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StevieDan

Panic: I'm feeling the pressure!!! DMP or Bankruptcy

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Hi,

 

Have been reading your forums all day and have found some of the advice and comments really helpful. I wondered if I could gets some advice on mine and the OH's current situation?

 

We have always known that we were running up too much debt, not on really reckless things, just living on CC's and overdrafts etc. Then all of a sudden, i got a small payrise at work and had to pay back student loan, at the same time our tax credits went from 85 to 10 per week (because of previous maternity leave then change of job/going full time etc). After looking at finances closely we realised we had been living on tax credits mainly and then paying off debts, child care etc with the rest of our income.

 

Spoke to National debtline and they recommended DMP with Payplan who then said I could go for an IVA (cos most of debt in my name - but spent jointly, personal loans, cc's etc) and my OH should do a DMP. Got really confused, asked a friend for advice who said we should go for bankruptcy as it will be better to have a fresh start and the house is in negative equity so they said there is no way they would take it off us - but I'm not sure and that is really worrying me!!!

 

The problem is I DONT want to risk losing our home, just moved in a year ago (again overstreched ourselves I think) 1st home and everything we want, got 2 kids etc, dont want to risk it - would be devistated if people find out. Got 2 cars, bangers but worth over 1k, both need them for work. No other assets.

 

We owe nearly 30k, all unsecured, student loan, personal loans, cc's, tax credits repayment and overdraft.

 

I feel better about the DMP, perhaps because our situation may change in the future - less childcare payments etc. But am I just being idealistic? I am v nervous about bankruptcy but we are eligble so should we consider it, barely surviving month to month at the moment. The thought of 10+ years with a DMP is really daunting, just a bit less than bankruptcy so that is perhaps why we are choosing it. Are we making the wrong decision based on fear??

 

Please help, i cant get my head round this all at the moment - all very stressfull!!!!

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Hello Steviedan and welcome,

 

Easy to say (and even the more longstanding and experienced here I am sure have their dark moments) but try not to panic. It is natural to feel the pressure, it is stressful (I have arrived at the same point as you, I know how you are feeling - slightly different path but debt is debt) but the folks here will help you through the darker times and then put the boot on the other foot when they muck up (and oh I am learning how they do muck up..... :smile:)

 

The answer to your DMP versus bankruptcy question is very specific in each individual circumstance. There are clearly pros and cons to each. If you have disposable income after you budget (payplan, nationaldebt line and CCCS all provide for a realistic one!) and wish to be completely sure of avoiding risk to your house then a DMP is probably the way to go. If you really do not have any spare income, will be stuck on a DMP for 10 or more years I can see how bankruptcy would seem appealing.

 

There are implications to both, the house being in negative equity certainly means that initially it would not be considered in bankruptcy but my reading here and elsewhere is that it can be more complex than that and down the line your reciever could re-visit that issue. I am sure IVAs have worked for some but on balance my impression is that they can be set up to be really restrictive in terms of allowing you to continue living some form of life whilst you pay your debts. The other thing is that if the IVA fails you end up at bankruptcy anyway!

 

No professional advice or expertise behind but from someone in a similar place I would think worth initially DMP (if spare funds) and then bankruptcy if that does not work out (all the three services I mentioned earlier claim to have a really high success rate with DMPs and paying off debts). Others with more expertise will I am sure be along to fill in the detail! :wink:

 

Best of luck and keep posting


MJC 007.5 :cool:

 

Advice or opinions offered by mjc 007.5 are personal, offered in good faith and without prejudice or liability. Your decisions and actions are your own and should you be in any doubt then please seek the opinion of a fully qualified and insured professional

 

:) If you think I have helped you please feel free to click on my scales :)

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DMPs are meant to be used not to pay of a whole debt but to pt it on hold for a period of time. If it likley that your situation will improve and that you will be able to go back to the full payments at some point then a DMP is a good option. If you will not be able to go back to the full payments in the near to medium term then a formal insolvency (bankruptcy or IVA) may be a better option

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Hi,

 

Thanks debtinfo and mjc007.5, it is great to get a neutral point of view from you both and from people who have been there, lol!

 

As I said I am not sure if we are still burying our heads in the sand about bankruptcy because we are so scared to loose our house - it's nothing special but its home to us and the thought of someone else having control over that is what is freaking me out!!

 

A big question I have is about the beneficial interest option. This has been mentioned to me a couple of times but just not sure I trust that we will be able to get it - anyone had any positive experience with this???? Does it mean that you can keep your home when you buy it back? Have I got it right??

 

We made the decision last night to go with the DMP for a while (fingers crossed they all accept it) and get really strict with our finances and maybe work towards offering some full and final payments to the smaller creditors after a year or so. If after a few months this is not looking realistic then we will really consider the bankruptcy, I may feel less emotional and more realistic about it then!!

 

This is all such a stressfull experience but it is really reasuring to feel that we are not alone. :D Thanks

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Hi

 

Not much to add but I think you have made the right decision, see how DMP goes and if it's not for you then you can look at Bankruptcy.

 

With regard to your house, until you go Bankrupt and then speak to your OR I don't think you will know whether you can keep it or not. We had already moved out of ours but I read in your original post that you would like to keep yours, with that in mind if you do decide it has to be Bankruptcy then you should seek professional advice.

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Thanks, Louise40 - as you say I think I need to look at all options before I consider bankruptcy, I definately feel much better about trying to keep some control over all this. Actually got some sleep last night for the first time in ages!!!

 

I'll do what I can, there is so much good advice on this site for getting control of things. Now thinking about looking at reclaiming bank charges - I know we have a lot!!! Did start a claim in 2007 but didnt take it further because I thought there was a stop on claims, looks like that has changed now? Its worth a try and may help with the debts a little??

 

Thanks so much to everyone - I'm never going to get any work done with all this info to process!!! I could be on this site all day!!! that would be all I need to get the sack!!

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