www.iva.co.uk

Hi - apologies in advance for the long post, stop now if it looks too boring to read...

I've been wavering on the verge of starting an IVA or bankrupcy for quite sometime now.

I have been thinking that I could sort out my own similar solution which would mean the money saved on fees would go towards creditors & that I would avoid the stigma of the IVA when it comes to mortgage applications etc. (I do appreciate the benefits of the IVA however!)

I haven't made any payments to creditors for a few months, a couple of creditors have now referred on to other companies, several of whom have now offerred a reduced debt figure, payment plans & frozen interest.

I can afford to pay approximately £500 per month, which is not enough to service the current level of payments but would be enough to pay them all a reduced payment each month.this would mean total payments of £36,000 over 5 years. My total debt is £42,000.

The incentive to the companies involved would be that their return is likely to be more than they would get back in an IVA/bankrupcy order & each wouldn't have to reduce the total debt by a huge amount.

I also have a valid PPI claim for one of the debts, which probably represents about £2,000 if not more.

My disposable income is likely to rise (professional job with good security) quite substantially over the next few years so should be able to increase the payments, ideally completing payments early.

Sorry for the waffling on, just wondered if anyone has done this successfully themselves (this forum is possibly the wrong place to look!!) & if anyone had any thoughts.

Thanks for reading!!

A "snowball" diy dmp can work, and I know of people for whom it has worked. Basically you work out the debt and allocate a pro- rata monthly payment from what you consider to be your disposable income and offer this to creditors. When you get extra income, you use this to chip away at the highest interest debt and, as each debt is settled, you allocate what was the payment from the settled debt towards the next highest interest debt ... and so on.

Some creditors will co-operate, some won't and, as you know, you will have no legal protection. But, as I say, with creditor co-operation it can work.

Hi Puppy - no post is ever to boring to read! This forum is for all debt related issues and solutions so you've picked the right place

You have nothing to lose by addressing this directly with your creditors if that is your preferred choice, however be mindful that it is an informal arrangement and as such neither you or your creditors or third parties are bound by it meaning they can change their minds at any point, add on interest, pursue you for the full amount and apply to put a charge on any property you may have. They can also file for your bankruptcy. This is not to say they will take any of this action and may well be happy with what you propose to them.

Clients have successfully managed their own DMP to successful conclusion, many choose to have a company act for them to look after the administration, especially if there may be a better chance of getting interest frozen.

There are pros and cons to a self managed DMP as there are with any solution so its best to be aware of each and make the right decision for you. It may be with talking it through with a couple of professionals to discuss the finer detail before embarking on a course of action.

Thanks for the reply Foggy, I also know people who have done this successfully, some by negotiating substantially reduced payments with immediate settlement, others who like you describe, have diligently chipped away. I think its worth a few phone calls to sound out the creditors anyway!

Thanks Tina

I've looked into both IVA & bankruptcy in some detail & these were my preferred options as it all felt too overwhelming & I liked the idea of a company essentially sorting it out for me. I feel like its all bit more manageable now tho. I think some of the guilt & shame has lifted (had these in abundance despite my situation being largely circumstantial)& that's made the difference.

That's great you feel more empowered to tackle this yourself - go for it. Glad to read the guilt and shame has somewhat lifted - horrible feelings to carry and only too common for everyone struggling with debt.

Keep us posted how you get on

Good luck with your chosen route ... Remember the forum will always be there for you

My own view is that it is always better to try to negotiate a repayment plan directly with creditors in the first instance, especially if you could technically repay your debts over a realistic timescale. IVAs and bankruptcy should only be seen as a last resort and the ultimate debt repayment solution - but of course they do work very well for some folks.

Hi all good advice above hope it's been helpful to you?

There are also debt management companies out there who do not charge any fees at all, so they may be worth looking at. Let them do the work for you and don't pay for the privilege