I am in a financial mess

[KLG2002]

I am in a financial mess and am finding that I am using my credit cards to pay for daily expenses and simply transferring balances from one credit card to another on a monthly basis to avoid actually paying the minimum payment. I am currently approx £35K in debt (2 unsecured loans £13k and £8K the rest is credit cards) At present I have kept up with payments one way or another but I know I can't afford to meet the payments and start reducing the debt I have. My question is would it be feesible to look into entering an IVA even though my credit reference report is excellent

[janot]

Hi KLG2002,
At the start of most IVA's people had an excellent credit rating, we were the same as you and could have gone on a little longer robbing peter to pay paul. trouble is you only end up owing more.
It takes a lot of guts to admit you have a problem and sort it. well done you have taken your first step.

[aguise]

Hi there and welcome. I think our credit was good up until we applied for an iva. If you could post how much disposable income you have after paying your living costs (dont include the unsecured debt payments, just what you need to live), if you own your house and if there is equity in it. Then I am sure the technical experts will be along to answer soon. A lot of people including myself were up to date with our minimum payments. Basically if you are insolvent, more going out than coming in, and have disposable income then you may well be able to look to an iva. There are also other options such as bankrupcy and debt management which you should also research. Ask all the questions you want, you will get great advice, on possible solutions.
The most important thing is you have realised you need to address the problem, well done and all the best.

Ang

[MelanieGiles]

Whether an IVA is the right option for you will be a matter of personal choice, as you also have the options of bankruptcy and debt management, however what is clear from your post is that you ought to be doing something as continuing to borrow money you recognise you are unable to repay is just making the situation worse.

A good place to start is by listing out your monthly income and expenditure and then working out what is left to actually offer to creditors. Then see if you would make some cut-backs or savings which would allow you to meet contractual repayments without using forms of credit to supplement shortfalls. If the answer to this is no, then I would seek professional advice from an insolvency practitioner as soon as possible.

[Reviva UK]

Hi

Would reiterate what melanie advises. Take a really close look at all income and expenses ( excluding debt payments) to understand where your money goes.

Then you can get a plan of action together.

[KLG2002]

I have sat down today and worked out the cost of paying secured debts and household utilities etc and I am left with approx £300pm. I have also worked out my unsecured debts and the figure stands at £45000(alot more than I had initially thought [:0]) I really don't want to go down the bankruptcy route as I actually joint own the house with a friend, the house has been her family home for 32yrs and after her mums death she asked if I would consider getting a mortgage with her in a bid to keep her home...so I did.I really could not bear to be resposible for causing her so much hurt. I really do not believe there is any equity in the house. I don't know what the chances of an IVA being accepted would be based on a £300 payment for a £45K debt, I have 7 creditors
Debenhams C/C
Capital One C/C
Barclaycard C/C
Argos C/C (not sure which bank runs this)
Beneficial C/C (not sure which bank runs this)
Alliance & Leicester Loan
Lloyds Loan and C/C

can someone please give me their honest opinion on my situation of being successful for an iva pls

thanks so much

[MelanieGiles]

I think that this would work nicely for you, but the only bugbear is the treatment of the property. In your case if I were acting for you, I would advise creditors that your co-owner is not in agreement to the raising of equity during the final year, and that you will make up for this by paying an additional year's contributions. Here I am making a big assumption that your co-owner will not be prepared to agree to a remortgage, but if he/she does then this simplifies matters.

It is now time for you to pick up the phone to an insolvency practitioner to take more specific advice as to your options. If the house is an issue, it is always worth considering whether a DMP is a more sensible route for you.

[jpj]

Is it worth offering another years payments Melanie if there is no equity in the house? The house would have to rise substantially in the next 4 years to go over the 85% LTV level, which is looking a bit unlikely at present!

[MelanieGiles]

I think you would have to offer something to be honest - but this could always be included as a modification rather than within the proposal.

[KLG2002]

I really don't know if my friend would be prepared to remortgage or not, she is helping at present by putting more than her fair share in the household pot to allow me to meet more of my minimum payments, but they are not her debts and don't feel we should do a joint IVA. We have a £44K mortgage and £83K unsecured loan and the value of the house will not top £130K. Is it not normal to negotiate the remortgage or payment extension in the 4th year of the IVA not in the intitial proposal? I have to sure on how things may affect my friend too before I pick up the phone to anyone.

[KLG2002]

I have been talking to my friend about me taking out an IVA £45K debt, disposable income £300pm. I mentioned about the equity in the house issue, which she was somewhat unsettled by. She has been looking into IVA's so she has an idea what I am talking about and there is really two questions

1) what is the likely hood of an iva being accepted on a £300 pm payment?

2) would it possible to avoid the equity issue if she put £50pm towards an iva proposal (her gesture to help me out)and extending the iva to 6yrs?

she is scared as i am that the iva proposal wil be opposed and that I could be forced into bankruptcy. Please can I have the experts input on this please.

thank you

[MelanieGiles]

I would say that an IVA would be accepted on the above terms, and I would certainly be happy to present this. However, the ultimate say so is from your creditors, but it does not cost you one penny to try. If the IVA is not accepted, you could always look at proposing a DMP, but are then looking at a much longer repayment period.

[Reviva UK]

Hi KLG2002

There you have it - a highly experienced and regarded IP ready to work through the situation and present a suitable case to the creditors.

Got to be worth a call on Monday.

Good luck and congrats on the first step of becomming debt free.