Confused

[Grief]

This is my first post looking for some advice or second opinion(s)!
Have unsecured debt of £88k and been paying in a DMP for the last 3 years with Payplan, I pay £770 monthly. Debt mostly in my name and £19k in joint names. Got around £70k joint equity in my property and been trying to find out wether an IVA would be a solution and possibly a speedy end to my problem. Got conflicting advice so far. From "we'll put a proposal in the post" from an IVA 'factory' within 2 hours of taking my details over the phone!!, to "it will cost you £15k in IP fees!!" from Payplan and so I will be paying back around £87.5k of my £88k debt! Would a Full and Final settlement IVA be viable at all if I manage to release some equity? and if so how much is needed? BR is an option I want to avoid!
Thanks
[8D]

[MelanieGiles]

Hi Grief and welcome to the forum

As one of the forum experts, I will try and give you some advice based on the very brief details you have posted.

Firstly you have £35k of equity in your property which would be available to creditors were you to enter into bankruptcy proceedings. Secondly you have an ability to fund contributions at £770 per month, repaying debts of £88,000. If you were to release the equity in your property and make contributions of £770 for five years in an IVA, you would almost have paid over enough money to repay the debts in full, so I question whether you need either an IVA or a DMP to be honest.

Why not consider effecting an equity release now and pay off some to each of your creditors on a pro-rata basis to the amounts they are owed. This would reduce your debts to £53,000, to which you could pay ongoing monthly contributions over a period of time. Obviously your disposable income would reduce as a result of the additional mortgage borrowings.

I do not feel that a Full and Final settlement IVA would work, unless your partner was prepared to raise some of his/her equity to offer to your creditors in lieu of your future monthly contributions. If not, then a contributions based IVA is a possibility, with either a front or back end equity release, and this would give a good return to your creditors. I would expect the IP fees to be between £6,000 and £8,000, so not quite sure how the £15,000 has been calculated - but then I do not have detailed knowledge of your case.

Hope this helps, and other experts may have differing views.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Grief]

Melanie thank you so much for the quick reply,if I was to raise £35k and distribute it pro rata to all the creditors as you suggest, how do I arrange monthly contributions thereafter? With an informal arrangement? I shall not have any protection from CCJs or BR shall I?
Thanks

[MelanieGiles]

Hi again

If you were to continue to repay the creditors via a DMP then you are correct, you would have no protection from CCJs or bankruptcy proceedings - but you don't now do you? What threat have you been under throughout the current DMP? And if they have just received a lump of money from you, with promises of a structured repayment plan to follow, I feel that there is little risk.

The alternative is to put it all into an IVA, but you might want to use this as a last resort if creditors do not agree to your plan. Also, when you find out the cost of the new mortgage repayments, do be sure to recalculate your disposable income to see what you have left to offer, and you can then compare the timescale of a DMP with the five years of an IVA, to decide which is the most appropriate route for you.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Grief]

Thanks for the advice will seriously consider all options. Great Forum so glad I discovered it.