IVA or Bankruptcy? Or is there another way for me?

A question about : IVA or Bankruptcy? Or is there another way for me?

I am a newcomer to this site and have been reading various posts with interest but cannot seem to find the best way to approach my current financial problems.

I have written a little about my background and current situation in the hope someone can help steer me in the right direction so I can find my way out of debt.

I have always been in debt. Since my first car loan as a teenager to recent consolidation loans to pay off other loans and credit cards the amount I have owed has always increased year on year and the repayments have always been one step ahead of my income, increasing all the time as lenders afforded me more credit – I’m now 35 and have had enough of being in the pockets of financial institutions. I think I have a fairly decent income but there’s always something that crops up and spoils my progress.

Last year I was living with my girlfriend and had a Ј30k/yr job but was still struggling a bit to pay my way – I paid most of the bills as she was on a lower income than me and had enough debts of her own. I had two consolidation loans which I took out to repay existing credit cards plus a car loan but ended up spending again on the cards. Then in August last year we split up and I moved out into rented accommodation. Due to the fact she couldn’t financially afford for me to move out I decided to pay my usual contribution to the bills (Ј550/mth) for three months until she found somewhere cheaper to live. This was obviously on top of what I was now paying out living in my own accommodation and ended up going on credit cards along with any additional monthly shortfall I was encountering living on my own.

Then in March this year I was made redundant and despite some redundancy pay the credit cards soon got hammered even more.

Around the same time I met a new girlfriend and in July I moved in with her and her son and her father at her fathers house and pay board.

I got a new job (Ј30k/yr) in October but despite this and my reduced monthly outgoings I’m still about Ј400 short every month. My girlfriend doesn’t earn enough to help me and I wouldn’t ask her to anyway.

So my monthly outgoings now look like this:-

Living Costs - Ј855/month
Loan Repayments – Ј731/month, Ј35,600 owed
Credit Card Minimum Payments – Ј235/month, Ј10,600 owed
Other Debt Repayments – Ј190/month, Ј1,180 owed
Overdraft - Ј0/mth, fluctuates between Ј0-Ј1,500 owed during the course of a month

Total Outgoings - Ј2,011/mth
Net Income - Ј1,579/mth

Shortfall - Ј432/mth

So on the face of it I need to find how to save Ј432 a month at the moment and then keep paying my debts and by March 2011 I will have finished paying off my last loan.

Sounds not too bad but then I don’t envisage living with my girlfriends father for the next five years – we want to get a place of our own. In the current situation I’m not going to be able to afford a mortgage anytime soon, even if I find some way of saving Ј432/mth - to have our own place is going to cost hundreds more a month.

So what can I do to improve my situation? I could consolidate my current credit cards onto another/existing personal loan – this would only bring my monthly repayments down by around Ј50-75/mth over a 5 year term, although interest accrued would be much lower. My ‘Other Debt Repayments’ don’t accrue interest so nothing much I can do there.

So I’m thinking of an IVA as opposed to Bankruptcy at this time. However, if I get an IVA and reduce my monthly outgoings by Ј400+ that means I will have to live at my girlfriends fathers house for several years while I repay my debts. This is hardly fair on him and besides, what happens if we split up, or we want to or are asked to move out in the future? Should I just get an IVA now and worry about later eventualities if/when they occur?

But then I think why don’t I just go Bankrupt and start over. With debts totalling Ј48,880 I can imagine a lot of people would say just do it. But I am not a quitter and over the years have always tried to pay my way and won’t admit defeat easily. Plus I don’t know if I could handle the stigma/bad press/risk of losing job etc etc associated with Bankruptcy. And how long would it be before I could get a mortgage or rent again?

Any advice would be greatly appreciated.

Many thanks,

Lex

Best answers:

