IVA vs DMP advice

rubydoiwannabee

I knew that an IVA would require you to remortgage to release equity at the end of the five years.... so I guess whatever way a lump sum can be raised, an iva expects it.

RichOneday_2

I've copied a description which can explain it better than I could:

People who are in serious debt in the U.K. have the option of proposing an IVA, or Individual Voluntary Arrangement to their creditors as a means of clearing their debt whilst avoiding Bankruptcy.
An IVA will generally lasts for 5 years, over which time, monthly repayments are made to the creditors through an insolvency practitioner, but when the correct circumstances are in place, it is possible to propose an IVA that consists of just one payment.
This IVA is referred to as a 'Full and Final Settlement' or 'Lump Sum IVA'.
The circumstances that tend to favour the 'Lump Sum' IVA as an option are quite specific and not all potential IVA cases will be suitable.
Firstly, the debtor must qualify for an IVA under the normal criteria of having over £15,000 in unsecured debts which are owed to a minimum of 4 creditors.
Secondly, the debtor must have very little, if any, disposable income with which to make their monthly contributions.
Thirdly, the debtor will need to have access to enough releasable equity from a property they own, or know a third party that is prepared to introduce a sufficiently high lump sum and act as their benefactor.
Fourthly, the lump sum should be at least 25% of the total debts, plus enough excess left over to cover the costs to the creditors.

rubydoiwannabee

Thanks, I guess that is why it is not suitable for so many people.

rubydoiwannabee

Merlot wrote: »

I'm very well thanks Ruby, I'm so pleased to read your progress Ruby, you are doing a fab job in repaying your debts.

Merlot.x.

Thanks Merlot, it's a long road but I am glad to be travelling in the right direction.

Merlot

Richoneday thanks for the info.

Could I possibly ask another thick question?

If you enter into an IVA and currently have equity in the home, what happens 5 years down the line and your equity has turned into negative equity because of the housing market? Does that make sense?

Merlot.x.

RichOneday_2

Merlot wrote: »

Richoneday thanks for the info.

Could I possibly ask another thick question?

If you enter into an IVA and currently have equity in the home, what happens 5 years down the line and your equity has turned into negative equity because of the housing market? Does that make sense?

Merlot.x.

If you have a 5-year IVA with 60 monthly payments you have protected your house. Any equity won't come in to the equation unless it was part of the initial agreement. This would be unusual because the main benefit of an IVA is to protect the debtor's home.

bottom_of_the_class

Wow, I could see how supportive a group you were from searching through the forums today, but your responses are fantastic and I do feel a little more positive already - I am reading your replies out to hubby who is calming down a little now and I think that I would feel much safer with a DMP - I really don't like the element of risk involving our house that an IVA threatens to bring into an equation that is stressful enough already.

Thanks loads already to everyone

Merlot

Thanks ROD, but I'm still confused. I'm off to read Martins article again on IVA.

Merlot

bottom_of_the_class wrote: »

Wow, I could see how supportive a group you were from searching through the forums today, but your responses are fantastic and I do feel a little more positive already - I am reading your replies out to hubby who is calming down a little now and I think that I would feel much safer with a DMP - I really don't like the element of risk involving our house that an IVA threatens to bring into an equation that is stressful enough already.

Thanks loads already to everyone

BOTC, Post an SOA, and I guarantee you will recieve tons of help in reducing your monthly outgoings.

Merlot.x.

RichOneday_2

bottom_of_the_class wrote: »

Wow, I could see how supportive a group you were from searching through the forums today, but your responses are fantastic and I do feel a little more positive already - I am reading your replies out to hubby who is calming down a little now and I think that I would feel much safer with a DMP - I really don't like the element of risk involving our house that an IVA threatens to bring into an equation that is stressful enough already.

Thanks loads already to everyone

BOTG,

IVAs have many faults but their main purpose is to protect your property NOT put it at risk.

The main reason they have come into disrepute is because greedy IVA companies have pushed a lot of people in to IVAs who, without question, should have filed for bankruptcy. The IVA companies earn huge fees though so don't care about what's best for the client.

In your circumstances I would suggest they actually may offer your best route.