I need to get a few things straight

[emma.o]

Hi, I needed to get a few things straight with regards to mine and my husbands situation and wondered if you could help. We jointly own 50% of our property and the other 50% belongs to the housing association so there is no equity in the property. Our debts are as follows....
£1600 joint overdraft.
£5600 credit card in my name
£1300 credit card in my name
£2500 credit card in my husbands name
£11000 unsecured loan in joint names
Our bills (car finance, mortg etc) and all of the above total £1800 and we then have hild minding fees which are around £200 to £250. Our earnings total £2200 which as you can see for a family consisting of 2 children aswell doesn't leave a great deal left each month. We are now in the cycle of living off my credit card once we run out of money each month and are considering an IVA.

After reading some of the views on this website the whole thing sounds like a nightmare and we are confused as to whether an IVA would be the best thing to do.

We also don't understand the difference between this and a Debt Management programme, can you explain? Also the next problem is the fact that I work for the financial institute where my credit card is held and we have our bank account with them. I am unsure f whether I will face disiplinary action if I applied for an IVA or if they'd even agree to one?

[MelanieGiles]

Hi emma and welcome to the forum

From the information you have provided above, it seems that you are struggling to make all of your payments to creditors, without reverting to other forms of credit to top up your household expenditure. This is a dangerous situation to be in, as you debts are probably growing on a month by month basis.

An IVA is a possible solution for you, but what you need to do is list out your income and then deduct all of your household expenditure - not including any repayments to creditors. Don't forget to make allowance for contingencies such as house and car maintenance, medical expenses, clothing and a general contingency allowance to take into account unforseen, irregular expenditure. When you have a final figure, this is known as your "disposable income". When I know what that figure is, I can advise you further.

There are a couple of clear differences between an IVA and a DMP.

1 An IVA runds for a finate timescale - usually 5 years - but a DMP will continue until the debts are repaid in full.

2 Interest is legally stopped during an IVA, whereas it can continue to run within a DMP thus extending the time period even further.

3 Creditors can continue with legal action under a DMP, but they are forbidden from doing so under an IVA.

4 An IVA brings more certainty, in that you know exactly where you are on the day of the creditors' meeting, rather than living with the uncertainty of a DMP.

With regard to your employers - check your firm's handbook or your contract of employment to see if you would lose your job. If this is the case, then a DMP is possibly the best solution for you, but will take longer to conclude.

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

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

[emma.o]

Thanks for your reply.
I have worked out that all or bills equate to £1372. I have then allowed £250 for child minding, £60 for petrol and £300 for shopping and living expenses which is tight, hence the vicous circle we are in. This leaves over £182.
Can you please tell us also what happens if you start earning more money, would they take this? Also I have heard they ask you to remortgage at the end of the 5yrs to repay more, is this possible in a shared ownership home?

Hi emma and welcome to the forum

From the information you have provided above, it seems that you are struggling to make all of your payments to creditors, without reverting to other forms of credit to top up your household expenditure. This is a dangerous situation to be in, as you debts are probably growing on a month by month basis.

An IVA is a possible solution for you, but what you need to do is list out your income and then deduct all of your household expenditure - not including any repayments to creditors. Don't forget to make allowance for contingencies such as house and car maintenance, medical expenses, clothing and a general contingency allowance to take into account unforseen, irregular expenditure. When you have a final figure, this is known as your "disposable income". When I know what that figure is, I can advise you further.

There are a couple of clear differences between an IVA and a DMP.

1 An IVA runds for a finate timescale - usually 5 years - but a DMP will continue until the debts are repaid in full.

2 Interest is legally stopped during an IVA, whereas it can continue to run within a DMP thus extending the time period even further.

3 Creditors can continue with legal action under a DMP, but they are forbidden from doing so under an IVA.

4 An IVA brings more certainty, in that you know exactly where you are on the day of the creditors' meeting, rather than living with the uncertainty of a DMP.

With regard to your employers - check your firm's handbook or your contract of employment to see if you would lose your job. If this is the case, then a DMP is possibly the best solution for you, but will take longer to conclude.

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

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

[aguise]

Emma have you included the payments to your cards etc in the 1372 if so dont just put your living expenditure gas electric mortgage insurances childminding petrol food clothing, what is left is what you would have to pay into an iva.

[MelanieGiles]

Hi Emma

Given that you have such a low disposable income, an IVA may not be an appropriate way forward for you - especially as you say this is tight. The tighter the income and expenditure restraints, in my experience, the more chances an IVA has of failure.

What is the value of your property (your share), and how much is your outstanding mortgage. It may be possible to re-mortgage now and offer the creditors a lump sum, failing that I think a DMP is your best option if you want to avoid bankruptcy, at least until your incomes increase.

Also if your mortgage is presently on a repayment basis, you might wish to consider switching this to interest only to free up more disposable income - and then an IVA may become more viable.

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

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

[emma.o]

Thanks for your reply.
I have worked out that all or bills equate to £1372. I have then allowed £250 for child minding, £60 for petrol and £300 for shopping and living expenses which is tight, hence the vicous circle we are in. This leaves over £182.
Can you please tell us also what happens if you start earning more money, would they take this? Also I have heard they ask you to remortgage at the end of the 5yrs to repay more, is this possible in a shared ownership home?

[MelanieGiles]

Think I've already answered this post!

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

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