I have a combined debt of approx 36,000 GBP

[Jamie.mc]

Hello. I have a combined debt of approx 36,000 GBP. My main question is that a loan I recently secured (all debt is unsecurred) had an initial payment break on it. The payment start in April. Do I need to wait for the first payment to come out on direct debit before I apply for an IVA? And if so is it just one payment that needs to come out? I have 2 loans and a credit card. One loan and the CC I have had for years... the new loan is due to start payments on 25th April.

My wife is pregnant and we are expecting at the end of August. I wanted to try and get an IVA in place before then so it would make things a little easier as my wife may not get maternity pay through her job. Any advice would be great. Many thanks. Jamie.

[MelanieGiles]

Hi Jamie and welcome to the forum

You do not need to wait until the first secured loan payment is taken out, however can I ask what the monies raised were used for? Presumably you have effected some form of repayment to your creditors?

You may find it difficult to propose an IVA with only two loans and one credit card - especially as it seems that one loan has only recently been taken out. Seek specialist advice before deciding on a course of action.

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

[Jamie.mc]

Hello Melanie. Many thanks.

The debt stems back from many years of build up. I have applied for consolidation loans to make the payments easier. Although I have just found it more and more difficult so applied for new ones. Now I find that I have the 2 loans and the credit card. I have around 4,500 on the CC, 22,500 on one loan and about 7,000 on another loan.

Do you know who it would be best to speak to regarding this? The problem is that I cannot see myself getting out of this debt and now even more worried now my wife is pregnant.

Many thanks. Jamie.

[gimmewine]

Do you have equity in your property. If your equity is higher than the combined unsecured debt, you may find (like me) creditors will not accept and IVA and steer you down the path of a debt management plan instead. If you have equity but do not want to enter into a dmp, another option is to remortgage the property.

You could consider an interest only mortgage for the time being, then when your wife is back at work ask for it to be converted to a repayment mortgage.

[Jamie.mc]

Hello.

No, we rent our property, so I do not have a mortgage. All of the debts are unsecurred. To be honest, looking at it now, I'm amazed that someone like me who doesn't even own a house, can get into this much debt. There seems to be no control.

Any further advice would be much appreciated...

Many thanks. Jamie.

[jamesfalla]

Hi Jamie

Please will you clarify. From what you have said I understand that all your debt (including your recent loan) is unsecured. Is this correct?

If this is the case, then your recent loan will need to be included in your IVA. It is always more difficult to negotiate with creditors if you have made no payments. Who is the loan with?

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions for over 10 years.

For more information visit www.jamesfalla.com and visit my blog at: http://jamesfalla.blogs.iva.co.uk

[jamesfalla]

Hi Jamie

Please will you clarify. From what you have said I understand that all your debt (including your recent loan) is unsecured. Is this correct?

If this is the case, then your recent loan will need to be included in your IVA. It is always more difficult to negotiate with creditors if you have made no payments. Who is the loan with?

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions for over 10 years.

For more information visit www.jamesfalla.com and visit my blog at: http://jamesfalla.blogs.iva.co.uk

[MelanieGiles]

OK Jamie - I also got confused with your use of the word "secured". I really do not think that an IVA will be acceptable in your case given the number of individual creditors you have, and the fact that one loan has only just been taken out. You should therefore also consider whether a Debt Management Plan or even bankruptcy proceedings are better to give your family a fresh start.

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

[Jamie.mc]

Many thanks for your replies Melanie and James.

James... my most recent loan is with MBNA and yes, all 3 (credit card with Capital One, Loan with Egg and Loan with MBNA) are unsecured.

Sorry if that was not clear.

Melanie... could I just ask, does that mean that an IVA is probably not possible due to ONLY having 3 different debts or because that is too many? I'm a little confused on that. Also, would that mean that because I've recently taken the new loan out, I also would not be suitable for an IVA?

Sorry, I'm not too clued up on this so still a little confused. I would like to try and avoid bankruptcy if possible but if it's the only option I have then maybe I should consider it. In regards to the debt management plan, I'm not keen on that as it's not a means to an end, just to delay the amount of debt I have further.

All I really want to do, is wipe the slate clean if possible. I know it is my fault that I have gotten myself in this situation, although it really scares me that I owe way over what I earn as an annual salary.

Any further advice would be great, as I am really confused now as to what I can do. I was really hoping I could do an IVA...

Many thanks. Jamie.

[David N]

Hi Jamie,

Sorry to hear of the state things are in but i do suggest you think about things very carefully right now especially with your wife pregnant.

