I need someone to speak to. Quite confused. DMP / IVA / Bankrupcy ?

[Wintry]

Hi

 

In response to your queries:

 

My questions are as follows:

 

1. What would suit me more, a DMP, IVA or Bankrupcy ?
   

All three options are suitable for you, but it depends what you prefer:

The DMP is an informal arrangement, whereby you would make your monthly payments into this arrangement until your debt is cleared in full. You would have someone acting on your behalf, dealing with all correspondence and any legal action that comes your way. As the DMP is not legally binding and informal, the creditors can still charge interest on your accounts, which could take you longer to repay. Based on your level and debt and surplus of about £400, it would take you 8.3 years to repay your debt in full in DMP, but this is presuming all interest and charges are frozen. Free of charge DMPs include CCCS and Payplan.

Bankruptcy lasts for 12 months, and is on your credit rating for 6 years but held on the government register for life. It costs £510 to go bankrupt, and it is declared in your local paper. Your property would be realisedin bankruptcy along with any other assets you may own. The advantages of this is that it is a quick option.

 

 

The IVA is a 5 year legally binding agreement between you and your creditors. You would declare your income and expenditure details, and the surplus amount that you can afford to pay in each month for 5 years will be proposed to all of your creditors. They can then accept ot reject this proposal. If they reject, you may consider the other options. (Look out for companies that charge hefty upfront fees - Payplan and Debt Free Direct are recommended). If your proposal is accepted, all interest and charges would be frozen on your accounts, and the creditors can no longer chase you. You would need to declare your property details to show there is no equity, but this property and other assets would be safe in an IVA. After the 5 years, the remainder of your debt is written off and your credit rating is wiped clean a year later (6 years from day it was approved). You would then be debt free.

1. I dont want to loose the property, what can i do ?
   

As above, your property would only be safe in an IVA arrangement. It would be safe in a DMP, but the creditors can still take legal action as it is not legally binding i.e charging orders etc.

1. I cant afford to pay a DMP for 10 years as it means by then, I will be 70
   

If you can afford £400 a month, it would take you about 8.3 years to repay, but could take longer if interest and charges are put on accounts.

1. What are the implications of IVA despite the fact that I have a property.
   

You would need to have your property valued in the IVA (free of charge), and would need to send details of any secured charges against the property, this is to purely show in your proposal how much equity if any is in the property. If there is equity, the creditors would usually require you to remortgage in the 4th year to pay 85% Loan to Value of this amount into the IVA. However, if negative equity, you will not need to dot his.

1. What are the implications of Bankrupcy despite the fact that I have a property.
   

Your property would need to be declared to the Official Reciever in bankruptcy, and it is up to them as to whether it would be realised. Usually all assets, especially any that are no occupied by the debtor are realised.

1. IVA's cost a lot to arrange, with my debts roughly how much will an IVA cost (fees wise)?
   

With Payplan and other free of charge IVA companies, there are no upfront fees to the IVA, therefore if your proposal is rejected, you would not be charged. However, if it is accepted, all fees would be built in within the IVA, so you would not have to pay any more than your surplus amount agreed. It is the creditors who agree to forego some of the surplsu at the beginning of the IVA to cover the IVA fees, and then after this, the surplus is paid directly to the creditors.

1. My job is not a guaranteed full time job, its an agency job. where its pay as you work.
   

As long as you are happy to maintain the payments agreed in the IVA, this will be fine. If you do come out of work in the IVA, your income and expenditure would be reviewed and your payment may change. For the DMP, it does not matter that you are on agency work, as they do not need proof of earnings, and as it is an informal arrangement, your payments can change throughout the arrangement.

1. I dont have any rights like full time employees.
   
2. Who can i ask for independent advice, the likes of CCCS would be very interested once they know once has a property, but even the property is in negative equity.
   

I would suggest you speak to your local CAB who are very helpful, or you can visit the following website for more information:

 

Free Debt Management Plans, Free IVA Debt Advice and Free Debt Help | Debt Advice | Payplan

 

Best wishes

 

Hello Looby Loo

 

Read this post with interest and a little confusion?

 

With Payplan and other 'Free of charge' IVA companies?

 

Payplan and Debt Free Direct are recommended?

 

Are these two companies charities or profit making businesses?

 

What is the difference between Payplan and Debt Free Directs charges and any other IVA companies apart from any possible upfront fees?

