any way that i can restructure my debts ?

[ianls]

I am 37 years old and over the last 24 months in particular have amassed around £44,000 debt. In all honesty £34,000 of it was planned and considered and absolutely manageble. I do not want to try and duck out of my responsibilities, I simply wish to avoid the endless interest charges on the remaining £10,000 of credit card debt.

My wife has just completed her entry to the UK from Canada and has left three children behind her, we have obvious requirements to maintain relationships there and have just found out unexpectedly that we are expecting our own child in January.

Whilst I am maintaining all debt payments, have no arrears and have an excellent credit rating, I am concerned about the future. I know that I do not earn enough to support my wife, child and stepchildren whilst maintaining my debt payments, especially if my credit card contributions continue to meet interest only. I recently spoke with an IVA advisor who came up with a plan which suggested me writing off around 50% of my debt, morally I find this reprehensible but emotionally utterly compelling.

I do not want to shatter my credit rating but dont know what my other options are, I seem to be being pushed down the road of an IVA as opposed to a DMP, I can see why but would really appreciate your advice.

is there any way that i can restructure my debts in such a way that I avoid incurring interest on credit cards, without actually ducking my responsibilities. Am I looking at this all wrong? Should I just go down the path and "take the money and run" so to speak? Are the likes of Morgan Stanley and Barclaycard likely to accept an interest freeze and DMP if I approach them, am I better to try and run a DMP as opposed to going down the IVA route. I dont want to rip anyone off, I just want to know that I can afford to support my wife, child and stepchildren to a reasonable standard.

[Viki.W]

Hey ianls, welcome to the forum. Congratulations on your baby news, you must be so excited. It seems that your life is going to change quite a bit with your new baby and stepchildren. I'm not an expert but I would suggest you get a second opinion from another IP, Melanie Giles, an IP who posts on here comes highly recommended. You really need to know the pros and cons of an IVA, DMP and BR so you can make an informed decision. Good luck, Viki X

[size5]

Ianls, a very warm welcome and I have to say that your post has intrigued me somewhat.

You say that you have spoken with an IVA advisor, not a bad idea but you should really talk to 2 or 3 before making any sort of decision. In reality, given the content of your post and with the limited info in it, I can make a case for both IVA and DMP. Either way, your credit rating rating will suffer so be prepared for that.

The pros and cons really are as follows. An IVA will guarantee to freeze all ongoing interest and charges, a DMP cannot guarantee it. An IVA will mean no creditor hassle (in theory at least) whereby a DMP cannot give that assurance. The IVA is generally set over 5 years where a DMP doesn't have a fixed timescale.

To balance that out, I must also say that in my experience creditors are generally very good at freezing interest and stopping hassle on a DMP, but again, there is no cast iron guarantee.

On another practical level, you do not say whether the 3 children are coming over to the UK or whether your good lady is in employment or has a job to go to. Will she get maternity pay when the child comes along? These are factors that should be considered and if extra expenses are going to be incurred later on for these and other circumstances that are not being incurred now then it may be that entering into an IVA under your current set of circumstances may not be right for you. It may be that a DMP followed by possible IVA may be the way forward, but I obviously cannot comment further on that without a lot more info.

Either way, it sounds as if letting the current cycle of debt keep running is not really an option.

Regards.

[ianls]

I have spoken again with both the IVA advisor and a couple of my creditors, it seems that I am being egged in the direction of an IVA because the end result is better for me financially, alas I am much more interested in finding a manageable solution which does not involve me ducking out of my actual responsibilities. I have an impeccable credit rating and would like to maintain that, I am actually trying to resolve a future problem rather than solve a current one. It's interesting that MSDW actually told me that they would cater a solution for me, if i had any arrears but because I have been making all my payments, I do not qualify. It seems I have the option of painting a very black picture and getting all the assistance in the world or being honest and getting none.

My step children will be staying in Canada, however we are compelled/obligated to finance two trips to the Uk for the three of them twice a year and this is a costly. My wife is working but will have to give up her job and has no rights to maternity pay as she has no recourse to public funds and has not been in employment long enough to justify such

[kallis3]

Hi,

Intrigued to read your posts. With regard to your stepchildren, what has happened to their father, can he not help you out with the financing of their trips over here?

As regards your credit rating, as has previously been mentioned, if you go either DMP or IVA it will be shot to pieces for the next six years, there is no way round that.

Full marks to you for wanting to pay your creditors back in full, we would all have liked to have done that, but it's just not possible. With your situation being the way it is (congrats on the baby by the way), I cannot see how you can carry on paying your debts in full no matter how hard you try. I think you are going to have to resort to either DMP or IVA.

[size5]

Again, the info is too limited to give a definitive answer, for example you have not mentioned whether you are a homeowner or not.

The MSDW scenario you paint is, I agree, pretty ludicrous on the face of it but they will argue that that is their company policy.

The credit rating issue is a little more difficult to address in your case as you wish to maintain it. Well, the only way to maintain it is to keep paying on time, every time at least the contractual minimum payments as set by your creditors. The question is, can you do that without either a) eroding a reasonable standard of living to do so or b) using the available forms of credit again after you have paid them, for example running up the overdraft every month or reusing the credit cards regularly?

If you can say hand on heart that you do not need to do either a) or b) on a regular basis then you are not struggling and shouldn't need any professional help. If you cannot answer as above, then your credit rating serves only as a tool to obtain more credit, which if you are already in the a) or b) scenario as we speak is obviously very dangerous indeed.

