advising we do a debt man plan

[hrst]

wehave been advised by dfd that creditors wouls expect us to sell our house as we pay 1300 on mort and secured loan and could rent in same area for 600 per month. They are advising we do a debt man plan. We owe 60k can afford to pay 750 per mnth?

[lizziej]

We were advised the same with similar amounts of secured loan and unsecured loans - we have taken the plunge and although will be in rented for the next few years so be it- at least I will be able to have my head up high and know in five years time our stupidity over the years has all been cleared away - that is if the IVA is successful on the 17th September!! Just think positive - DFD have been very open and honest with us, not like a couple of others we have spoken to with hidden charges!! Good luck

[catullus]

Hello hrst

Sounds like the correct advice if you don't want to sell your home.

A number of lenders have a limit upon the % of your household income that they will be prepared to allow you to spend on housing. 40% is generally the norm and if you exceed this the creditors will generally vote against the IVA.

How much equity have you got in your home, and bearing in mind what you could rent for, what is stopping you selling your house, if that might get your creditors under control more quickly?

[lisabham]

our age is 50 and 45 would never get back on property ladder. Also do not want my parents to know. just in an absolute turmoil over this.

[catullus]

Well, I tell my clients that property may go up in value, it may stay the same or it may go down. You don't know.

But what you do know is that the crippling rates of interest you're paying on your unsecured debt will never go down.

It strikes me that if you have equity in your home, downsizing and realeasing some of the equity to pay back creditors is a win/win situation.

You get your creditors more under control and you have a more affordable housing budget that might open up the possibility of an IVA if you still needed one.

That, of course, assumes that you have equity in the home at the moment.

[MelanieGiles]

You will be paying for a long time and there is no guarantee that interest will cease to be charged. And statistically, only about 20% of DMP's actually are succesfully concluded. Also, if you have equity in your property, creditors may well choose to go down the charging order route - and thus secure their position against your home, following which you would have to agree a separate repayment programme with them on top of your DMP payments. This could be risky.

Have you also considered an IVA with an equity release either at the beginning or at the end? This would at least limit your repayments to a 5 year period, but involve you in paying higher mortgage payments. If you have equity now, I would consider a front-ended equity release based IVA - the higher mortgage payments could be absorbed within your monthly disposable income - so long as they don't breach the 40% rule Catullus refers to above.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

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[JoeB]

Hi

WE had our IVA approved in August and I was really stressed about this 40% issue - we were just over at 42% - it never came up and was not an issue!

[mikebdomain]

Hi hrst

First off, your creditors are unsecured; therefore they cannot automatically expect you to sell your home, they have taken the risk, and they must go through the hoops… Including considering an IVA if that is viable, and a route you wish to take.

Did I read somewhere on another post that you have an endowment?
If so, you need to seek advice from an IFA, as to whether it is worth cashing in now, to raise capital.

What equity do you have in your property?
It may be, that if you have had your mortgage product for a number of years. A remortgage now may reduce your outgoings and also allow you to raise capital. You would need to speak to a mortgage broker and let them carry out a full fact find to determine the viability of this option. Do not assume that you will have to seek an adverse credit mortgage product; you may not have got to that situation yet. Only an authorised, qualified, professional mortgage advisor can give you advice on this.

Talk to some of the IVA professionals on this site on a personal level, there is a wealth of experience and knowledge on here. I know that MelenieGiles has helped hundreds of people through their IVA.

Bottom line – don’t just give up, you seemingly, still have lots of options.


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[lisabham]

hi mike
thanks for reply
we have taken a DMP with payplan
paying 850 per mth will take 70mths to be debt free
at least we keep house and have money for food
just hope nothing drastic happens in next 70mths
thanks for everyones help and advice [:)]