Edited August 2, 2009 by Wintry

[debtinfo]

Hi Wintry, what loobyloo means is that you dont have to pay an initial fee for the nominee to prepare your paperwork and to submit it to creditors. You only have to pay if the IVA is accepted and this comes out of the normal amount you pay as part of the IVA

[loobyloo85]

Thanks for that debtinfo - thats exactly what I meant.

There are some IVA companies as well as payplan that do not charge upfront fees, and who's fees only come out of IVA upon approval of the arrangement. x

[omoeko]

Hello Guys,

 

I have just got a letter from Lloyds offering me an offer 4k off the balance of the debt that i owe them, out of 12k they said i should pay 8k and forget it, but the thing is that there is an outstanding PPI claim outstanding, which should take some bit off the outstanding balance..

 

Dont know what i should do, i owe them some money on other debts and was cautious of the fact that if i start looking at offeres for individual loans seperately than offering them a whole settlement i.e credit card, loans, bank balance etc.

 

Dont know which one makes the most sense.

[Wintry]

Thanks for that debtinfo - thats exactly what I meant.

There are some IVA companies as well as payplan that do not charge upfront fees, and who's fees only come out of IVA upon approval of the arrangement. x

 

Thank you both for your replies and clarification.

[omoeko]

Hello Guys

 

I have just got a letter from the following:

 

Halifax, they have taken the matter to a DCA even though I was paying how much I can afford on a monthly basis, payments were regular but I cant believe they still referred the case to a DCA, what should I do now. they have demanded full payment.

 

HSBC: They have referred credit card debt to a DCA, as I claimed the credit card was unenforceable and wasnt paying anything towards it, what should I do.

[omoeko]

Hi All

 

I have been a member of CAG for over 6 months now, whilst the adviec I got here has made things a little steady, I am searching for a long term solution to my debt problems.

 

I will give a breakdown of everything below here.

 

LLoyds loan: Original loan was for about 13k 4yrs ago, PPI element was around 3k as well, PPI dispute currently with FOS to adjudicate on the matter. I am asking for the whole PPI amount to be returned. balance around £3k at the moment, reduce pro-rata offers beiing paid for last 8 months. Lloyds offered 500 as PPI refund, this was rejected. Case still with FOS. I think they are charging norminal interest or frozen. I also think I have been defaulted, I have numerous letters that going through them itself is a job on its own.

 

LLoyds loan: Original loan was for about 13k 2yrs ago, PPI element was around 5k as well, PPI dispute currently with FOS to adjudicate on the matter. I am asking for the whole PPI amount to be returned. balance around £12k at the moment, reduce pro-rata offers beiing paid for last 8 months. Lloyds offered 2k as PPI refund, this was rejected. Case still with FOS.I think they are charging norminal interest or frozen. I also think I have been defaulted, I have numerous letters that going through them itself is a job on its own.

 

 

HSBC Credit card: Balance around 3.5K,they have not provided me with an agreement, matter with HSBC DCA at the moment. No payments made for last 8 months, I think they are still charging interest, despite numrous letters, looks like they are ignoring, they asked me to make an offer in june, a £1k offer was made and they rejected.

 

HSBC Loan: They are threathening default at the moment, currently sent them I&E and paying a reduced pro-rota sum, even though they didnt officially agree to this, as what they officially agreed to was to make pro-rota payments so far I took out a new loan, I refused so still paying pro-rata. Agreement is enforceable.

 

HSBC bank account: Balance of about 700, they didnt freeze interest, so it feels like any money I pay in gets sucked in interest payments, I can easily pay this off, if we come to a compromise and I make a £200 offer. But they have joined this together with the loan and treating them under thesame subject when I receive letters from them, should I make an offer to settle the bak account, I dont have enough money to settle the loan aspect. Also, bearing in mind that I have been paying in some money eaten up in interest despite numerous letters stating that I my income has been seerely reduced, where can I find a template letter of an offer ?

 

Halifax: Loan took out 2 yrs ago for around 10k, balance is around 6500k, after numerous letters, I sent them I&E offering reduced payment and they were accepting this for the last 6 months, now they have taken the matter to thier in house DCA, demending full payment as if I will go to steal it. I sent them another I&E lately.

 

I want a long lasting solution to my probleems rather than fire fighting, a DMP i considered after speaking to CCCS will take 9 years, by which time I will have retired. An IVA on the other hand sounds rather too formal and looks a bit cumbersome especially with my instable financial arrangements, I work for an agency and its not guaranteed full time work, also I have a property which is in negative equity technically speaking.

