Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • sammyjo1979
    • By sammyjo1979 6th Aug 18, 9:31 PM
    • 83Posts
    • 33Thanks
    sammyjo1979
    DMP or IVA?
    • #1
    • 6th Aug 18, 9:31 PM
    DMP or IVA? 6th Aug 18 at 9:31 PM
    Hi, I was wondering if someone would be able to offer any advise. I added up all my debts today and they totalled just under £22k
    I have rang MBNA who have put me on some sort of plan where they have set the payment at £190 per month which I'm assuming I need to default on? Barclaycard have frozen the interest for a couple of months and I've yet to speak to Tesco. I am just confused how all this works and if this is actually the best option for me or if I should be looking at an IVA instead (I don't own my own house). I work part time but do earn an okay wage. I get tax credits and child benefits and my husband is currently on ESA. Please could anyone offer any advice
Page 1
    • sourcrates
    • By sourcrates 6th Aug 18, 9:46 PM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    • #2
    • 6th Aug 18, 9:46 PM
    • #2
    • 6th Aug 18, 9:46 PM
    Hi,

    A statement of affairs will tell us more, depends on your circumstances:

    http://www.stoozing.com/calculator/soa.php
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • sammyjo1979
    • By sammyjo1979 7th Aug 18, 12:09 AM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    • #3
    • 7th Aug 18, 12:09 AM
    • #3
    • 7th Aug 18, 12:09 AM
    I think i've filled this in right. The benefits are tax credits, not sure if i've put that in right place but pretty sure it doesn't make much difference. Thank you.

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 2
    Number of cars owned.................... 1

    Monthly Income Details

    Monthly income after tax................ 974
    Partners monthly income after tax....... 500
    Benefits................................ 500
    Other income............................ 0
    Total monthly income.................... 1974


    Monthly Expense Details

    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 650
    Management charge (leasehold property).. 0
    Council tax............................. 110
    Electricity............................. 35
    Gas..................................... 43
    Oil..................................... 0
    Water rates............................. 31
    Telephone (land line)................... 0
    Mobile phone............................ 27
    TV Licence.............................. 13
    Satellite/Cable TV...................... 68
    Internet Services....................... 0
    Groceries etc. ......................... 340
    Clothing................................ 100
    Petrol/diesel........................... 125
    Road tax................................ 21
    Car Insurance........................... 32
    Car maintenance (including MOT)......... 25
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 20
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 10
    Pet insurance/vet bills................. 6
    Buildings insurance..................... 0
    Contents insurance...................... 11
    Life assurance ......................... 0
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 30
    Haircuts................................ 25
    Entertainment........................... 25
    Holiday................................. 50
    Emergency fund.......................... 40
    Total monthly expenses.................. 1837



    Assets

    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 400
    Other assets............................ 0
    Total Assets............................ 400


    No Secured nor Hire Purchase Debts


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    mbna...........................5305......190...... .0
    barclaycard....................8670......130...... .18.9
    santander......................1790......40....... .0
    tesco..........................6150......140...... .22
    Total unsecured debts..........21915.....500.......-



    Monthly Budget Summary

    Total monthly income.................... 1,974
    Expenses (including HP & secured debts). 1,837
    Available for debt repayments........... 137
    Monthly UNsecured debt repayments....... 500
    Amount short for making debt repayments. -363


    Personal Balance Sheet Summary
    Total assets (things you own)........... 400
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -21,915
    Net Assets.............................. -21,515
    • sourcrates
    • By sourcrates 7th Aug 18, 12:31 AM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    • #4
    • 7th Aug 18, 12:31 AM
    • #4
    • 7th Aug 18, 12:31 AM
    If you could get your debts below the 20k Mark, by paying off a bit more of it, re-jig the budget, as with two kids, you can easily add another £100/quid to it, you would possibly qualify for a debt relief order.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • Craig1981
    • By Craig1981 7th Aug 18, 3:59 PM
    • 553 Posts
    • 262 Thanks
    Craig1981
    • #5
    • 7th Aug 18, 3:59 PM
    • #5
    • 7th Aug 18, 3:59 PM
    gas, electric, groceries for 4 people seem to be own the low side
    no amounts for parking either. other child expenses like school meals and school clothes?

