Any advice - IVA vs DMP

moneysavingplumber

skintandscared wrote: »

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.

Well for me it was because I had debts that could not be included in DMP (income tax), and bankruptcy would have severely disrupted my small business. The consensus generally here will be that an IVA is never preferable to a DMP, but personally I would have considered IVA even if could have cleared my tax arrears, as I was confident I could finish it successfully and it meant it would have a definite end. The weakness as many will point out is that if your circumstances change you may find yourself bankrupt anyway and the money you paid in will be paid to the IVA company anyway, who will take their fees before paying off any of your creditors.

trudij

I took out my IVA because I changed job, and took a 1/3 pay cut to do so,makign me not able to make the payments on my debts,even after Id sold all my anything worth selling. I was confident that I coudl make my payments for 5 years, and I am still happy thats so. I have been kept in the loop with things all the way through, and apart from it taking 4 months to set up, its all proceeded as I have expected it to. Right at the begining I said I rent,and I have a cheap car thast noone would want!! I have had it all explained to me in single syllable words,and I can phone and check anything I need to whenever I want. I know that anything I get extra they have half of towards my IVA, and Im happy with that - I dont care,as in two Septembers time,it will all be finished and I can start to get on with my life again - older and wiser (I hope!!).

I dont give a hoot that BE get a big chunk of money as well - they have taken all the pressure off me and let me live again - far as I am concerned,they can have it!! The only way I will ahve to do a 6th year is if I earn too much overtime in my final year and I cant afford to give them the 50% of it at the end.

I really dont know why people have such a downer on ivas - some people do them,some people do dmps, and some people just straight go bankrupt. I was asked if I was certain I didnt want to go BR, but I want the chance to feel like i am paying back at least a large proportion of what I owe - after all - I got myself into this - its hardly cricket if I just go "ooooh - its not my fault, I cant do it - please make me bankrupt,then I can go and do it all again in three years time"..... and Im not goign to have learnt anything. This way I have HAD to get myself sorted out, and boy oh boy have i learnt my lesson...

I thought this board was meant to be to support people in an iva, the same as the rest of the board is meant to support people in whatever situation they are in. I have yet to read much in support of an IVA - all I keep seeing is people who have them being jumped on and being effectively told they are stupid for having one. They arent - they just are dealing with their problems the best way they can, but in a different way to how the critics would do it - it doesnt make it missold or stupid.

kev1980_2

trudij wrote: »

I took out my IVA because I changed job, and took a 1/3 pay cut to do so,makign me not able to make the payments on my debts,even after Id sold all my anything worth selling. I was confident that I coudl make my payments for 5 years, and I am still happy thats so. I have been kept in the loop with things all the way through, and apart from it taking 4 months to set up, its all proceeded as I have expected it to. Right at the begining I said I rent,and I have a cheap car thast noone would want!! I have had it all explained to me in single syllable words,and I can phone and check anything I need to whenever I want. I know that anything I get extra they have half of towards my IVA, and Im happy with that - I dont care,as in two Septembers time,it will all be finished and I can start to get on with my life again - older and wiser (I hope!!).

I dont give a hoot that BE get a big chunk of money as well - they have taken all the pressure off me and let me live again - far as I am concerned,they can have it!! The only way I will ahve to do a 6th year is if I earn too much overtime in my final year and I cant afford to give them the 50% of it at the end.

I really dont know why people have such a downer on ivas - some people do them,some people do dmps, and some people just straight go bankrupt. I was asked if I was certain I didnt want to go BR, but I want the chance to feel like i am paying back at least a large proportion of what I owe - after all - I got myself into this - its hardly cricket if I just go "ooooh - its not my fault, I cant do it - please make me bankrupt,then I can go and do it all again in three years time"..... and Im not goign to have learnt anything. This way I have HAD to get myself sorted out, and boy oh boy have i learnt my lesson...

I thought this board was meant to be to support people in an iva, the same as the rest of the board is meant to support people in whatever situation they are in. I have yet to read much in support of an IVA - all I keep seeing is people who have them being jumped on and being effectively told they are stupid for having one. They arent - they just are dealing with their problems the best way they can, but in a different way to how the critics would do it - it doesnt make it missold or stupid.

Excellent Post!!

I am currently going through a Scottish Trust Deed similar to the IVA and the help and support I am getting from my trustee is excellent!

worried80

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....

I'm glad its gone well for you, unfortunately for a hell of a lot of people out there it hasn't.

