Any advice - IVA vs DMP

10past6

Having spent months doing our research into an IVA, we eventually applied via CCCS, and were one step away from signing the official documentation, however, because:

Deep_In_Debt wrote: »

if you lose your job whilst in an IVA and you miss a payment, you could be facing BR

That part we have no control over, especially in today's current climate, and in view of that, we decided to back away from an IVA and continue with our DMP.

moneysavingplumber

Deep_In_Debt wrote: »

I've not had any hassle from creditors since May, but I'd rather deal with them than worry about being tied down (so to speak!) and not being able to live.

I think DMPs are much more readily accepted now by credit companies than they were when I was in one, therefore are a better option than they were then, provided you don't have tax arrears, which was always the fly in the ointment for me.

jack290292

I've not had any hassle from creditors since May, but I'd rather deal with them than worry about being tied down (so to speak!) and not being able to live.[/quote]


I think it depends on how many creditors you have. Some are better than others I had 13 different creditors and trying to keep up with all their letters, calls etc when I haad a DMP was a complete nightmare. Once in the IVA all that stopped. I am just speaking from my own experience.

trudij

I am now in year 4 of an IVA, have no assets, was talked through bankruptcy before the final stuff went through and I havent had any problems at all. If I get the odd letter from my old creditors,I just ring BE and they sort them out. When you first set your iva up, they go through your expenditure with you - and they have a maximum that you are "allowed" to need for each thing - (eg - there is a max of £40 a month for pet food - to cover people who have pets on prescription food or have two or more pets) I was told that if I wanted to I could claim the maximum for all my living expenses,and end up with more money for me - I didnt, though occasionally I wish i had!!
They know I have no assets - my car is only worth £1500, and I rent, so no property and its not a problem.When I rang and asked, they said that some people release equity to end it sooner - its not compulsory at all.

I dont know what happens in the final year though - ( btw - I changed jobs in teh middle, told be straight away and they were really helpful - I was lucky enough to get another job before I needed to pay them again,so it didnt matter, but I didnt get the feeling that it would have been a massive problem if it had taken a month or two) Im durrently paying the half of my extra earnings as an extra add on to my monthly payments - presumably I can do it as a lump sum at the end of my time...

anyway - just because you dont have a home to protect,dont let it put you off looking into an IVA - they arent half as bad as people would have you believe - the only people Ive ever heard bad mouth them are people who have been told they are bad,never anyone who has gone into it with their eyes open....

Julie_Ann_Smith

Sorry to be thick but what is a DMP?

fermi

Julie_Ann_Smith wrote: »

Sorry to be thick but what is a DMP?

Debt Management Plan

skintandscared_2

A DMP is a debt management plan. You can start one with companies like CCCS and PayPlan. You fill out a budget sheet and come to a figure you can afford to offer to creditors. You send that one monthly payment to CCCS or PayPlan and they divide it, pro rata, between your creditors. They also try to negotiate reduced or frozen interest with your creditors. You carry on the plan for as long as it takes to pay everyone off (which obviously can depend on whether they freeze interest or not!) But you don't have the five-year cut off that you get with an IVA, with any debt left outstanding written off.

Deep_In_Debt

trudij wrote: »

I am now in year 4 of an IVA, have no assets, was talked through bankruptcy before the final stuff went through and I havent had any problems at all. If I get the odd letter from my old creditors,I just ring BE and they sort them out. When you first set your iva up, they go through your expenditure with you - and they have a maximum that you are "allowed" to need for each thing - (eg - there is a max of £40 a month for pet food - to cover people who have pets on prescription food or have two or more pets) I was told that if I wanted to I could claim the maximum for all my living expenses,and end up with more money for me - I didnt, though occasionally I wish i had!!
They know I have no assets - my car is only worth £1500, and I rent, so no property and its not a problem.When I rang and asked, they said that some people release equity to end it sooner - its not compulsory at all.

I dont know what happens in the final year though - ( btw - I changed jobs in teh middle, told be straight away and they were really helpful - I was lucky enough to get another job before I needed to pay them again,so it didnt matter, but I didnt get the feeling that it would have been a massive problem if it had taken a month or two) Im durrently paying the half of my extra earnings as an extra add on to my monthly payments - presumably I can do it as a lump sum at the end of my time...

anyway - just because you dont have a home to protect,dont let it put you off looking into an IVA - they arent half as bad as people would have you believe - the only people Ive ever heard bad mouth them are people who have been told they are bad,never anyone who has gone into it with their eyes open....

This is a bit concerning! If you have no property to protect then you shouldn't be in an IVA. Also, how are you going to raise the funds to clear off the rest of the IVA if you have no assets?

Sounds to me like you've had some dodgy advice.

moneysavingplumber

It is only possible to raise funds to pay the IVA off early if you can present a third-party that is willing to pay in directly. They cannot give you the money as that will be seen a a windfall, which will come under the agreement.

My brother considered doing this in his IVA but his supervisor advised against it in the final year as it would have opened up a further review of his finances and may have cost him more alot money overall.

I probably would have been able to arrange an early settlement too but decided against it and kept my head down after my final review, as I'd managed to get right the way through without any increase in payments. After my last payment I just had a courtesy call from one of the directors of the IVA company saying they were getting everything ready to close it down and a few days later I received the Certificate and final report.

skintandscared_2

Deep_In_Debt wrote: »

This is a bit concerning! If you have no property to protect then you shouldn't be in an IVA. Also, how are you going to raise the funds to clear off the rest of the IVA if you have no assets?

Sounds to me like you've had some dodgy advice.

But this was one of my original questions. WHY shouldn't you do an IVA if you don't have property to protect? All it means is that in year 4 you don't have anything you can re-finance to give the creditors another lump of money. So are you saying that creditors are less likely to accept an IVA proposal if they know they don't stand a chance of clawing back a good proportion of their debt by making you refinance your property?

People just keep saying to do an IVA instead of bankruptcy if you have property to protect. I get that. What I DON'T get is why you should do an IVA instead of a DMP if property isn't an issue.

My own personal reason for finally choosing a DMP over an IVA was that 75% of the debt had to agree to the plan, it can take MONTHS to get that agreement and by that time you've already paid the IVA manager lots of money, potentially for nothing!

75% of the DEBTS have to agree - so if you have, say, 8 creditors and you owe £40k, but 1 of the creditors is owed £20k and the other £20k is spread between 7 creditors, all 7 could agree but if the 1 who owns 50% of your debt says no, then the whole IVA is rejected. On the flip side, if 75% agree then the others have no choice and have to take part in the IVA. I have 3 creditors who own about 80% of my debts, and the other 20% is spread between 5 creditors. If one of those big 3 said no, it would put the whole plan in jeopardy. I couldn't risk it.