    best option as said, try get below the £20k mark and do a DRO. if DRO and Bankruptcy not an option, then IVA over DMP
    • fatbelly
    • By fatbelly 7th Aug 18, 4:51 PM
    • 13,103 Posts
    • 10,162 Thanks
    fatbelly
    • #6
    • 7th Aug 18, 4:51 PM
    • #6
    • 7th Aug 18, 4:51 PM
    I agree that you could add £100 to your budget without anyone blinking an eye.

    But to get a DRO you will need to pay £2000 (to get the debts down) plus £90

    Bankruptcy is a straight £680 and you stand a good chance of keeping a £400 car

    An IVA is just about possible on your budget but seems to have the fewest advantages of those three insolvency solutions.

    A DMP is going to take too long at your surplus level. You can't even afford the MBNA payment that you have agreed to.
    • sammyjo1979
    • By sammyjo1979 7th Aug 18, 9:58 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    • #7
    • 7th Aug 18, 9:58 PM
    • #7
    • 7th Aug 18, 9:58 PM
    With an IVA, do they tell you how much you have to pay monthly? It just all seems very confusing. I feel as though I should have an IVA to try and pay back what i've had rather than it being all written off. With the DRO, am I right in thinking that for the first year you don't pay anything and then if your situation hasn't changed it'll be written off? But surely if you aren't paying your debts you will be better off? Have I got this very wrong?
    • sourcrates
    • By sourcrates 7th Aug 18, 10:11 PM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    • #8
    • 7th Aug 18, 10:11 PM
    • #8
    • 7th Aug 18, 10:11 PM
    With an IVA, do they tell you how much you have to pay monthly? It just all seems very confusing. I feel as though I should have an IVA to try and pay back what i've had rather than it being all written off. With the DRO, am I right in thinking that for the first year you don't pay anything and then if your situation hasn't changed it'll be written off? But surely if you aren't paying your debts you will be better off? Have I got this very wrong?
    Originally posted by sammyjo1979
    DRO has a monotorium period of 12 months, you make no payments.
    After the 12 months are up, all your debts are written off, as long as your circumstances have not changed.

    You do not really have sufficient disposable income to have an IVA, they have a formula for working out what is acceptable.

    Bankruptcy would be more expensive, but is an option.
    Last edited by sourcrates; 07-08-2018 at 10:14 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • sammyjo1979
    • By sammyjo1979 7th Aug 18, 10:19 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    • #9
    • 7th Aug 18, 10:19 PM
    • #9
    • 7th Aug 18, 10:19 PM
    DRO has a monotorium period of 12 months, you make no payments.
    After the 12 months are up, all your debts are written off, as long as your circumstances have not changed.

    You do not really have sufficient disposable income to have an IVA, they have a formula for working out what is acceptable.

    Bankruptcy would be more expensive, but is an option.
    Originally posted by sourcrates


    Thank you for this. With a DRO though, with not paying my debts each month, i'll have that money, around £400. Does that just become mine? I'm so confused sorry.
    • sammyjo1979
    • By sammyjo1979 7th Aug 18, 10:53 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    I agree that you could add £100 to your budget without anyone blinking an eye.

    But to get a DRO you will need to pay £2000 (to get the debts down) plus £90

    Bankruptcy is a straight £680 and you stand a good chance of keeping a £400 car

    An IVA is just about possible on your budget but seems to have the fewest advantages of those three insolvency solutions.

