realise I can't meet all our committments

[elizabethr]

Struggling to meet all our committments and am realise I can't.Have been looking at IVA's and think am more or less convinced that this is the only way forward.Problem is am struggling with "failure".My husband has a disbilitating condition (CRPD) and I have been the main earner and 24 carer for years - which is why I am now suffering health wise (developed crones 4 years ago)together with my very stressful job.Have 2 girls and always just tried to carry everybody.You may detect a hint of despair from my writing. I had a minor operation October and also my crones flared up.I was off work for 3 months went back to work for a week and am off again.Hoping to go back to work in a month but have to seriously look at dropping some hours on health grounds.I cannot meet our committments and certainly will not be able when I drop some hours.I went on to interest only on mortgage 2 years ago to be able to fund university trips/things for university and have not been able to go back on to capital repayment. If worst comes to worst will move before retirement and down size leaving us with a smaller mortgage.This has turned into an agony aunt question!!!! but really need some help.Am bothered about having to give up bank accounts I have had for years. The ironic thing is that I budget.I have 2 accounts - No.1 is income and pays no 2 where all the bills are paid by direct debit.All bills paid-no defaults and mortgage interest being paid.The problem is that nothing left for living so everything on credit cards.I owe about 40k now on 5 cards.No secured loans/no hire purchase.My husband is already on a debt repayment informally - 3 debts (total about 10K) interest frozen and pays monthly.We were thinking that I would do the IVA individually leaving his accounts and everything in tact.

The other question I have is that my youngest (11) has premium bonds from an inheritance but any winnings come in my name and would have to be paid into my account

[Adam Davies]

Hi
I think the first question is how much equity do yo have in your property ?
Regards

[elizabethr]

equity in house is 40K. I did try to remortgage in the summer but after the mortgage had been agreed in principal 2 months later after hearing nothing I found out the surveyor had downvalued - probably because it was the start of the credit crunch. If it had gone through our payments would have been manageable and we would have been paying some capital off the house - I was going to complain to the Abbey as I didn't think it had been handled right but I have been too ill

[ianmillington]

Hi Elizabeth

Can I ask if you didn't have the debts how much do you think you would have left at the end of the month?

Ian

[elizabethr]

Current state of affairs

Joint net income 2,250 including child benefit and tax credit. Mortgage interest and direct debits 1250 but could loose 50 of that which is HSA and sky. My husband needs 100 for his debt repayment that leaves 900 ish to cover housekeeping, petrol, animals, school and work lunches, clothes, personal care, car tax, car repairs. If I have to drop some hours I will lose 200 a month probably so its very tight.

House value 170K although I thought it was 190k
Mortgage 130K - 700 a month interest only.
If I go back on to capital repayment I think that ups it about 300 a month.

I did speak to an organisation called Payment Plan - they didn't tell me any options apart from 10year debt management plan and they were very condescending and judgemental. They also said I would only be allowed 40 month each for gas and electric when my bills are 60 and 72 so how can that be. They said I would be expected to economise but I pay what the energy companies tell me and I don't have my heating on all the time when I do its only on 19C. For information I do my shopping at Aldi not expensive stores

[MelanieGiles]

Hi Elizabeth

Beware anyone who tells you that you are only allowed to spend a certain amount on categories of expenditure. The CCCS guidelines, which the majority of creditors now use as a test of reasonableness, do not dictate how much should be spent on fuel costs, and as you say how on earth are you supposed to reduce something you have no control over.

From your post it looks as if you have debts of £40k and your husband £10k which he is servicing within a DMP. And you have equity of £40k - therefore £20k each, assuming that you own the property in equal shares. How much do you think you can afford to offer to creditors on a monthly basis, after taking account of all of your household and personal expenditure, and your husband's DMP payments? And how does this figure compare with that Payplan told you you could afford?

[elizabethr]

The property is in my name only but obviously as we are married and anything happened (divorce) then my husband would be entitled to some. The house is in sole name because we have actually divorced through the stress of everything - fortunately we remarried each other 6 months later.