Obviously I do not know your circumstances but unless you have a real good job with great income that would be at risk under bankruptcy i would certainly consider that, bankruptcy.

Yes it is at first a bitter pill to swallow or even contemplate but everyone I have spoken to or advise this route has said they breathed a great sigh of releif - and that one or even three years fly by, and teach you to manage and not borrow.

Yes there are 'stigmas' and 'blacklisted credit files'but you propbably already have the latter and IVA does put you in to a committment which, if not honoured results in bankruptcy (or certainly can).

With a good wind behind you bankruptcy could be over before baby's first birthday - and you can start to rebuild on sound footing.

Either route, IVA or banruptcy, make sure you open new card accounts with at least two different banks, now, right now!

Regards
David N

[Jamie.mc]

Hi David,

Many thanks for your advice.

I have thought about bankruptcy and I guess it is something I would consider doing, if there is no alternative (ie; the IVA). It's a fairly scary thought though.

Could I just ask (probably me not being clued up again)... why 2 bank accounts? Would they close my current bank account as part of the bankruptcy... Or should I just open another one and keep the one I have currently?

Also, do you know the best people to speak to regarding bankruptcy and how to start it etc...?

I really do just want to get this sorted out asap as both my wife and I are really worried about the future with this debt hanging over our heads.

Cheers.

Jamie.

[David N]

Hi Jamie,

Yes in bankruptcy most banks will close your accounts, especially current account though they are not obliged either way.

Two banks give you a better chance of keeping at least one open - also worth getting a post office account.

You definately need somewhere to receive wages and clear any cheques you receive - Alliance & Leicester might be useful since they have/had Giro with the PO.

Halifax might not be so generous to keep account open but Nationwide and Coventry try to be man in the street user friendly so might allow account to continue.

Maybe Melanie can expand on what happens with any rental deposit you have given to your landlord, in bankruptcy or IVA - doesn't it form part of the estate?

What is your salary?
Will you be able to maintain IVA on your salary alone?
Are all debts in joint names?
How are they split?
Maybe any action should be in one name or the other?
What is your job?
What are your prospects, job wise?

Regards
David N

[Jamie.mc]

Hi David,

In reply to your questions…

My salary is £1,900 per month after tax. I’m certain I’d be able to maintain in IVA as my current outgoings are around £1,600. All the debts mentioned above are in my name only and all are not secured on any property as I rent. My wife also has a £10k loan, of which I was hoping they may be able to include on an IVA. None are in joint names… they are in single names only.

They are split with my wife’s loan which is £10k and then my 2 loans being £22.5k and £7.5k and then my credit card which is £4.5k.

I don’t mind the action being taken solely in my name if that is allowed, that’s for sure, just as long as it sorts it all out. I’m not really one of these proud people and to be totally honest, like I mentioned above. I’m just so disgusted with these companies that they’ve allowed me to get into this amount of debt in the first place, so anything I can do to get out of this mess, I would consider.

I am a Finance Analyst with a company based in London on a fixed term (ongoing) contract. As for prospects, I hope to go permanent where I am and then start studying CIMA. So I’m not sure that will affect this too much.

I’d also like to add that we have family in Australia and we are thinking of maybe moving over there at some point in the future so any quicker option that would give us the opportunity to do this would be great. This is one of the reasons though, that I’m not sure bankruptcy may be the way forward, as I think it could affect any possible visa application. My wife is a nurse so she could easily get a visa. But I might not be able to if I’ve gone through bankruptcy.

What are you thoughts? It is a bit of a mess that’s for sure…

Many thanks.

Jamie.

[David N]

Hi Jamie,
Exactly why i enquired your aspirations - Australia or if you were Home office Police type employment BR is a big no no.
IVA will only allow you what you need to live on (frugally) so,
When is the baby due?
When does you wife lose her job?

You have to balance cost of baby and lost income against creditors accepting realistic chance of you repaying/honouring the IVA so it is not always best to charge in now when there is no baby and 2 jobs!

Yes it can be done in your name only, or your wife's.

Remember IVA is on credit file for 6 years - do Australia do a credit check on you? Get the Visa entry forms NOW and look see - that's forms NOW - it might be better to apply for Australia now, get visa, adjourn departure whilst you further qualify and then IVA -

I don't know, but these are things you must consider - remember, no-one can force you in to an IVA so you can re-visit anytime, BR is totally different though!

Regards

David N

[Jamie.mc]

Many thanks David. I will definitely take all this into consideration.

Cheers.

Jamie.