First Post - All advice greatly appreciated!

[odd_job]

Hi....I've spent the last 3 days thoroughly reading and searching through this site and can honestly say it's a fantastic wealth of informative advice...so glad I've found it!

Through various failings, illness, partner unable to work for the last 5 years through illness, unexpected household bills, raising a toddler etc our debts have spiralled and we're now at the point where we need serious help and action to get us back to a level playing field.

I've a thousand and one questions and am unsure where to start....

Unsecured debt = £24,250 (1 loan, 5 cards, 2 overdrafts)
Secured debt = £57,000 (Firstplus incl £10k insurance)
Mortgage = £75,860 (Northern Rock)

Combined income = £1890

Monthly expenditure (not incl debts) = £1506

We've contacted afew companies all with differing advice and really wondered what you guys think?

The house is valued at around £100k, one piece of advice was to sell the house, pay off Mortgage, then associated costs with selling house, then First plus would get whatever's left (roughly £22k).

The remaining First Plus would then be deemed as unsecured as we'd look to rent a new house. Add the remaining £24,900 First plus to the other unsecured debt of £24,250 and enter this into an IVA?

Based on our budgeting I think we could afford £320 a month towards an IVA.

Do these figures add up? What are our chances of getting all this approved? I really am running out of ideas.

As a final point, there are no missed payments or arrears on any debt or bill......yet!

Thanks for taking the time to read....

[MelanieGiles]

Hi Oddjob and welcome to the forum. Glad that you are finding it useful.

You will need to discuss a potential house sale with First Plus, but you are right to assume that their shortfall will become an unsecured debt in any subsequent insolvency. If you decide to go down this route, make sure that you keep First Plus in the loop as they are unlikely to be keen to become an unsecured creditor.

Your suggested way forward barely scrapes a minimum dividend of 25p in the £, after costs, and assumes that your house will sell at the asking price. If you are obliged to reduce the price, this will create a larger First Plus debt.

How have you been managing to make your creditor repayments of late - has this been by taking out additional borrowings?

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

[Adrian Ratcliffe]

Hi odd_job,
With the mortgage and the secured debt £132,860 and the property valued at £100,000 is this correct?
My view would be not to pay anymore out, it will take Northern Rock and First plus several months to take possession you could use this time and money to save the deposit for a rented property.
I would also take the bankruptcy route to save any creditors from pursuing you further.
You have to take into account the health of your partner first.

Regards
Adrian

[odd_job]

Thanks for the speedy replies.

At the moment we have a shortfall of around £200 each month - up until now this has been met by using Peter to pay Paul along with doing afew car boots to raise extra funds.

My parnter is currently working 1 shift a week which is all she's aloud to do on a permitted work scheme due to the incapacity benefit.

Adrian - I can see where you're coming from, is there anyway it would be possible to go down that route and not lose the much needed family car? (Value approx £4k)

When I contacted CCCS they suggested I continue paying all secured debt and make token payments of £1 to each of the 8 companies we owe - is this really good advice??

[MelanieGiles]

Your car will be at risk under bankruptcy proceedings given its value. Are there any family members who could help you to buy this from a subsequent Trustee?

The suggestion to pay your creditors at the rate of £1 per month may stop them taking ongoing action against you for a while, but is unlikely to be a sensible solution into the future. If you declare yourself bankrupt, and do not have any unsecured creditor payments going out, would you be able to manage the mortgage and the secured loan? If so, your property is unlikely to be affected by bankruptcy proceedings.

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

[odd_job]

Melanie, it is possible that the 2 secured payments could be met without the other debts around our necks.

After much discussion, we'd rather not stay in the house, odd as it sounds! It's played a very big part in helping us get to the debt ridden state we're in and we'd much rather try to start a fresh. At least with renting we'd not have the financial worry of maintenence and repair.

Further down the line though we would like to be in a position of buying again.....but that's much further down the line!

Has anyone ever had any experience of our situation and with First Plus?

We're at a point now where we really could do with someone saying "yes, we can set this up for you, stop paying your creditors, stop worrying and we'll sort it"!!! I wish!

I'm very limited with the time I have outside work and don't seem to get any joy out of the IVA companies I call at night, they all take details and noone's called us back yet! Are they trying to tell us something?!!?

Thinking out aloud, I'd much rather go down IVA route over bankrupcy, not only because of the stigma, employer knowing, losing car, in papers etc but because my conscience is wanting to at least attempt to repay some of what I owe, does that sound crazy?

[MelanieGiles]

No crazy at all - merely responsible! An IVA will be tricky, given the uncertainty of the First Plus shortfall, but not impossible. You will need to find an IP to represent you, who will then want to discuss your situation with First Plus before proceeding. They will also take you right through all of the options available to you, allowing you to make a reasoned choice about the way forward.

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

[finebridge]

Hi odd_job and welcome to the forum,

I'm glad you have gained some useful information from the site and hope you can continue posting as you decide which route you are going to take.

I think you are talking a lot of sense and as Melanie has stated an IVA would not be impossible.

If you have had no luck in the past with contacting IVA specialist I would suggest contacting a company that posts on the forum, many of which I am sure are available out of hours to discuss in more detail.

Once you have had this initial discussion I’m sure you will feel happier about whatever choice you have made!

