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Do I stay with my DMP, go bankrupt or propose an IVA? Help!

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7 posts • Page 1 of 1

Do I stay with my DMP, go bankrupt or propose an IVA? Help!

Postby Boo » November 12th, 2017, 2:56 pm

Hello, I haven't been on here for a while. I have a DMP with stepchange which has been going along nicely for 2 or 3 years. When I had my review in the Spring the woman I spoke to suggested me going bankrupt or taking out an IVA. She sent me some info and I want to remain with my DMP, but at the time she was kind of pushing me which is worrying. I haven't heard anything since and hope I don't get to speak to her on my next review next Spring. Can she force me?

I still have Schizophrenia but it is well controlled now and I don't want a stressful situation that could send me backwards. Also, I am now in a battle with breast cancer, COPD and heart problems, and my bowel died and had to be removed and I now have a colostomy, plus I will be 70 next year so am trying to take care of myself, and the last thing I want or need is stress.

My debt started at about £18,000 and is coming down well, plus I have been able to clear 3 debts on my own.

I have my state pension and guaranteed pension credit coming in and I pay stepchange £100 a month by DD. My PIP isn't taken in consideration because it is used for my carers, cleaners and all things to do with my disabilities, which is what it is for.

Any advice would be welcome.x
Boo
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Debtwizard » November 12th, 2017, 7:22 pm

Hello Boo and welcome back to the DebtWizard IVA and debt help forum.

Sorry to hear you have not been well and trust you are now more comfortable.

No one can force you to do anything, if you want to remain on your Debt Management Plan (DMP) then it is your decision.

That said StepChange, like any other regulated debt advice agency, has to conduct reviews with you to see if an alternative would suit you better. I understand from your post they are 'suggesting' you look at either bankruptcy or an Individual Voluntary Arrangement (IVA)

Without seeing all the paperwork, figures etc I am unable to comment on what is best for you, but I may be able to help you decide if I have a little more information.

Q. How much is left on the DMP to pay back?
Q. Do you own your home?
Q. Do you own a car? If so how much is it worth, roughly?
Q. Can you comfortably afford the £100 per month into the DMP? What I'm looking for is if you find this a struggle to meet each month due to other ongoing costs.

Thanks Boo,

Best wishes,
Mike
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Boo » November 13th, 2017, 1:10 pm

Thank you Mike.

I would have to look up the exact figure that is left but I estimate it at around £14.000 to £15.000.

No, I don't own my own home, I'm with a housing association.

I don't own a car anymore, it died.

Yes, I can afford the £100 pr. month comfortably.

I can understand StepChange suggesting other options. I told the lady I am happy with my DMP. My debt is going down and my personal finances are ticking over comfortably and I can afford what I need (rather than what I want as I used to!). Other than my DMP I don't owe a penny to anyone. This feels good and I feel in control at last, and I don't want any big changes, or feel I am being forced into them.

Would doing my next review online be of any help as I don't hear too well on the phone and can get confused?

Regards, Boo
Boo
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Debtwizard » November 13th, 2017, 6:50 pm

Hello Boo

Thank you for your additional information.

If you are paying £100 per month on debts pf £15,000 (provided interest and charges are stopped) then this will take just under another 13 years to clear. This is why I feel StepChange has made contact and offered you an alternative.

The alternatives that I can see from the information you have posted are;

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a process of clearing your unsecured debts such as, credit and store cards, personal loans, payday loans, bank overdrafts and mortgage shortfall following house repossession.

Your IVA provider will work out what you can afford to pay each month. Once approved then all interest and charges will be stopped and you are protected from any legal action from those lenders that feature in your Individual Voluntary Arrangement (IVA).

Any fees should come out of your monthly payment and not on top fo the £100 you are paying into the DMP. IVAs usually last five years and all debts left after this time are written off provided you finish the arrangement.

You may also find the following helpful in understanding how IVAs work.

What is an IVA?
IVA pros and cons
IVA information & advice this covers procedure and IVA fees as well.

Debt Relief Orders (DROs)

Another option that you might be eligible for is a Debt Relief Order (DRO)

Debt Relief Orders (DROs) became available on the 6th April 2009 and is a form of insolvency for people that have a certain amount of debt, little disposable income and few assets.

