Time to face facts - advice needed please.

[warsteiner]

So for the last few years I have been living in ostrich mode running up debts on credit cards in order to pay for things that I wanted but didn't really need i.e. holidays, clothes, etc. This resulted in me getting a consolidation loan to pay off the credit cards but rather than stopping the cards I carried on using them and things got worse. 2 of the credit cards (both from MBNA) also decided to 'put the boot in' and up the interest on my cards and there was no way I could pay them off.

Since Aug 08 I have been resident in Germany and transfer money back to the UK to pay off the loans and cards. There have been a couple of occasions when the money didn't reach my UK bank account in time, which meant that the direct debit was bounced and I was charged an excessive penalty by my bank, which meant I had to find more money.

The long and short of it is I am now about £65k in debt and as from next month I will not realistically be able to make the loan and CC minimum payments. After my rent and utility bills if I paid the loans and CCs I would have £150 left over and this would need to pay for food and everything else.

I have 5 unsecured loans, 4 credit cards and a £2k overdraft. The companies are:

Loans - Halifax (2 loans), Cahoot, Tesco and Abbey.
Cards - MBNA (2 cards, Abbey and Virgin), Tesco and Abbey.

My loan repayments and minimum monthly CC payments amount to £1450 so I would be fairly comfortable if I didn't have some of these debts. I would be able to afford at least £200 (if not more) so hopefully an IVA would be an option.

I have decided to contact me creditors to see if they would accept a lower payment but I can't see that I would ever be able to afford to increase the payments to their current level so doubt the creditors will accept this.

On to the questions:

- I have been resident in Germany since Aug 2008 however I believe I can still apply for an IVA?
- As I am living abroad would bankruptcy be a better option? I am willing to pay what I can towards the debts and would be happy to get an IVA but I would be interested to hear people's opinions. I don't have any plans to return to the UK to work in the near future.
- Does anyone have a link to a budget planner?
- What are the realistic amounts that I can expect to spend on food, clothes, etc.? I want to provide my creditors with a realistic amount that I spend on things and as I have been in debt for years I have never really budgeted for these things before. Some of the planners that I have seen include an amount for alcohol and tobacco. I don't smoke but wouldn't creditors expect people to pay off their debts rather than spending money on alcohol each month?
- As soon as I have the budget planner completed I will be sending one of the template emails from this site to my creditors asking for a reduction in payment and a freeze in interest. Would it be advisable to start the application for an IVA even though I have only just contacted the creditors? From doing some research an IVA can take about 2 months from start to finish and I am pretty sure that some of my creditors are going to get nasty if they haven't received their money in this time.
- How would the IVA payment be calculated bearing in mind that I am paid in Euros? The exchange rate at the moment is very good from a Euro point of view but it could change dramatically within the 5 year IVA period.
- What would happen if my financial circumstances changed within the IVA period i.e. if I lost my job? Would the amount I pay the creditors change or would I have to pay the same amount for the complete period.
- Would I be required to travel to the UK to setup the IVA? I am happy to do this if necessary but flights are something I can't really afford at the moment.

Sorry for the longish rant and lots of questions.

Thanks

[David Mond]

My replies to your queries are in red.

