very unsure of where to turn now

[chae]

Hi all, im very new to this so please bear with me.. I am 31years old and have now lived with my girlfriend for about 3years in rented property and we now have a 2year old boy..my debts are around 45k to 6creditors of which my partner knows very little about..i take home approx 1250 a month and have outgoings of approx 600pm which doesnt not inc my debt payments.
I have never missed a payment but things are becoming very hard now i have a full time family i am very unsure of where to turn now as everymonth is getting harder.
I hope for some very sound and clear advise.

Thanks for reading and all advise greatly appreciated.

[MelanieGiles]

Hi chae

You are experiencing common difficulties which many people experience when they have children - those little ones cost a lot of money!!!

I am assuming that yours is the only income into the household - but could you confirm if your girlfriend also works, or has any benefit income. You will no doubt be receiving child benefit, and possibly child tax or working families tax credit.

Your expenses look very low at £600, and I wonder if you have taken full account of everything, including items which are not paid on a regular monthly basis such as road tax and car maintenance. You should sit down and list out all income and expenditure to confirm your figures.

As you mention that you are only just starting to run into problems, it may be that some minor restructuring to your finances is required. However, with £45,000 worth of unsecured debt, I imagine the repayments are actually quite high. You basically therefore have three options:-

1 Agree reduced monthly payments with your creditors, and make sure that you do not borrow any more money. You can either do this yourself, or get professional assistance from either the Citizens Advice Bureau or a debt management company. The downside of this type of agreement is that you will continue to make the payments until the debts are paid off in full, and interest will continue to be charged at the same time.

2 Propose an IVA to your creditors, based upon an affordable monthly payment for a maximum three year period.

3 Declare yourself bankrupt - perhaps the most extreme option given your circumstances, but this would remove your responsibility to repay your creditors, to be replaced by again an affordable monthly repayment to be paid over a three year period - at the discretion of the Trustee.

Lots to think about, and do research things thoroughtly. I also recommend that you contact an insolvency practitioner or a debt management company for more specific advice. But don't hesitate to post more questions on the site if you feel we can help.

Good luck

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chae]

Hi Melanie,
thx for your quick response...
to confirm my girlfriend does work part time and brings home approx 400 pm..she has no debt and knows very little of my situation.. as for my out goings you are correct and with the car taken into consideration this amount is actually closer to 750.
so as you will know the last 15months have been a struggle and i would love to hear which one out of the 3options below you would think is best..

thx chae

[MelanieGiles]

The answer to that question will depend upon how important it is to you to see your creditors repaid.

If you have debts of £45,000 and a disposable income of £500 then a debt management plan will take you over ten years to repay - depending upon whether the creditors will continue to charge interest - and some will!

An IVA also seems workable, and will conclude at the end of 5 years. It appears that you could offer a very reasonable repayment, which hopefully would be acceptable to creditors.

If you are not really bothered whether your creditors are repaid anything or not, and you do not own any assets of material value, you may wish to consider bankruptcy proceedings. Do make sure that this would not affect your employment, and note that bankruptcy is publicly advertised in your local newspaper - which will include your name and address.

It is not the job of an insolvency practitioner to advise you as to which is the best option, but merely to ensure that you are well advised of all options to enable you to make a reasoned decision.

As I always say to my potential clients - consider where you want to be in one year, three years, five and ten. Then choose the option which gives you the fastest and most economic route, but enables you to deal with your obligations to creditors in the most appropriate manner you feel comfortable to live with in the future.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[phill]

Melanie refering to your first post you say to propose an IVA for three years everything i have read states that an iva lasts 5 years have i missed something?

[MelanieGiles]

phill

The three years I have referred to relate to the timescale involved in paying under an Income Payments Order or Income Payments Agreement under bankruptcy proceedings.

This is very different to the repayments under an IVA, where 5 years is the accepted norm, but in reality any time period could be workable so long as creditors agreed.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chae]

Melanie,

I dont want to go bankrupt but would gladly look at IVA could you put me onto where i should go? and if an iva was taken how would this affect the futre regarging applying for a mortgage?
thx for this

chae

[chae]

also, do you keep your bank account to enable direct debits etc...??

chae

[Oliver]

The best thing to do Chae is to contact 2-3 companies (review the ones on this site) and discuss your debt problems with them.

Being in an IVA will not affect your ability to have a mortgage in the future as a mortgage is a secured loan which is very differently underwritten compared with an unsecured loan. You may have to seek a specialist broker to do this and potentially will have to pay c0.5% more than a high street mortgage. More importantly, if you are wishing to take a mortgage out during an IVA you will have to seek permission from your Insolvency Practitioner to do so and are only likely to be granted permission if it will not affect your ability to pay your creditors the agreed IVA monthly payment.

You can keep your bank account. You may be advised to initially change this account to a "clean" bank account if you owe monies to the account holder as before the IVA is agreed and legally rubber stamped by the courts that account provider will be allowed to take money out of your bank account to offset monies owed to other accounts such as loans and overdrafts to the same provider.

You will be allowed to have DDs and a debit card and cheque book but you are not permitted to have any credit products such as overdrafts or credit cards during your IVA without the express permission of your IP.




Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[neverending]

Chae
Speak to companies on this site and discuss your situation in detail.Do not go rush into choosing a company,take your time and ask many questions so that you are confident in the route that you are taking.
You are able to purchase a property whilst in an IVA but you will need a deposit of approx 20% and this must not come from your own savings/windfall etc as any extra money you receive will have to be paid into your IVA[normally only 50% of any overtime has to be paid],you will also need to let your IP know.Also the mortgage payments will need to be similar to your current rent payments as you will need to maintain your IVA payments in full.
There are many bank accounts available to you and its best to open one up,with no overdraft facility,just before your IVA is approved and use a bank that you have no current debts with.
Hope this helps

[MelanieGiles]

Hi chae

You should contact either an insolvency practitioner or a debt management company - why not try some of the experts on this forum for some impartial financial advice.

They will need to see full details of all of your debts, together with a summary of your income and expenditure, and will then be able to advise you of the options available.

Good luck with your decision making.





Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chae]

thanks guys for all the info,
a couple more things would your employer find out and would it be necessary to tell yout live in grilfriend who has no ties to this matter whatsoever?

chae

[MelanieGiles]

Your employer will not be informed of the IVA, but I feel that you ought to tell your partner as you will probably need some ongoing suppot during the next five years. You don't have to though, so think about that one carefully. Most clients tell me they feel heaps better once they have shared their problems with their partners.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[123debtsolutions]

You can get some good info on this web site via : http://www.iva.co.uk/guide_pros_and_cons.asp
You should also ensure that you have done your homework thoroughly before entering into an IVA.
I would recommend any of the companies on this forum but most definitely Miss Giles and Thomas Charles as two of the best and most experienced on this forum.

Regards

Lee
www.123debtsolutions.co.uk