When I entered in to my IVA I was in a DMP which was fine, I had no problems with it until I had a phonecall from an IP who wanted to know if I'd thought of doing an IVA, he explained everything to me, and he said that it wasn't a problem that i didn't own a house, the equity release in yr 4 wouldn't affect me as i didn't own, so wouldn't have to find money, just keep paying at then yr5 it would all be over. I was in a long term relationship, thinking about getting married, and I COULD afford repayments at the time. That relationship ended in yr 2 of my IVA, and I was up a creek without a paddle, I had to pay rent on my own, ther bills on my own, i had barely enough money in my account to buy petrol to get to work, let alone food. I couldn't rent any cheaper, I had a friend move in to help out with everything, which helped, but still struggled. I wrote to my IP as soon as I realised I was in trouble, and asked them to renegotiate with creditors ( I was told this was be possible before I took out the IVA) there response? They wrote back increasing my payments byaround £50 per month, when I said I couldn't afford it, they didn;t want to know. I tried and tried, made token payments but they FAILED it and petitioned for my Bankruptcy, I am now Bankrupt and wish to god I had stayed with the DMP, as even though it would take longer to pay off at least I would have paid what I owed. I wouldn't have been in the situation I find myself in now. I went into this with my eyes wide open thank you, and i looked very carefully into it before I made the decision. I wanted to pay back my debts, and pleaded with everyone involved to stop the bankruptcy but to no avail.

I think that IVA are good for some people and do not dispute that. Yes I had a bad experience, and no I will not recommend them to anyone.

Deep_In_Debt

I think that a lot of people forget that a lot can happen in 5 years - circumstances change for whatever reason which then puts people in the position of defaulting on repayments and then facing bankruptcy having paid a lot into he IVA which the majority will have gone to the IP and not the creditors. You also have a lot more flexibility with a dmp.

As mentioned before, you are expected to release equity in your property in year 4 or find money from somewhere to give to creditors.

insider66

your solicitor friend may well be correct.
you will pay all your debt with a dmp, but will pay for just 5 yrs on an iva.
why pay it all when you can have some written off?
an iva is not only for people with property to protect, it is for anyone who doesn't want to go bankrupt.
it is recommended for people with property to protect as an alternative to bankruptcy so their property is not sold, but is just as useful for non-homeowners that don't fancy bankruptcy

insertname1981

Hi guys

My wife and i are considering an IVA due to our financial situation, but i could do with some advice. Although the company we work for will not guarantee it, it is likely that we will get a bonus (it is related to profits, so we might get something, or we might get nothing). Last year my wife got £2000 and i got £9000.

How will this get treated in an IVA, since it is not a guarateed payment?

Cheers

insider66

insertname1981 wrote: »

Hi guys

My wife and i are considering an IVA due to our financial situation, but i could do with some advice. Although the company we work for will not guarantee it, it is likely that we will get a bonus (it is related to profits, so we might get something, or we might get nothing). Last year my wife got £2000 and i got £9000.

How will this get treated in an IVA, since it is not a guarateed payment?

Cheers

your bonus will be excluded from your income with regard to your financial statement, so will not affect monthly payments, but if you get the bonus, you will have to pay half of it to your IP towards the iva

purple-pear

Hi in regard to the bonus this happened to my friend she had paid in to the iva for 12mths and then thy got a bonus and before the iva ip did the next review she rang up for a settlement figure and paid the iva off afer one year her debt was 30,000 approx paid in for 1 year and then cleared it with 11,000. She lef a couple of accounts store cards open with 0 balance etc and has now put a bit back on these and is successfully rebuilding her credit file although wont be clear for 6yrs but best thing she ever did.

insider66

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.

This is typical of some of the posts on here, it seems to be a common myth that you should only enter into an IVA if you have property to protect.

Can we all please be clear on this please, an IVA is an alternative to bankruptcy for both homeowners and tennants with no assets.

To be honest, if you own property, you are much more likely to benefit from a DMP, as you can wait until a point in the future when the value increases and remortgage or move to release equity and clear the debts. An IVA is for homeowners ONLY if the other alternative is bankruptcy.

For tennants it is siad on here many times you should not enter into one. Why??
As a tennant your IVA proposal is more likely to be accepted, as the creditors know you can chose bankruptcy and they get next to nothing with no future comeback on you if your circumstances improve.

The CCCS in particular will recommend a DMP every time, as creditors get all their money back, even if it takes 30 years. Why would anyone (apart from someone owed the money) recommend you pay your disposable income for 30 years instead of 5??

The mythical 3% of people who an IVA suits (according to the CCCS) are probably the non asset holding peolple who talk to the CCCS and then say they are not paying for so long and want to go bankrupt, THEN the CCCS will recommend an IVA so at least the creditors get some of their money.

We all need to take a long hard look at the advice given by the CCCS, and decide who it is really benefitting.