[omoeko]

Also not to forget, I have another halifax credit card with around 3k balance. just paying off minimum payment at the moment.

[loobyloo85]

hi omeko, i am sorry to hear about your debt being passed onto a dca. i know it is easier said than done, but try not to let this worry you. it is part of the creditors procedure to chase for the full amount outstanding. the dca will now chase for the debt instead of the main creditor. They will send letters threatening to take legal action,but half the time these are empty threats, and a tactic to try and get more money from you. This is where having a company acting on your behalf comes in handy and they would be able to deal with the dcas on your behalf x

[omoeko]

I have a problem with my creditors, the problem is my mountain of debts and they are as follows.

Creditor A loan: £6,500 (low payments being paid, would take approx 5 yrs to pay off)

Creditor A overdraft £2,000 (no settlement yet)

Creditor A credit card £5,200 (CCA agreement provided but reduced payment not accepted)

 

Creditor B loan £5,500 (CCA enforceable)

Creditor B Credit card £3,000 (No CCA provided)

 

Creditor C loan £4,000 (CCA provided)

Creditor C credit card £3,000 (no agreement provided till date)

 

At the moment, I do own a property which is worth less than the mortgage on it, but I am still maintaining the interest payment on the mortgage. My concerns are as follows, I do not want to loose the property but at the same time, I am just over 60 and don’t want to be paying debt for the rest of my life as my health isn’t in the best shape.

 

I am looking for the easiest option for me which would mean that I am out of debt in 3 years or less. Is bankruptcy the best option for me?

[loobyloo85]

Well bankruptcy is a quick option, but it is very likely your property and any other assets you have will be at risk. If you are earning, and your job is not affected by bankruptcy, your bankruptcy could take 12 months, plus a further 3 years (the OR may ask for you to pay into an income payment order each month for 3 years). Bankruptcy does carry a stigma attached to it, and may be advertised in the paper. All of these things would need to be considered.

The IVA is an alternative to bankruptcy, it is a legally binding agreement between you and your creditors, and is a 5 year agreement.

The IVA is subject to approval by your creditors, but a lot of companies do nto charge any up front fees, meaning that if you proposed an offer to your creditors and it was not accepted, you would not be charged anything, therefore there is no harm in trying this.

If your IVA is approved, all interest and charges are frozen on your accounts, and the creditors can no longer chase you. You would make a payment each month for 5 years. All assets are safe in the IVA. The only thing is that in the IVA, the creditors would require for you to have a valuation in the 4th year of the arrangement to see if you have any equity. If you have equity of over £5000, they would require the person to attempt to remortgage to release 85%n loan to value of this amount to pay into the IVA. However, with respect due to your age you would not be able to get a remortgage in 4 years time, so instead, if you did have equity, you would just need to pay an extra 12 months of payments on the end of your IVA in lieu of the equity. If you still have less than £5kequity or no equity at all, you do not have to pay anything.

Your debts will be written off after 5 years, and it only remains on your credit rating for one further year after this. The only possible downside to the IVA to consider is that you need to be able to sustain a monthly payment for 5 years. Although the companies review budgets annually, and the surplous can change during the 5 years depending on changes in circumstances, you would need to show that you are able to afford a sustainable payment for the 5 years from the outset,.

 

I hope this helps. x

[debtinfo]

If you are sure that the property is in negative equity and it is your home then the property is fairly safe in bankruptcy. The OR will offer to sell the equity back to you for £1 + legal fees (£211 jointly owned, £460 solely owned). The IPA is usually more lenient than an IVA and only 50 - 70% of any surplus is taken rathen than 100% in an IVA. Iy your surplus is less than £99pm throughout the 12 months or less of your bankruptcy or your income is solely from benefits then you will not have to make any payments at all.

[omoeko]

I have a complex financial situation, I need to speak to someone about it. The story is quite a handful to read an before I make and decisions, I would like to speak to one of the helpful members of this forum.

 

Thanks.

[rebel11]

Hi omoeko

 

Welcome to CAG

 

The guys will advise as soon as they are available. But you need to give as much detail in your thread as possible.

[debtinfo]

What would you like help with

[buzby]

There is nobody you can speak with - outline your concerns in a forum posting, keeping it to the point, and CAGGers can contribute.

[omoeko]

Thanks all, I will explain the situation in as much detail as possible. This is concerning a family member who cannot use a computer and hence the reason why I am here asking the question. The summary is as follows:

 

Unsecured loans

==========

 

HSBC

 

Credit card: No legitimate CCA provided, offered 30% discount recently.no CCJ, roughly about £3,500

Loan: CCA provided. with DCA at the moment. Default notice served. no CCJ roughly about £5,000

 

Lloyds

 

Credit card: CCA legitimate, with DCA, defaults served, no CCJ, around £5,200

Loan1: around £2,500 left for this loan, CCA legitimate, with DCA. defaults served

Loan2: around £6,500 left for this loan, CCA legitimate, with DCA. defaults served

 

Halifax

 

Loan: legitimate CCA, £1 being paid at the moment for the time being. halifax agreed to this. balance around £5,200 notice and defaults served. no CCJ

Credit card: around £3,000 balance

 

 

Secured debts:

===========

 

I own a flat bought in 2005 for £135,000 where i used to live, but since my financial situation got worse. I had to rent it out. debt on it I reckon would be about £125,000 roughly. I'm not 100% sure but just there about. I then secured another further advance loan of £20,000 3 years ago, which I currently pay on a monthly basis. I think the balance is roughly about £15,000 again I'm not 100% sure. Now the property itself with the current downturn, I reckon would be worth around £150,000 - £160,000, it has a tenant in it leased out on a long term lease. The mortgage right now is on a variable rate, the mortgage and further advance is taking up about £450 a month at the moment, rent is £800 a month. I have service charge arrears and there is a section 20 bill for the roof for around £5,000 which I have not even thought about right now.

 

 

Situation with debts

============

 

My family have offered to lend me about £7,000 on the condition that I use the money to clear off all debts, but its becoming so difficult to offer a full an final settlement that is acceptable to all creditors. They just are not having none of it, nobody has accepted any of my offers. I worked out all the debt on a pro rata basis on the calculation that i had £7,000 in the pot, so it worked out that all creditors will receive roughly 20%, typically most creditors are wanting 70-80% of the debt.

 

 

Other information

===========

 

I currently rent out a room at the moment, all the debts mentioned above have been taken out whilst squatting with various people at different stages. Now, I do not mind if i loose the house, all emotions have now been erased and I feel bankruptcy would be my easiest solution out. I'm 61 at the moment and want to stop working in the next year. Also, my income is not stable, I effectively work for an agency, so its when they have work. I also have a daughter who depends on me.

 

 

 

Any help/advice will be greatly appreciate.

[IdaInFife]

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=01_bankruptcy

 

is there specific questiosn that they are asking?

[omoeko]

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=01_bankruptcy

 

is there specific questiosn that they are asking?

 

Sorry I do not understand your question. I was just looking for advice on the matter explained above.

[debtinfo]

Give national debtline a call, We cannot tell you to do bankruptcy or not, that is a decision you have to make yourself, you would likely be elligable. It is likely that the house would be lost.

 

We can answer questions about the process and mechanics of bankruptcy if you have any of those questions

[nottslad]

From the information provided, bankruptcy does seem the most logical solution, however I would still speak with Debtline or Consumer Credit Counselling Service just to get their spin on the best solution.

 

It appears there are no assets other than the property which is heavily mortgaged, an unreliable future income and a massive level of debt so an IVA wouldn't seem appropriate, a debt management plan un-servicable, and not eligible for a debt relief order due to the size of the debt.

 

Consumer Credit Counselling can also guide you through the process of declaring bankruptcy; it isn't as bad as it used to be 8)

[sequenci]

Do you know if there is a wish for the property to be retained (if possible)?

[omoeko]

Do you know if there is a wish for the property to be retained (if possible)?

 

Thanks for the reply, we will like to be given options about what is involved in retaining the property or loosing it, so that we can make an informed decision. if its possible to retain the property then yes but at this stage we don't mind if the property is lost.

 

Thanks.

[omoeko]

I just found out that the total secured debt on the property is around £128,000 and the property is worth roughly between 150,000 - 160,000, the housing market is a bit sluggish at the moment which everyone knows. The lender would only release extra funds up to 80% LTV max.

 

This means that I cannot raise extra capital from the lender, selling the property is also tricky as I do not know how long its going to take to sell it, there is also a section 20 pending at the moment with roughly around another 5,000 in costs.

 

Any ideas ?

[liquidauctions]

bankruptcy at age 61 is bad news