help!

[ruby2610]

Hi People,
You have probably heard this a million times before but here goes!
My wife and i have been struggling with debt for the past two years. We have no missed payments as yet but it's only matter of time before we do. We seem to be fighting a losing battle and as an example all we seem to be doing is reducing the food bill etc so we can meet the debt payments. Our question is, would an IVA suit us.We both have debts over £30,000!, so there is very little mony to free up. We have no equiy inour house and we both need our cars for work Do you have to be in real trouble before it's an option or could we look into now? As you will all know this is making us both ill and our marriage is suffering because of the financial strain! Can anybody please advise us? This is soon to become a more serious issue.
Thanks in advance.

[neverending]

Hi and welcome.
You have taken your first steps to sorting out your debt problems.
Have you got debts of 30k each or between you ?
Either way an IVA may be the answer for you.
Firstly deduct your monthly living expenses, including your unsecured debt payments, from your income.If you are in a negitive situation then you are insolvent and a good case for an IVA.You can work out your disposible income by deducting your monthly living costs,NOT including your unsecured debt repayments, from your income.This will be the figure that you can pay into your IVA each month.Obviously there is alot more info needed but if you can confirm your debt and monthly disposible income then I can give you further advice.
You will both be able to keep your cars for work whilst in an IVA as long as they are of no great value.
Hope this helps

[ruby2610]

Hi,
Thanks for the quick response. A great help already!
I am currently going through all our finances and will have the details you requested available tomorrow. Our total combined debt is approx £90,000! I know terrible! The cars are off average value (combined total £10,000).
Thanks again for your help, we appreciate it!

Ruby2610

[neverending]

Thats fine,remember its only unsecured debt that can be considered for an IVA and 90k is nothing to be embarrassed about,mine is 66k.The cars should be fine but your IP will be able to advise better.Remember that when listing your living expenses to include car repairs and running costs,insurances,clothes ,dentist,xmas etc etc but it must only be "essential" expenses so holidays,going out money etc will not be allowed[although it is really upto your IP and creditors to decide as there is no industry set amounts]
Just to give you an idea you will need to return at least 25p in the £ to your creditors plus IP fees[approx 10k] so on a debt of 90k you will need to pay in at least 32.5k over 60 months so your disposible income will need to be at least £550 per month.This is just an approx guide to assist you but gives you an idea if an IVA would be suitable.


Regards

[ruby2610]

thanks for the advice so far.
It's great that you offer advice to people like us.
Keep up the good work.
Hopefully one day we can return the favour to somebody in our position now.
I can certainly advise on why not to borrow money!

Many thanks

[ruby2610]

Hi Neverending,

Income - Monthly Living Costs(including loans and what we realy need to pay for) = -£1,001. (in the minus)

disposible income-£792 (not including loans etc).
no loans are secured.

(the monthly living costs may need adjusting slightly as sky etc will need removing)
Also i started a business last year will this be affected? I have no loans with the business and it is a ltd company.
Thanks in advance for your advice.

Ruby

[kezza]

Hi Ruby

If you are a ltd company it will not be affected, you will be able to keep them separate.

I am a sole trader and so have to include mine [:-(]

[ruby2610]

thanks Kezza[:)]

[neverending]

Hi again
Well with a disposible income of £792 you could return approx 42% dividend to your creditors and seems reasonable.You may have to release some equity in your house in year 4[you may have none now but you will in year 4]make sure that you fully understand this aspect when consulting with your IP.
As you are probably going to return far more than the minimum 25% I would make sure that you have accounted for as much as possible in your living costs.Keep sky in unless advised by your IP to remove it.Build in an emergency fund etc.
Good luck

[ruby2610]

Hi,
Thanks again, feel a little better about it all now. Just need to have a good think about what to do next.
Thanks for help. I'm sue i'll be back with more questions soon.
Cheers Ruby

[bluebelle]

Hi Ruby,

Yes keep Sky in or account for it in some other way!...my IVA was approved in Nov and i still have Sky (sky+) and AOL. When my draft proposal was done by my IP on my monthly expenses they had put Telephone = £45. It is normally only between £12-£15 per month. Being honest I queried this with them. I had also noticed that they hadn't listed my Sky and AOL although i had told them about it. When i spoke to them they said to leave the telephone at £45 as this was the acceptable 'norm' for the average household for Landline and mobile. The £45 would help cover the majority of the costs for BT,Sky and AOL. My mobile isn't too much of an issue as it is pay as you go and i don't use it much. They told me to keep Sky and AOL hidden that way because 'some' creditors 'may' insist that you get rid of it and some may see it as acceptable. I am sure your IP will advise you how best to reflect it in your IVA (hidden or not!). Don't get rid of it. If you are anything like me i did feel a bit cheeky at the time (felt really humble) wanting to keep it as it is not a necessity. I was quite surprised that my IP recommended that i did this as i thought that they would insist on me listing these.

Regards

[ruby2610]

Thanks bluebelle,
People on here really are a great help.It's so much easier dealing with people who have been in the same position as us.
Thank-you.
Another question is our mortage is on intrest only at the moment so we can afford the bills, when you enter an IVA do you put it back on repayment or not? As Neverending mentions we may be required to release some equity within 3-4 years, if we continue with intrest only payments there won't be any? I don't understand, will they make us put it back on repayment? currently we have no equity in our house.
Thanks
Ruby
Thanks
Ruby

[neverending]

Hi
With just paying interest only have you another way of paying off your mortgage at the end eg endownent,pension etc? If not then I would look to revert back to a repayment mortgage prior to your IVA and include the new mortgage amount in your listed expenses.Finally even with an interest only mortgage you will gain equity as house prices continue to rise year on year[average is about 8% per year]Your interest only mortgage means that your debt remains constant.
Regards

[ruby2610]

Hi,
Thanks,we will probably revert back to paying repayment. Right it's time to get all my accounts together and make the first step to sorted out this mess! Any advice on who to use? There seems to be a few the people on here have been happy with.Is it better to deal with a local company or doesn't it matter?
Thanks
Ruby

[kezza]

Hi Ruby

Shop around and go with whoever works best for you and your situation. Don't go with the first one just because they seem understanding and don't go with anyone who wants loads of payments upfront. From all accounts from postings on here, the experts who post on this forum have had good feedback.

When you get refered to an IP they may want to see you face to face. I had to travel to Cardiff from North Staffs but saying that she was going to come and see me but was only round my way once a month and that didn't fit in with my diary [:)]