If, as you say, you are trying to address a future problem, then that is very wise of you but I would be very surprised if any creditors would agree to freeze interest when you are currently in a position to maintain contractual payments. No harm in asking I suppose but you may just have to grin and bear the interest in the meantime, they will quite rightly argue that you signed on the dotted line to pay it, therefore they are quite within their rights to charge it.

Regards.

[ianls]

I am not a homeowner, having sold my house to finance my expected emigration to canada, after much expense and effort it became apparent that it would be better to move in this direction, several thousand pounds later my wife is here, i have supported her for 2 years and helped finance our side of the maintenance for the kids. We pay when they are here and in order to bring them here, the ex pays in canada.

My concern is maintaining that effort in the future with the added cost of my own child to support along with the costs of child care or the lack of a second income.

[size5]

As I said previously, you are wise to try and head trouble off at the pass as it were, but I can only ask again, are the payments you currently have making you feel the pinch?

If an IVA advisor has recommended an IVA as a suitable way forward, and for the moment with your indulgence we will leave to one side the question of whether it is the right solution or an inappropriate solution, it is reasonably safe to assume that given that we all pretty much use the same guidelines as regards reasonable expenditure levels when looking at potential IVA proposals that your advisor felt that there was a need to consider professional help.

Have you looked at the financial statement that was produced for you and do you agree that it is reasonable?

[ianls]

In all honesty I think the arrangement will make me considerably better off than I am and actually unfairly represents my current financial position, I am not struggling just now, I am simply throwing every penny I have at clearing debt just now and will find by the time my child arrives and my wife stops working that I may begin struggling. Ethically i do not agree with claiming my expenses are £300 a month higher than they actually are and this seems to be what was being suggested. When I was first approached by the advisors I was advised that as I was solvent i did not qualify, after some rejigging of my details I was miraculously £500 a month worse off and eligible for assistance. I have just had another long discussion again where the advise seems to be, if you are coping, keep coping and when the S**t hits the fan in March 2009, give us a call and well help you out. Im really looking for a pragmatic approach, alas neither of my loan provders seems remotely concerned about the fact i may start to struggle in 9 months, they are only concerned with the fact that I currently am coping okay.

I work in Insurance and understand the rational, we dont pay out to prevent losses, we pay out when the disaster occurs, I guess I am being told that i am not yet a disaster, however the IVA type advisors are saying that if I apply reasonable expectations, I am struggling. I am thoroughly confused but as always relatively optomistic

[jpj]

Hi Ianis

I would check that if you do go down the IVA route your creditors will allow you to pay for return flights for 3 stepchildren to come over to England twice a year (as you say,very costly) and I can see your creditors refusing this cost!

[MelanieGiles]

I am struggling with this thread Ianis - and you must not consider entering into an agreement with creditors which does not indicate your true position to creditors - indeed you should steer clear of anyone which makes any such suggestion to you.

An IVA will be difficult for you as you appear to be supporting your wife and expecting to fund travel expenses to regularly visit her other children in Canada. In an IVA scenario creditors will not be happy to see you paying for this without any contribution from your wife, and from what you are saying your current difficultis would appear to be manageable perhaps with some restructuring which a DMP could bring.

[size5]

This is a very interesting post in many ways. I can only echo Mel's sentiments in that you must not enter into an arrangement that is not right for you, or that you feel uncomfortable with.

My gut instinct, for what it is worth, is to recommend that you give serious thought to a DMP and then review your situation periodically. Having re-read your posts at home tonight at leisure, as it were, I suspect that that is the path you are thinking of following anyway.

As for the question of are you actually struggling, that is for you to decide. If a financial statement has been produced that clearly exaggerates your expenditure then that is patently not correct, however I have very often asked the question, for example, "How much do you spend on food each week?" to be given an answer of "£30"

For a family of four, I kid you not!!

It MAY be possible to spend £30 per week at Tesco's to feed a family of four, but I wouldn't like to try it, so you must allow for the fact that, as well as the weekly shop, there will be the milkman, at least 2 or 3 visits to the Co-Op for bread, bits and bobs etc. None of these "hidden" expenses can be covered again by flashing the plastic, so I would encourage you not to be too hasty in dismissing a financial statement as being overly generous.

Lastly, if by chance you have available credit on your cards and haven't used them at all (or an overdraft facility) in, say, the last 3 months, then you are most likely ok as you are. If your cards (or overdraft) have been used in that time, especially for non luxury items such as food, petrol etc, then you may have to consider whether you are currently in a denial situation. Might sound a tad harsh that, but it is very true.

Regards.

[ianls]

I do not believe I could be accused of being in denial, my financial plan for the next twelve months involves me wiping off pretty much all of one credit card debt, my concern is my own position thereafter. I do not for one second think I am in anyway requiring of an IVA i simply found it staggering that when seeking independent advice on how to prevent future problems, which in my mind seems like a dreadfully responsible think to do, I was quite aggressively pushed towards an IVA type solution. I was essentially asking the question "is there anyway I can restructure unsecured borrowing or seek improved interest from my lenders, and was more or less told to file for some form of bankruptcy. I have resolved the advice as over zealous and misplaced, I was simply curious as to the general consensus. I have already structured a better deal with MSDW alas MBNA can do nothing for me as they are no longer offering loans and are unwilling to review my current arrangement, despite making 18 payments on time and being bang up to date. Thanks for the input.

[MelanieGiles]

You seem very in control of things, so I would crack on and get those debts paid directly as quickly as you can. The very best of luck to you, and keep posting to let us know how you get on.