I have heard that for an IVA you have to be able to pay 200 a month minimum and I would say thats about all we could pay - my daughter is at uni but I am still trying to help her out as well. After all direct debits 200 a months would leave approx 700 for food (inc pets), clothes,hair,presctiptions petrol, school activities and spending money. We don't smoke and only drink at home. If I did an IVA independently then I would need 200 and my husband pays 100.

As I said earlier we will sell and downsize once the youngest has finished high school but she currently walks to school and with my work I couldn't manage if she had to travel

[elizabethr]

Sorry - I forgot to answer a question on my last post.

The Payment Plan rep I spoke to said that on the income we had (thats before I realised I may have to drop hours) the creditors would be looking for approx 500 per month repayment. She didn't tell me about IVA's at all

[MelanieGiles]

With your £40k debt, share of the equity and a disposable income of £200, it may be possible to find an IP prepared to take that case on, but you would have to be really committed as your household budget does look really tight.

Where did the DMP compaby get £500 per month from. Did they take any notice of your own individual circumstances in arriving at that figure?

[elizabethr]

they asked about my debts first then decided to take my husbands into account. They seemed to allow for "stock" expenditure and didn't allow for things like school lunches,school activities and hobbies - said that all had to come out of a 400 housekeeping allowance. my husband pays into a pension which gives extra life cover towards the mortgage otherwise we don't have enough but that wasn't allowed for nor was the 15 a month for income replacement as he doesn't get paid if he is off sick. Didn't allow for sky (although we considering dropping that). I am sure there was other things they didn't allow for as well. I am sure I could trim things to spread the money and I know it would be tight but things are tight now and I don't know what other options I have. I don't want to lose the house as it is the family home. Is the 40K equity seen as a lot. We still have to be able to get a house in retirement - although at this rate I won't ever be able to retire. Do I have to close my bank accounts and open elsewhere. If I think IVA is a good way forward where do I go from here.

[ianmillington]

Hi Elizabeth

From what you say it is certainly worth your while investigating an IVA. A full review of your income and expenditure will be required. It is necessary that appropriate provision is made for those little things that plague us all, given that upon entering into an IVA you enter into a binding commitment.

Only an Insolvency Practitioner can do an IVA for you. You need one that will talk you through the pos and cons of bankruptcy, DMPs and IVAs and so that you can make a fully-informed decision with knowledge of the consequences of all the options.

On the matter of your day to day bank accounts - do you owe any money to the banks in question? If the answer is yes then more than likely you will have to set up new accounts.

[elizabethr]

I am on overdraft on both accounts but am trying to reduce those. I got the impression that you had to close your accounts anyway and one was opened by the IP which they controlled - is this right. I would rather try and keep my own accounts even if they see the statements.

I still have an unanswered question about my youngest daughters premium bonds - any winnings come in my name on her behalf - would they be viewed as my windfall because that would seem fair.

Another question - would I be better trying to remortgage to get rid of the debts if I can. That would mean not much equity left in the house but it would get rid of the stress.

If I managed to get some kind person to give me some money !!!! (I don't think so) has anybody successfully negotiated with creditors to accept f&f without doing an IVA

[Adam Davies]

Hi
Your overdarfts will form part of your IVA,so do not try and pay those off as you will be preferring one creditor over another.
You will need to open a new basic account but this is certainly not controlled by your IP.
It is possible to negotiate a settlement direct but is very difficult unlss you only have two or three creditors,as it is very hard to find a decision maker and it can take many weeks/months to get to that stage.
If you can remortgage then this is often the best way out of heavy debt.
Regards

[MelanieGiles]

Hi Elizabeth

Your daughter's premium bond winnings would not be grabbed by your creditors, but why not open her an account at the Post Office so she can pay these into her own account.

[Andrew Graveson]

Hello Elizabeth,

A full and final settlement based on proceeds of a remortgage could be negotiated by yourself or via enlisting professional negotiators that are not IP's to represent you.

In honesty this process can take a significant amount of time and does not benefit from the legal certainty and specified timelines of an accepted IVA.

Have you taken advice on the remortgage side of things? I ask as this would obviously be crucial for an IVA or any other negotiated settlement to work.