I'm looking at an IVA

[emma_t]

Hi booboo

As everyone has already said please stop being so hard on yourself, one of the hardest things is admitting you have a problem and dealing with it so well done for doing that.
It is so scary when you add up figures, when I first realised I was in trouble was when I lost my part time job and I knew without that income I had no way of keeping up minimum payments on my credit cards and loans. But if I am honest I had been using credit to pay for credit for years and things would have eventually come to crisis point anyway. When I phoned a company from the internet to see what help was out there they asked how much I was in debt, I said about £21K. How wrong I was, when I sat down and added every penny up it was £46K [:0].
Whatever your debt there is a solution out there for you, and this forum has been my lifeline and kept me sane and you always feel amongst friends.
I entered into an iva in November and am so grateful for the chance to be debt free in 60 months, it is such a relief to see the end in sight. Its very early days for me as only 3 payments in but so far it has been all positive. I am managing to budget very well, although my first few weeks without credit cards was terrifying and I was always at the cashpoint checking my balance before I spent any money.
I would advise you to take advice straight away, its not going to go away if left...
As Wen suggested you could do no better than taking advice from Melanie as I found her team to be second to none.
Reviews of iva companies are also on www.iva.com.

Sorry for the long and rambling post, but just wanted to let you know there is help out there and always a solution.
Good luck and keep posting
Emma x

[stoptheworld]

Hi I think I identify with most on here. I was also wondering whether an IVA was the way to go and would appreciate the experts views. I will try to summarise my situation. Back in 2004 I was fine. I had a package worth £53K per annum, a mortgage on my main residence of £95k plus two let properties with a total mortgage of £197k. The income from these minus the outgoings gave us an additional £350 per month. This coupled with my salary meant that my situation was pretty good. We had alway seen that particular house as a stepping stone to the one we would like to live out the rest of our lives in. So looking at our circumstances we took the decision to move to where we are now. The house is bigger and in a higher valued location hence the mortgage was £250k.
It is an interest only mortgage the plan being for the sale of the two let properties plus an endownment to provide the capital sum at the end of the term. The plan wasn't perfect but it worked on paper and we considered that it was the only way to get the home we had always wanted. Then I was made redundant.

There is no need to go into the impact that had save to say it was disasterous. I had to take a £20K drop in salary so we had to sell one of the let properties to supplement - the plan being to buy time while I got a higher salaried position. That is still the plan and I am still looking. Meanwhile the supplement of the equity from the first proprty sale ran out and so I borrowed against the other let property - and that has gone too. Increase in interest rates have compounded the situation so that now I have £732 a month more going out than coming in. I haven't defaulted on anything but I know I am going to. I am now drawing on credit cards for monthly essentials just to stop the bank from refusing to pay a direct debit. Now my overdraft is £2k and I am all out of options. Basically it breaks dow like this:

Main residence value - £400k (and probably dropping.
Mortgage outstanding - £253k (17 years left)
Monthly payment - £1350 interest only.

Let Property value - £180k
Loans outstanding - £180k (17 years left)
Monthly payments totalled incl service charges - £1200 (Int only)
Monthly rent total - £1260

Credit cards (2 off) - £11k total - £236 per month
Unsecured Loans (1 off) - £12k - c£220 per month
Unsecured Car loan - £7k - £136 per month
Overdraft: £2k

Other outgoings:
power + water - £210 per month
council tax - £165 per month
Insurances - £75 per month
Food - £360 per month
Phones/Internet/mobiles/TV - £120 per month
cars/insurances//petrol/repairs etc - £220 per month
Repairs/Clothing/Haircuts/Social - £200 per month

Total income
Salaries - £2500 per month net
Rent - £900 per month

Total in - £3760
Total out -£4492

Shortfall - £732 per month

Considerations:
We want to stay in our home
Selling will release £100k max after all outs and ins
This will reduce by £30k to pay off debts
Thus £70k will be available for another property
Salary multiples will get us another £140k max (realistically)
Thats £210k
We drop from a 4 bed detached to a two bed terrace
My duaghter will have to change schools
My wife will have a nervous breakdown
I will be held responsible and endure a lifetime of grief.

I have an interview in Jan that would solve a lot of this if I'm successful but after a year of being in the careers market and some twenty interviews plus we are both 48 it is looking dire. There must be some way we can stay here.

I'm stuck with this lender because of salary multiples. They have tightened up because of the credit crunch and won't let me borrow agaist the equity to consolidate. As I said I haven't defaulted on anything and well credit rated so far but that will definitely change in 2 months if I don't do something now.

Any advice is appreciated.





Steve

[MelanieGiles]

Why not take advice from one of the mortgage experts on this forum - I have personally worked with Andrew Graveson and Tony Parsons (who posts as Welshboy, and there is another firm called Leybridge who also have worked with a number of forum members.

It strikes me that you need to consider selling the buy to let property, before prices drop further, and consider remortgaging your main residence to pay off your unsecured creditors. If this does not work, then a sale of the property seems the most sensible way forward, as you are only likely to make matters worse by carrying on borrowing.

I think it is unfair for your family to hold you responsible for the debts, unless of course you have spent all of the money entirely on you which is probably unlikely. These things happen, and you cannot spend the rest of your life worrying about bad decisions made in the past. Concentrate your efforts on the future and look forward to brighter times.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[stoptheworld]

Consolidating by borrowing against equity was my first course of action. But the lender refused, despite my impeccable record, on the grounds of affordability. Clearly I can reduce the deficit from £732 per month to about £200 per month just b paying off the other creditors.
Obviously I would have to service the additonal borrowing. But that coupled with some luck in the jobs market and maybe reducing interst rates may have bought me a bit of time. I am seriously considering letting the BTL property go but I will be in a loss situation. 2 bed flats have nose-dived. So I could come out of any sale down by £20k.

Regarding selling my main residence - I know its the sensible thing - but it is such an enormous thing that it can't be expressed in words, as such it drives me, rightly or wrongly, to look at any alternative short of having to lose it.

Steve

[MelanieGiles]

You don't have to stick with your current lender. There are other lenders who I am sure would consider lending you the money, given your equity and the fact that your unsecured debts are relatively low.

Hopefully one of the mortgage experts will be on-line shortly to add further input to your query.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Andrew Graveson]

Hi Steve,

It may be worth getting in touch with one of the mortgage professionals that post on this site.
Your lender may have said no but others might take a different view.

I should preface this however by saying that the income multiples look as though they might not support a new mortgage of over £250k in the current mortgage market. It's also not sensible to refinance in a way that leaves you with an (albeit smaller) income deficit each month as the problem would not be solved and would start to grow again (without an income increase).

Andrew Graveson
Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[Adam Davies]

Hi stoptheworld
Most of us[in debt] try to hang onto the house at all costs,we don't want to admit defeat,to be seen to downsize or upset our wife and kids.But reality is that it can put a huge strain on the finances and can be the reason for increasing unsecured debt.I had to go from a four bed detatched[new]house into a three bed terraced in the same village but do not miss for one moment the large house and large mortgage.The kids are not worried at all about house size and I'm sure your partner would rather have you less stressed you than a big house.
You are in a position where you can juggle your finances and get back in an affordable position,many of us leave it too late and insolvency is the only route left.
Have a real good talk with your partner but I would strongly suggest selling,downsizing and paying off your unsecured debts.
Regards

Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp