more debt than i can afford to pay

[Doug2]

Hi, i've ran up more debt than i can afford to pay now. My total debt is around 57k i think. 20k to lloyds loan, 10k left on m&s loan, 7.5k a&l loan, 7.5k overdraft with lloyds, 7.5 cc with lloyds, 5k cc with virgin. I'm looking into getting an iva but need a point in the right direction as to whom to get one with, what sort of payment will i be needed to make a month, will most of my debt get written off etc. I am living with parents and have no assets. Any advice would be greatly appreciated. And how long does it take to set up???

[MelanieGiles]

Hi Doug and welcome to the forum

When you consult an insolvency practitioner they will go through your income and expenditure with you to see how much you can afford to offer to your creditors. It is usual to need to offer at least 25p in the £ as a minimum dividend, so on the level of debts you are carrying you would need to pay at least £360 per month to also take account of IP fees - but obviously you would have to pay more if you could afford it. if the IVA is accpeted, the will write off all the remaining debt at the time you make the final payment usually in five years time.

If you are living at home with your parents, and have no assets, have you also considered bankruptcy proceedings? An IVA ought to take no more than 6 weeks to set up for you, and possibly less in your case which seems relatively simple.

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

[Doug2]

Thanks for the reply Melanie. I did consider bankruptcy but will it not have adverse effects in the long term? i.e getting a mortgage etc? With bankruptcy, does that mean that ALL debt is written off completely? I also understand that bankruptcy only lasts 3 years. Will my credit rating return to normal after this as with an IVA?

[MelanieGiles]

Bankruptcy these days lasts for just one year, but you may be required to make ongoing contributions from your income and if so these last for a three year period. All debts are written off from the date of the bankruptcy order.

You will be able to get a mortgage as soon as you are discharged, but this will be an adverse mortgage because of your credit rating and therefore will cost more than usual high street rates. Both an IVA and bankruptcy proceedings will remain on your credit records for six years.

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

[mikebdomain]

An adverse credit mortgage costing much more than a high street mortgage, is a common misconception.

With the competition in the adverse market the margins between prime and sub prime are much reduced. The majority of sub prime lenders will offer different products at different rates depending on the levels of adverse and the amount of time since the adverse occurred. Somebody discharged three years ago could be on a prime product with some adverse lenders, but, somebody missing two mortgage payments in the last twelve months could be on a heavy adverse product with other lenders.

If for example; you were discharged yesterday, with sufficient deposit, you could obtain an adverse mortgage rate of less than 7% fixed for two years the criteria for this product would also allow four missed rent/mortgage payments in the last twelve months.

It does ALL depend on your personal circumstance, when the time comes, ensure you talk to a mortgage broker who is authorised and regulated by the FSA.


FREE ADVICE IS THE BEST ADVICE

Mortgage Broker
Specialising in adverse credit.

[Lisa2009]

Question for mike

I have been in an iva for 3 years and im trying to make an offer for full and final 2 years early by relesing equity now while i can. i have NEVER missed a mortgage or iva payment and i have been given a remortgage quote at 8.09%
Does that sound about right to you?
Also do all lenders make you pay upfront for a valuation as its this bit i am strugging with. I can get it from a family member (£330) but risk them not getting it back if my offer is unsuccessful.

[mikebdomain]

Hi Skint

This sounds like SPML three year fixed rate (although I could be wrong).

The upfront fee for the valuation is pretty normal; the amount charged is generally based on the value of your property.

It’s difficult, if not impossible, to say whether the rate you have been offered is right or not, without one of my advisors carrying out a full fact find – please feel free to give us a ring to confirm you have been giving the best product based on your wants needs and circumstances.


FREE ADVICE IS THE BEST ADVICE

Mortgage Broker
Specialising in adverse credit.

[Lisa2009]

sorry i dont understand SPML?
The offer "in prnciple" i have been given is from a company called EDEUS and it is fixed for 2 years. After the 2 years that rate then jumps up considerably.
If after that 2 years we wanted to remortgage again for a better rate, what are the chances? The iva if it run for the 5 years would say on record till 2010. Would i have to wait till then to get a better rate?
Sorry its all really confusing and i am concerned that i wont be able to get a better rate after the 2 years.

[Lisa2009]

The house was last valued at £85000. it has probably increased a bit but i wouldnt think it would be much as its an ex council house sat right in the middle of quite a rough estate

[mikebdomain]

Hi Skint

There is no reason why you couldn't get a better rate in two years as long as you do not miss any mortgage payments. An IVA DOES NOT have a massive adverse effect on a mortgage application IF it has been carried out satisfactorily.

The rate you are offered will also depend on the Loan To Value (LTV) (the amount you are looking to borrow against the value of the property – As I previously stated I would seek the advice of another mortgage broker to confirm that you are getting the best advice, it doesn’t cost anything until you actually make an application for a mortgage, but what it does do is confirm you are getting the best deal and advice.


FREE ADVICE IS THE BEST ADVICE

Mortgage Broker
Specialising in adverse credit.

[iva.com]

Hello Doug,

If you are looking for an IVA firm to appoint you might find our web site useful. We maintain a list of IVA firms and IPs. We also list reviews on IVA firms, posted by their clients, that can help when choosing which firm to appoint.

We recommend looking at several firms before choosing which one to appoint.

Good luck with your search and please let us know how it goes.

Kind regards,
Terry Balfour
IVA.com

IVA.com - Comparing IVA firms by using consumer feedback.

Please rate your IVA firm or Insolvency Practitioner by reviewing them here: http://www.iva.com/submit_iva_review.asp