• Hi Lex
  I would advise you to give payplan or the cccs a call the links are at the top of the page both will be more than happy to talk to you about your situation and advise you what would be your best course of action .
• I think that, most probably, an IVA is the way to go.
  gettingitsorted has given you the best advice!
• can you post a breakdown of the £855 ..its not really possible to give a view without seeing the detail.
• Nothing to stop you moving into new accommodation and setting up an IVA then. Give Payplan/CCCS a ring and talk through your options.
• Clapton - I have detailed my current outgoings alongside what they would be if/when I get my own accommodation. I can’t reduce mobile phone costs any further as this is needed for work. My car costs are high as I travel 86 miles to work and back five days a week – after being redundant for six months this was the closest I could find a job on the salary I was on before. I swapped my gas guzzling petrol car for a diesel and now get 50mpg+ so that has saved me loads. That pretty much leaves me Ј20 a week for the odd night out/ beer in/ smoke (all of which I have cut back on drastically already).
  It’s so depressing being on a 30 grand a year job and can barely even afford to go out. I daren’t even think about what my girlfriend is going to say when she wants to go on holiday and I say I can’t afford it for the next 5 years!!
  I had a look at the Payplan site and there’s a lot of good info on there so I’ll give them a call tomorrow and see what they say.
  Thanks for your help guys.
  LODGING
  300 Board/rent
  incl in board Council tax
  incl in board Building/contents insurance
  incl in board Water rates
  incl in board Gas
  incl in board Electricity
  60 Telephone (BT and mobile)
  10 TV Licence/Tivo
  60 Food/Housekeeping (partially incl in board)
  37 Car Insurance
  11 Car Tax
  40 Car repairs/maintenance
  12 Car Breakdown cover
  200 Car fuel
  80 Social/Alcohol/Tobacco/Misc
  30 Hairdressing/medicines/dentist/laundry
  15 Internet Fees
  855 Total Outgoings
  1,151 Debts
  2,006 Total
  427 Shortfall
  RENTING
  450 Board/rent
  95 Council tax
  20 Building/contents insurance
  20 Water rates
  35 Gas
  35 Electricity
  60 Telephone (BT and mobile)
  21 TV Licence/Tivo
  160 Food/Housekeeping
  37 Car Insurance
  11 Car Tax
  40 Car repairs/maintenance
  12 Car Breakdown cover
  200 Car fuel
  80 Social/Alcohol/Tobacco/Misc
  30 Hairdressing/medicines/dentist/laundry
  15 Internet Fees
  1,321 Total Outgoings
  1,151 Debts
  2,472 Total
  872 Shortfall
• Hi Lex,
  Im sure you are taking the right course of action by contacting payplan ,they were great with me not judgemental or condeming in anyway .
  let us know how it goes .
• Hi I have just gone on a DMP with Payplan and my Wife has just declared Bankruptcy. You have not included your incomingss, but the amount of credit you are paying could by greatly reduced by a DMP. I would recommend contacting the CCCS or Payplan please believe me they are on YOUR side and will advise you or how to handle you creditor.
  LODGING
  300 Board/rent
  incl in board Council tax
  incl in board Building/contents insurance
  incl in board Water rates
  incl in board Gas
  incl in board Electricity
  60 Telephone (BT and mobile) [COLOR="Red"]could you not go PAYG on the mobile?
  10 TV Licence/Tivo
  60 Food/Housekeeping (partially incl in board)
  37 Car Insurance
  11 Car Tax
  40 Car repairs/maintenance (cut this in half!
  12 Car Breakdown cover (Unless you do 100's of mile ditch this
  200 Car fuel Where do you drive this is alot
  80 Social/Alcohol/Tobacco/Misc (I would put a bit more on your shopping budget as your creditors won't alow this.
  30 Hairdressing/medicines/dentist/laundrylaundry ??
  15 Internet Fees
  855 Total Outgoings
  1,151 Debts (Speak to cccs or payplan and get this reduced
  2,006 Total
  427 Shortfall
  RENTING
  450 Board/rent
  95 Council tax
  20 Building/contents insurance
  20 Water rates
  35 Gas
  35 Electricity
  60 Telephone (BT and mobile)
  21 TV Licence/Tivo
  160 Food/Housekeeping
  37 Car Insurance
  11 Car Tax
  40 Car repairs/maintenance
  12 Car Breakdown cover
  200 Car fuel
  80 Social/Alcohol/Tobacco/Misc
  30 Hairdressing/medicines/dentist/laundry
  15 Internet Fees
  1,321 Total Outgoings
  1,151 Debts
  2,472 Total
  872 Shortfall
  lex_1971 is online now Report Bad Post Thanks
• Hi makingendsmeet
  My car costs are high due to travelling 86 miles to work and back each day - thats 22,000 miles a year! But I do have a diesel now instead of petrol. I tried to get a job closer to home but it took me 6 months to find this job! The laundry bit is about getting my only suit (needed for work) dry cleaned once a month! In actual fact the 'Hairdressing/medicines/dentist/laundry' should be a lot higher as I need a fair amount of work doing on my nashers but have had to put this on hold!
  Lex
• i think you have seriously to consider bankruptcy. i dont really see how a DMP or an IVA is feasible for you. in any event your credit rating is going to be trashed and bankruptcy will allow you to start again.
  good luck.
• So if I go bankrupt does that mean I won't have to pay my creditors anything at all? And how long would it be before I could get a mortgage?
  Thanks
  Lex
• no, it all depends upon the details
  in bankruptcy to may be required to have an IPA/IPO ...basically an order to pay a certain amount of your 'surplus'income to your creditors for 3 years.
• I think with debts of nearly 50k it would be better to go for bankruptcy and write it all off. It would be a real relief I bet after you did it !!