto my card only paying minimum payment most months then when the balance got too high i got a 0% balance transfer card and loans over the years to try and facilitate my debt, which drove me into depression. I know i have been stupid with not managing my money better and the fact i had not told my partner about my debt was starting to effect our relationship, i would fly off the handle for no reason as far as she was concerned and i would just tell her it was a stressfull day at work.

With Samaritans help i decided to face up to my problems and told my girlfriend about my debts, that didnt go according to plan. We had a big argument and i got kicked out for not being honest , and she doesnt want to loose her flat that she owns because of my debts. Luckily one of my friends is letting me stay in his spare room for now, i had to buy a bed and wardrobe etc. I couldnt afford my monthly minimums any more so i stoped paying my creditors one by one and started drinking heavily to drown out the fact that i have messed my life up big time.

I plucked up the courage to contact stepchange last week and contacted my girlfriend for a list of bills that we pay, she told me to come round and we can do it together rather than me phoning every 5 mins. We had a chat and she made it clear that she loves me and wants us to be together but my stepson is autistic and she has worked hard to be able to afford to buy her flat to know he has a roof over his head no matter what happens to her. We downloaded the debt remedy from stepchange and read through it over a chinese take away. I had 2 options iva or the nuclear option of bankrupcy, i got told that if i did the iva then we can put my stupidity behind us and move on together, i can move back in and she will forget about it providing that i tell her the truth from now on. finally light at the end of the tunnel i thought until i spoke to the IP that stepchange put me in contact with.

When speaking with the IP they said that i would need to fill in a income/expenditure form that they will send. I explained that we split all our bills 50/50 and i had done this following the guidance on stepchange and that showed my share. I tried to explain that the income/expenditure form i filed in was based on my 50% share of houshold bills etc but was told that they will need to see bank statements from both of us. I told them that i would have to ask my girlfriend for permission to use one of her bank statements as we are not financially linked.

After speaking with my girlfriend i got told over my dead body is anybody going to see her bank statements as they are private and nothing to do with me or my debt. I am now back at square one again after thinking i was going to get my life back together and dont know what to do. I love my girlfriend and can see it from her point of view but she cant see that her providing that info would help put it behind us.

Housing Amount Comments Rent £270
Mortgage
Secured loans
Charging / Inhibition order
Mortgage endowment premium
Service charge/ground rent
Water £27
Council tax £52
Gas £45
Electricity £45
Other household fuels
Household Services Amount Comments Building/contents insurance £4
Telephone/mobile/internet £100
TV licence £7
Satellite/cable television
Repairs/maintenance
Household appliance rental
Child maintenance
Childcare
Fines/CCJs/decrees
Life insurance/pensions £50
Medical/accident insurance
Hire purchase / logbook loan
Transport Amount Comments Spares/servicing
Road tax
Insurance
Breakdown cover
Fuel/parking
Public transport £300
Food & Housekeeping Amount Comments Food, toiletries, cleaning £250 Client's contribution
School meals/meals at work £50
Pets/pet foods/insurance
Tobacco £20 Client:Reduced from £40
Misc. Goods & Services Amount Comments School trips/activities
Medicine/prescriptions
Dentist/opticians £28
Hairdressing
Union/professional fees
Laundry/cleaning
Education fees
Personal & Leisure Amount Comments Clothing/footwear £50
Newspaper/magazines
Sports/hobbies/entertainment
Children's pocket money
Religious contributions
Sundries & Emergencies

Total Income £ 1,440 Total Expenditure £ 1,298 Surplus (Deficit) £142
Monthly income
£ 1,440
The total of all household spending in a 'calendar month' including payments to any 'secured' debts and all priority household bills.
Monthly outgoings
£ 1,298
The balances on your unsecured debts have been used to work out the amount of money you’d need to make your minimum payments each month.
Monthly contractual payments
£ 663
The number of unsecured debts you need to pay each month.
Total number of creditors
6
The amount you owe your creditors for all unsecured debt.
Total unsecured debt
£ 20,258

thevdm · 19 September 2019 at 8:59PM

First of all, debt is never the end, I can completely understand how you feel with this looming over you. It's a lot to handle in all areas of life and I have had similar feelings over the years.

I suppose the main thing to add for reassurance is that no matter what debt solution you opt for, it will not effect anybody's assets other than your own, even if you were married to a millionaire. Assuming the flat doesn't have your name on it then it is not something that they can touch.

I personally wouldn't put bankruptcy down as the nuclear option, it's really not that scary. The main thing to consider is that you choose an option that is right for your situation, no matter what that option is. Many of the insolvency options have similar restrictions when you look into them.

As far as I am aware they can request a copy of your partners bank statements, but there is no right for them to see them, as it is a private document belonging to someone other than their client. I gather without seeing the bank statement it just has to be accepted that you contribute in a 50/50 manor. I would hazard a guess that she has some savings in the account that she (for a good reason) has no interest in loosing, again this is her asset not yours.