    A DMP is going to take too long at your surplus level. You can't even afford the MBNA payment that you have agreed to.
    Originally posted by fatbelly


    Would I not need to default on a DMP? I've read up on stuff but just feel very confused with it all? How does a DMP work? You pay a monthly sum that is then distributed between my creditors? Won't it default on all but at least i'll be paying something? I guess I need to speak to SC. Hate not know what is the best thing to do
    • sourcrates
    • By sourcrates 7th Aug 18, 11:12 PM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    Thank you for this. With a DRO though, with not paying my debts each month, i'll have that money, around £400. Does that just become mine? I'm so confused sorry.
    Originally posted by sammyjo1979
    Your budget is too lean, it could easily account for your full income.

    You do not have £400 left after debt repayments, your £363 in the red. add that £137 to your budget shortfall, and you have nothing for debt repayments.

    To qualify for a DRO you would need your debts to be under 20k anyway, so presently itís not an option.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • sourcrates
    • By sourcrates 7th Aug 18, 11:16 PM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    In a nutshell you do not have sufficient disposable income for any permanent solution to your debts.

    You can either carry on until your debts drop below 20k, then try for a DRO.

    Go bankrupt, or as the debts are all non essential, pay each £1 a month, and see if things improve in time.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • sammyjo1979
    • By sammyjo1979 7th Aug 18, 11:54 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    In a nutshell you do not have sufficient disposable income for any permanent solution to your debts.

    You can either carry on until your debts drop below 20k, then try for a DRO.

    Go bankrupt, or as the debts are all non essential, pay each £1 a month, and see if things improve in time.
    Originally posted by sourcrates

    The paying of the token £1 a month is that like a DMP? Am I likely to get baliffs etc knocking at my door? Feeling very stressed about all of this but thank you for you help.
    • sammyjo1979
    • By sammyjo1979 8th Aug 18, 12:04 AM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    Also when I spoke to MBNA she went through a budget thing with me and said that they would set a payment (which happens to be £190) but they didn't expect me to be able to pay that. They have also stopped all interest. Does this mean that I have some payment plan with them and again wont have people knocking at my door? I haven't defaulted on anything yet but will do soon as I cannot carry on like this. How will this affect things like my banking, getting car insurance, contents insurance etc? Would it mean i'd have to pay in full rather than monthly? Currently we have sky, mobile, car tax and utilities that are I guessed based on credit. Would all this change? Sorry for all the questions.
    • sourcrates
    • By sourcrates 8th Aug 18, 12:41 AM
    • 15,872 Posts
    • 14,921 Thanks
    sourcrates
    Also when I spoke to MBNA she went through a budget thing with me and said that they would set a payment (which happens to be £190) but they didn't expect me to be able to pay that. They have also stopped all interest. Does this mean that I have some payment plan with them and again wont have people knocking at my door? I haven't defaulted on anything yet but will do soon as I cannot carry on like this. How will this affect things like my banking, getting car insurance, contents insurance etc? Would it mean i'd have to pay in full rather than monthly? Currently we have sky, mobile, car tax and utilities that are I guessed based on credit. Would all this change? Sorry for all the questions.
    Originally posted by sammyjo1979
    Ok, take a breath........r e l a x........lets summarise, you seem confused about what you have actually agreed too, that is why its always best to do these things in writing only, it appears you have agreed to something you cannot afford to pay with MBNA.

    As a first step, remove all ability for your creditors to take payment from you, that means cancel direct debts, card payments, standing orders etc.

    Next write to all your creditors telling them you are in financial trouble, you will automatically get 30 days grace with no collection activity, do a proper budget that shows no surplus, include a copy of your budget in the letters, tell them you are taking advice.

    After that, get in touch with one of the free debt advice services in my signature, see what they advise you to do.

    I would suspect they will opt for bankruptcy, but see anyway.

    No one will be knocking on your door, please read up on when bailiffs can and cannot be used, you are a long way off that happening, there would be a court process to go through first.

    Creditors are much more in tune with customers in difficulty nowadays, and have been ordered by the regulators to treat everyone fairly, there is a solution to this, it is just another problem that needs to be solved, you just need the right advice.