- I have been resident in Germany since Aug 2008 however I believe I can still apply for an IVA? YES
- As I am living abroad would bankruptcy be a better option? I am willing to pay what I can towards the debts and would be happy to get an IVA but I would be interested to hear people's opinions. I don't have any plans to return to the UK to work in the near future.Your choice but best to discuss with an IP
- Does anyone have a link to a budget planner? visit many practitioners web sites - What are the realistic amounts that I can expect to spend on food, clothes, etc.? I want to provide my creditors with a realistic amount that I spend on things and as I have been in debt for years I have never really budgeted for these things before. Some of the planners that I have seen include an amount for alcohol and tobacco. I don't smoke but wouldn't creditors expect people to pay off their debts rather than spending money on alcohol each month?You need to list all of your expenditure and the IP will let you know what is right and what is excessive or not allowed based on CCCS guidelines or the Common Financial Statement.
- As soon as I have the budget planner completed I will be sending one of the template emails from this site to my creditors asking for a reduction in payment and a freeze in interest. Would it be advisable to start the application for an IVA even though I have only just contacted the creditors? Possibly but speak to an adviser From doing some research an IVA can take about 2 months from start to finish and I am pretty sure that some of my creditors are going to get nasty if they haven't received their money in this time.[red] Can be done far quicker than that provided you have all available information and copy statements. Your chosen advisor can confirm this.
- How would the IVA payment be calculated bearing in mind that I am paid in Euros? The exchange rate at the moment is very good from a Euro point of view but it could change dramatically within the 5 year IVA period.[red]You would remit each month the sterling amount so it will be up to you to make the transfer. [red]
- What would happen if my financial circumstances changed within the IVA period i.e. if I lost my job? Would the amount I pay the creditors change or would I have to pay the same amount for the complete period.[red]You would go back to your creditors and ask for a variation to suit changed circumstances
- Would I be required to travel to the UK to setup the IVA? I am happy to do this if necessary but flights are something I can't really afford at the moment

[warsteiner]

Thanks for the quick response David. It looks like there might be light at the end of the tunnel after all. I will have a look around for the budget planner and then start the IVA process.

[kallis3]

Visit www.iva.com - there are a lot of companies on there who come recommended and can give you the advice you need as to the best way forward.

[David Mond]

I forgot to welcome you tothe forum and no you don't have to come back to the UK.

[MelanieGiles]

That is quite a difficult response to read, as the red seems to have leaked all over the post. Suffice to say that you are more than able to look at an IVA as an option, and that whilst there are certain guideline figures creditors will expect you to observe, you should base any offer on the level of your actual expenditure - which may be different to the UK based on German costs of living.

A face to face meeting with the IP you choose to represent you is only necessary if you are self-employed. Are you based in Germany with HM Forces as a matter of interest?

[warsteiner]

Hi Melanie,

No, I am not with HM Forces just here as a 'normal' employee of a company.

Thank you for mentioning that I should base my expenditure on the cost of living here in Germany as this is something I was struggling with when completing the budget planner. As the €-£ is practically 1:1 at the moment food, clothes, etc. seem very expensive here if the price is converted to pounds.

[David Mond]

Sorry my post was not that clear - trying to be too clever by half. Your expenditure is what you incur in Germany.

[MelanieGiles]

It is important to take local considerations into account.

I am currently acting for some clients who live in the Falkland Islands where some items of expenditure are absolutely sky high. I was told that they have to pay £15 for a cauliflower, and that telephone expenditure is also extremely high.

I was recently in Holland, and could not believe how expensive things seemed due to the cost of living. A good IP will take you through this item by item to make sure you are left with appropriate allowances before proceeding.

[warsteiner]

Thanks for your help so far. One more question; I currently have my contact address for the loans and cards as my parents address in the UK but I was thinking about updating this to my 'real' address here in Germany. Is this advisable?

I would prefer to provide my address as it will mean that all correspondence would come straight to me and also if debt collection agencies are involved they won't be turning up at my parents front door.

Thanks

[MelanieGiles]

I think it is important that creditors know where you are living - so if the move to Germany is permanent, then it would be wise to amend your details.

[warsteiner]

Thanks Melanie,

I was a bit concerned that the creditors would say something along the lines of 'in order to have this loan/credit card you need to be resident in the UK' and would request that the account be closed and the balance paid in full. As I can't now afford the minimum payments I suppose this really doesn't matter anymore so it would make sense to provide them with the correct address.

Thanks

[MelanieGiles]

Not at all - lots of people move abroad and continue to pay their debts in the UK.

[warsteiner]

Thanks Melanie, you have put my mind at rest a little bit. I've entered an IVA Enquiry via your website so hopefully either you or someone from your team will be able to assist me.

[MelanieGiles]

I hope so - I served in the Army in Germany and have fond memories of a lovely country.