Topic: some advice plz

[desperate dan]

hi
bit fed up this afternoon.  ive entered in to a diy dmp for debts approx 40k a couple of months ago all creditors were o.k and sympathtic to my personnel problems, i have reduced the mortgage to intrest only to help me get back on my feet and pay what i can afford on my debts. i know the day will come when i may have to enter into an i.v.a so i could clear this debt in 5 years and be totally debt free. question i would like to ask and may be steve you could answer this if i were to enter an i.v.a lets say in 6-12 months time could i put the mortgage back to repayment as long as i have between £250.00 - £ 300.00 spare to pay into the i.v.a would that be o.k. and also i know in a lot of i.v.a you may have too remortgage on year 4 1/ 2years but what lender will touch you if you have a poor credit rating and defaults against you ? i can't at the moment increase my o/d from £ 400.00 to £ 600 at the moment for a couple of months. i don't want to be in a long term dpm how ever trying to put some money aside before i enter into an i.v.a 5 years is a long time any thoughts would help 

[Steven Jackson]

Hi Desperate Dan
 
Given your debt is £40k, I would always be considering an IVA quite simply because by staying with a debt management plan, it is going to take you for ever to get out of debt. Even if you are currently paying £500 a month, it will still take you a minimum of 80 months (nearly 7 years) and that is if all interest and charges are frozen for good which is not likely.
 
However, there are a few points to consider. The first is you can only do an IVA if the equity in your house is less than your debt. How much equity do you have in your property currently and is it owned jointly with a partner or spouse?
 
In terms of your IVA payments, I agree that you would need between £250-£300 a month. If in this context you can afford to change your mortgage to repayment then you can certainly do this but you would need to do it before the IVA started.
 
In terms of the re-mortgage element of your IVA, yes you would have to agree to do this (normally at the 5th year of the arrangement). At that time, the equity in your property is reviewed and if you are able to release any, you will have to do so. Your insolvency practitioner will introduce a mortgage broker who will work with you to do this.
 
If no equity can be released, you may have to extend your payments for another 12 months to compensate the creditors.
 
Given your situation, I would not want to wait another 6-12 months before starting an IVA. You can not put money aside before you start as you would probably have to give this to your creditors. As such, the key is to make sure your expenditure budget is correctly calculated so that you have enough each month to live on and for eventualities once the IVA starts. I have done this for people I work with many many times and it does work well.

[desperate dan]

thanks steve for coming back so quickly. equity in the property aprox 15 k as regards putting money aside it wasn't to save anything i need too replace some windows in the home and now my credit has dried up i'm having to save over the next few months to put this right before they drop out. i'm going through a marriage break up at the moment but trying to salvage the relationship we have 2 small children and my wife is a stay at home mum so there is only my income. i suppose trying to hold off the i.v.a route untill i know where i am with my relationship ie may have to sell the house and secondly i have a job in the next 3 months. you seem to be an honest type of guy and i have read your posts with other people helping them along the way i presume you are I.P of sorts and set up i.v.a's if so i would like to talk to you off the record at some point. thanks

[Steven Jackson]

Hi Desperate Dan
 
Given your situation, it seems right to be cautious. You should never go ahead with an IVA until you are absolutely sure your circumstances are right. Getting a bit clearer on your relationship and job first seems to be exactly the right thing to do.
 
Given you have equity of £15k in your home and I guess half of this is your wife's, this will not cause you a problem.
 
I do indeed help people set up their IVAs and have been doing so for the last 12 years so I have a fair bit of experiance. Feel free to contact me through beatmydebt.com if you wish and I will be happy to have a chat with you.