The DRO will help to place the least complicated debt discharge cases on a fast-track through the court system with no personal appearance at court required.

The DRO can be completed with StepChange for a fee of just £90 and after 12 months you are debt free.

This is why I wanted to know if you could really afford £100 per month as to qualify for a DRO you have to be only able to afford under

What are the requirements for a Debt Relief Order?

The debtor's total unsecured liabilities must not exceed £20,000
The debtor's total gross assets must not exceed £1,000
The debtor's disposable income, following deduction of normal household expenses, must not exceed £50 per month
The debtor must be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales
The debtor must not have previously been subject to a DRO within the last 6 years
The debtor must not be involved in another formal insolvency procedure at the time of application for a DRO.

In my view it all boils down to your disposable income, becasue if it is below £50 then the DRO would be a serious option for you, remove all the ongoing stress of the next 13 years with the DMP and be over in 12 months if there is no change in your circumstances.

Trust this helps.

Best wishes
Mike
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Boo » November 14th, 2017, 12:19 am

Thank you Mike.

What is meant by disposable income? Would a DRO take my PIP into consideration even though it is used for my disabilities?

And, what does assets cover besides a house and car. Would it include jewellery and cameras? I hope this doesn't sound silly. My jewellery is to be passed to my granddaughter and is kept in a safety deposit box at a bank.

I am comfortable with the £100 a month with the DMP.

Another worry would be, if my ex husband passes before me he will leave me his house. Of course, I hope that will be many years away, but you can't predict life events.

I'm not sure of a DRO but I will read up on it, and also the IVA. My review is not until next Spring. Also, I run my bank accounts well and all of my bills are paid by direct debit so I don't have to worry about bills coming in if I am away from home.

On a morbid note (sorry), what would happen to my DMP if I died before it had ended?

Regards, Boo
Boo
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Debtwizard » November 14th, 2017, 12:09 pm

Hello Boo

Disposable income is the term given to how much you have left over after paying for essential expenditure, in your case it has been determined by StepChange as £100. This figure is then the amount you pay into the DMP. If the disposable was £60 then the DMP would be £60 per month.

Personal Independence Payment (PIP) payments when you have debts

Personal Independence Payment (PIP) are meant to cover the extra costs you have because of the disability.

You have two options of dealing with PIP payments when you have debt options but both will end up with the same result.

First option

Don't show the PIP payments as income on your income & expenditure form. If you do this then also don't show any extra expenditure you have in dealing with your disability.

Second option

If you do include the PIP as income then detail the expenditure you have to cover this. For example you receive £250 PIP per month then list the expenditure you have showing you spending this money.

Re assets, what you feel is worth something may not be agreed by someone else. In a forced sale scenario you have to look at a percentage of the value. For example an item of clothing costing £100 but used may only be worth £10. It will be a higher sum for say jewellery or a camera but remember it is used and therefore will be reduced in value.

Re the ex house. If you inherit the property whilst in an IVA then the property becomes an asset of yours and may well be investigated further with a view to being sold to raise money for your creditors. Remember an IVA runs usually for five years.

If this happens in a DRO scenario during the 12 month period then the DRO will become null and void.

What happens if I die during the Debt management Plan (DMP)?

When someone dies the death is advertised in numerous publications, any debts still outstanding can be claimed on the estate, the estate is the name given to the value of your assets, savings, life cover insurance etc. For example if your estate was worth £100,000 then creditors could enter a claim on the estate. If the estate was of very little value then creditors would only receive what is left after funeral expenses and crown debts.

Your family or friends are not responsible for paying your debts, the only exception to this is if any of the debts are in joint names, then the full balance would fall onto the other named person to pay.

I trust this helps, this must be a worrying time for you and trust what I have posted has helped somewhat.

Best wishes,

Mike
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Re: Do I stay with my DMP, go bankrupt or propose an IVA? He

Postby Boo » November 14th, 2017, 2:34 pm

Thank you Mike for explaining the things which were worrying me so clearly.

I didn't realise that I didn't have to include my PIP in my income, though I have always made it clear that this money has to be used for my disabilities, which is what it is for really.

I am going to take a break from money issues for a while and let my mind settle. But I will keep in touch as to what I decide to do and how I get along with that.

Thanks again.
Boo
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