With a bit of perseverance and time there will be a solution.

mwarby · 19 September 2019 at 10:15PM

I don't see what an IVA would gain you over an bankruptcy, you'll be repaying for 5 years not 3 and an IVA can fail.

If all your creditors froze interest and you could pay 150 a month your talking 11 years, in practice over that 11 years the debts will be sold multiple times and no guarantee that buyers will be happy to continue.

jcmufc · 22 September 2019 at 9:58PM

Hi thankyou both for your advice. The thought of going through the bankruptcy scares me, taking my wages out quick and then having to tell HR at work that I have new bank details for them and then they see my tax code changed might then trigger them to try and protrude into my private life via a monthly one to one. Its my understanding that with an IVA I won't have to change banks and my tax code doesn't change so work don't have to know ?

My girlfriend has probably got a quid or two sat in her account and she isn't going to be letting anyone know especially if she thinks they might take it due to my debt, roles reversed and I would probably be the same.
Problem for me is she pays all the direct debits bar two. When they see my bank statement it will show a chunk of money transferred to her every month for rent/main food shopping, followed by two dd,s to broadband and my mobile. Then they will just see a stream of cash withdrawals over the month which is a mixture of paying my half of the dd,s when they come in and my expenses for travel, food etc

JCS1 · 22 September 2019 at 10:20PM

The reasons for your tax code are confidential between you and HMRC, your employer should not ask you anything about it.

mwarby · 22 September 2019 at 10:24PM

What do you do for a living ? tax code changes aren't uncommon (ok changing to NT not so common), and switching banks isn't that uncommon either. There is no need to take out all your wages just enough to tide you over for a few days incase your account is frozen/closed. Many employers would see you taking action on your debt as positive, it will reduce your stress and if your job is sensitive from a security/money pov you won't be doing anything stupid to repay it

If you get an IVA you may be advised to switch accounts anyway (if you bank have any credit with the bank). Also worth bearing in mind you'll be on a public list for 5-6 years in an IVA, vs 1 year 3 month for bankruptcy

fatbelly · 23 September 2019 at 7:07AM

You don't appear to have any assets to protect, and are just outside the criteria for a DRO.

Debts are £258 too high but if a third party was going to help with the £680 bankruptcy fee it would be cheaper for them to just pay your debts down and pay £90 for the DRO

Your surplus income is £92 too high but you seem to have nothing for haircuts or prescriptions, some figures seem suspiciously round, and what happened with your tobacco spend?

I think you should take further advice from someone who does not stand to financially gain from you having a particular 'product'. Have you discussed this with CAB or a local independent debt advice centre?

jcmufc · 23 September 2019 at 7:41PM

Hi I am just speaking with the Samaritan's at the moment, I have not spoken to anybody at stepchange yet just used their form so far and spoke to somebody about an iVA that stepchange forwarded my details to. I managed to pluck up the courage to phone my creditor's who have given me 30 days breathing room.
I reduced the tobacco section because the stepchange form said it was too high and a luxury item. At the moment it is costing me £40 a month but that is ejuice for vaping, my suspiciously round figures is down to me either rounding up or down ( £8.59 = £10. £8.16 = £8). I shave my own hair and I don't have anything on prescription at the moment.

thevdm · 23 September 2019 at 9:37PM

When I filled in my SoA, all the figures were rounded to the nearest £5, unless it was a specific bill that stays the same every month.

It's interesting that they recommend a budget of £20 for smoking (or vaping), most people I know who smoke go through a pack a day, so spend nearer £300 a month.

I second that it's worth speaking with an advisor who has no financial benefit from the method you chose. Before going bankrupt I was in an IVA, at the time I took control and made a choice based on my research the company dealing with the IVA had earnt around £2,000, yet my creditors had about £40 between them. As far as I'm concerned they knew as well as I did that an IVA wasn't my best option, but it was their best option.

Some slight differences between the SoA of an IVA and bankruptcy is that bankrupcy allows an allowance for holidays and birthday/christmas presents. i.e. on a bankrupcy SoA you would have less disposable income. I'm not sure how the SoA differs with a DRO.

The option for a DRO is probably the least worrying one, if you can reduce your monthly excess to below £50 by making sure you have an allowance for everything you require and reduce the debts to under £20,000 then it may be possible.

If you are able to go that way and pay the £258 off, make sure you pay a representative amount to each creditor (i.e, if you owe one £10,000 and another £20,000, pay £86 to the first and £172 to the second), this may not make much difference, but if you do end up going bankrupt in the future it will not show a preferentail payment to a single creditor.

As scary as it can be, keep in contact with creditors so they know what is happening. In the time leading upto my financial issues, some creditors offered to stop charging interest for the forseable future and a couple of them accepted a token £1 per month payment which kept them relatively quiet.

AlantheCourier · 5 February 2020 at 2:53PM

Why are you spending so much a month on vaping? I vape and use B & M shop juices - currently £10 per month max.

ACG · 5 February 2020 at 8:02PM

Could you do a Debt Management Plan (DMP)?
Could you not agree a payment plan with your creditors directly?

IVA or Bankruptcy

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