Kind regards

Nicola


Finebridge Ltd
22 Laud Street, Croydon, CR0 1SU
0800 180 4212
www.finebridge.co.uk

[jane.l]

Hi, your situation seems similar to ours. Our secured loan company is Picture Finance and they is just no way they are going to agree to a house sale! We wanted to put the shortfall from the secured loan into an IVA. It has been nearly 5 months now since we tried to sell our house, (cash buyer ready and waiting!)but Picture have flatly refused to lift the second charge. We moved out into a rented house and left our house. I have not paid any creditors since end of February now and still I have had not even one letter from Picture Finance. The last I heard about our situation was from the estate agent/soicitor handling the sale and she said "Picture MAY consider allowing the sale if you DO NOT enter an IVA!" I don't know what they mean by that but we are now going to petition for bankruptcy soon. I have a court date for repossession from the 1st chargeholders, Northern Rock on 1 August, I have sent in a letter to the court,
(I cannot attend on that date) explaining why we have done what we have and the circumstances leading up it. I am hoping and presume that nRock will be granted possession of the house, I hate that house now, I still go down to check everythings ok and it just brings back such bad memories, I cannot wait to get rid of it! As I walk thru the door I expect the 'phone to be ringing with creditors! ahhhhh

Anyway, I have been through so much worry and stress and I think I have now become quite hardened to things, it sounds awful but I really do not give a toss now whether Picture get any money back at all once we are bankrupt, they have just kept us dangling on a string waiting for "their decision" about a sale, I feel like saying to them, "tough, as of 1 August, NRock have the house"! I feel that if they would have agreed to a sale very early on in the preceedings, we probably would have gone down the IVA route and paid all creditors the most we could, now they'l get nowt and I'm soooo glad!!! A woman from Picture spoke to me and she was so horrible and nasty, I tried to be polite as I wanted their approval for the sale and the IVA but now I really don't care that they'l get nowt!!!! Its been a long tough few months!!

[odd_job]

Thanks for your post Jane, it's good to know we're not alone!!!

There have been some developments since my last post....one of the IVA bods have called me back....twice...on time! This may not sound much to some but I hold folks in quite high regard when they do what they say! At this early stage it's encouraging and I hope they continue to impress!

After much discussion and number crunching it would appear that we can go ahead with the proposals and this company is happy to help. I've contacted all the creditors and got accurate current balances, interesting to note that First Plus were the worst on the phone, 40 minutes on hold before speaking to anyone and then 60 questions as to why I wanted a settlement figure!

The next stage is to get an accurate valuation done on the house....2 booked in for Monday and another Estate Agent Tuesday. I have the official phone meeting with the IVA bod on Thursday to run through all the figures.

Based on what you've experienced Jane, I guess I'm anticipating the most troublesome party to be First Plus....can they really put a stop on us selling the property? I really don't see how they will benefit?

The house was valued at £95k 2 years ago for the purpose of First Plus....lets assume it's now worth £100k.....Outstanding mortgage with Northern Rock £76,561 plus £2500 assosiated sale costs leaves £20,939 for First Plus....leaving an outstanding balance with First Plus of £34,653.

That £34,653 would go into an IVA with 50% being paid off......would they get that if I were to be forced bankrupt?

At what point would I need to get a solicitor involved in the sale of the house? This may be a stupid question....but will the solicitor need to know about the whole situation, IVA etc....if so then I'd rather be upfront and honest from the start!

Off to get a new bank account in the morning while I still can!!!

[Barrington]

Hi Oddjob
I've been an Insolvency Practitioner since 1983 but have only just found this site - and it's a great opportunity to share knowledge and to try and eliminate some of the myths in this very personal and difficult areas. To answer your last questions, First Plus (along with any other unsecured creditors) are unlikely to get 50% of their debt through Bankruptcy for a number of reasons, income contributions are likely to be at a lower rate and for a shorter period (three years instead of five) and costs may be higher (the Government takes a substantial "commission" for handling any funds). If you think about it, unless creditors receive a better deal through an IVA than Bankruptcy, they will not vote in favour of it!
As far as involving a solicitor do the same as you would if you were not in financial difficulty but do tell them about your circumstances.
I hope this is of some help - whatever you do always ask for anything you don't understand to be fully explained until you do! Most Insolvency Practitioners are honest professional people who will be pleased to help you.

Phil Wood
www.barringtons-online.com

[westonr]

Hi

this is an intesting case - can i ask 2questions:

1. If your house was repossessed would their be a need for you to enter into an IVA to pay off the unsecured debts or would your income not cover these debts considering you don't have to pay the secured debt anymore?

2. Going bankrupt, do you automatically lose your home if you have no equity in it?

thanks

[MelanieGiles]

Hi weston

I can only answer point 2 - you would not lose your home in bankruptcy if there was no equity in it. What you would probably do is find a family member to make a notional offer to your Trustee - say of £1 to buy out the Trustee's interest.

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

[Barrington]

Westonr
If your house is repossessed you would still be liable for any shortfall on the secured charges, in addition to all your other unsecured creditors. Whether you would be able to cover that from income without an IVA would depend on the numbers and the attitude of the previously secured lender. You should also bear in mind that although you don't have the mortgage to pay, you will presumably be paying rent instead so it isn't all surplus income.

Phil Wood
www.barringtons-online.com

[odd_job]

Just thought I'd post an update with the story so far....

Applied in person for an account with Alliance and Leicester on Saturday, there didn't appear to be any problems with my application...just waiting on the confirmation and the account number.

2 Estate Agents came today, first one valued the property at £115k, second gave us a range of £115k (easy quick sale) upto £124k.

Things are looking slightly more promising now as with the remaining unsecured debt added to the First Plus shortfall, we're looking at IVA payments of around £350-£380.

We've got another Estate Agent coming tomorrow (Tues) and another phone call from the IVA Co tomorrow night to go through the final figures. We have a half hour phone meeting Thurs morning which I suspect is a more subjective look at the figures with the person who'll be handling the case.

If First Plus were to agree in principle to the sale of the house and the remaining debt to be entered into an IVA, would it be acceptable then for the payments to cease with them and just continue with the mortgage until the property is sold?