    You will have no problem with any insurance etc, I was insolvent and I managed just fine.
    Last edited by sourcrates; 08-08-2018 at 12:46 AM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • Craig1981
    • By Craig1981 8th Aug 18, 5:36 AM
    • 553 Posts
    • 262 Thanks
    Craig1981
    No baliffs with the debt you have listed - would have to go through alot of defaults, and ignoring of the debt, court ordered payments etc etc etc

    so long as your priority debts - C/Tax, rent, TV licence are up to date and nothing owing, get the bailiff though off your mind.

    from what you have listed, you have 5 debts - it will be easy to control and get everyone up to speed with what you are going to do/plan on doing, as sourcrates has already said

    one step at a time...
    • sammyjo1979
    • By sammyjo1979 8th Aug 18, 9:35 AM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    No baliffs with the debt you have listed - would have to go through alot of defaults, and ignoring of the debt, court ordered payments etc etc etc

    so long as your priority debts - C/Tax, rent, TV licence are up to date and nothing owing, get the bailiff though off your mind.

    from what you have listed, you have 5 debts - it will be easy to control and get everyone up to speed with what you are going to do/plan on doing, as sourcrates has already said

    one step at a time...
    Originally posted by Craig1981
    Hi, thank you. I am a bit panicked! We are not behind on any household things at all and have never been. It is literally just the cc's. Haven't spent on them either for the last year but the interest is killing me and i'm paying very little off now.
    • sammyjo1979
    • By sammyjo1979 8th Aug 18, 8:28 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    Ok, take a breath........r e l a x........lets summarise, you seem confused about what you have actually agreed too, that is why its always best to do these things in writing only, it appears you have agreed to something you cannot afford to pay with MBNA.

    As a first step, remove all ability for your creditors to take payment from you, that means cancel direct debts, card payments, standing orders etc.

    Next write to all your creditors telling them you are in financial trouble, you will automatically get 30 days grace with no collection activity, do a proper budget that shows no surplus, include a copy of your budget in the letters, tell them you are taking advice.

    After that, get in touch with one of the free debt advice services in my signature, see what they advise you to do.

    I would suspect they will opt for bankruptcy, but see anyway.

    No one will be knocking on your door, please read up on when bailiffs can and cannot be used, you are a long way off that happening, there would be a court process to go through first.

    Creditors are much more in tune with customers in difficulty nowadays, and have been ordered by the regulators to treat everyone fairly, there is a solution to this, it is just another problem that needs to be solved, you just need the right advice.

    You will have no problem with any insurance etc, I was insolvent and I managed just fine.
    Originally posted by sourcrates
    Thank you for this. It just all seems very daunting at the moment.
    • sammyjo1979
    • By sammyjo1979 13th Aug 18, 2:47 PM
    • 83 Posts
    • 33 Thanks
    sammyjo1979
    So I have spoken to SC today who have given me the option of a DMP or an IVA. The DMP would take me 12 years to pay off but i'm okay with this as it is my debt.

    Could someone advise me though, does this mean that my credit file will be terrible that whole time? I've seen conflicting info about it. Some people are saying it will drop off my file after 6 years even though the debt is still outstanding/being paid and then i've also seen that it will stay on for the 12 years i'm paying it off for plus an additional 6!

    Would anyone be able to advise?

    Thank you
    • Willing2Learn
    • By Willing2Learn 13th Aug 18, 3:48 PM
    • 1,825 Posts
    • 1,408 Thanks
    Willing2Learn
    Hi sammyjo1979,

    You want your creditors to mark the accounts as defaulted, so that the debts drop off after six years, even though you are still paying the debts down. You can ask them to do this. See the thread linked below for guidance:
    Punished for DMP

    If they mark the debts as AP (Arrangement to Pay), then the debt will stay on there for 12 years, until the account is settled.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

532Posts Today

4,286Users online

Martin's Twitter