IVA vs. DMP

Homegrown_Idiot

I'm on a DMP with CCCS and it's due to be paid off in about 8 years:eek: . During my last review they suggested going the route of an IVA with their new IVA section and said it would be the same payments as now but with the benefit that after 5 years anything left outstanding would be written off.

I asked what disadvantages an IVA would have over the current DMP (because I find it hard to believe the only difference is that the IVA is 3 years 'quicker') and was told that there were no drawbacks other than the IVA is less flexible than the DMP - e.g. where you can miss a payment with a DMP for emergencies you cannot with an IVA.

Does anyone know of any other drawbacks with an IVA vs. a DMP? Or indeed does anyone think this is the way to go?

Thanks in advance

firesidemaid

i have no experience of either, but just wondered how secure your job is in this current climate?

just something to consider x

Homegrown_Idiot

firesidemaid wrote: »

i have no experience of either, but just wondered how secure your job is in this current climate?

just something to consider x

No problems with the job as I work for a section of the London underground and am permanent staff rather than a contractor.

Miss_Piggy_2

I'm currently on a DMP (prob for another 6 years). I did look at IVA's but decided the criteria were far too rigid and unbending for me. I like knowing I can rejig my figures some months if needs be.
One thing to consider is that a certain percentage of your creditors have to agree to an IVA or it will not come off. As you are on a DMP and paying them already I canot see what benefit your creditors would get from you transfering to an IVA.

Miss P
xx

skintandscared_2

I posted a similar thread recently because I couldn't see why more people didn't do IVAs.

Basically what I found out was that you have to pay someone to administer an IVA, so even if you make the same monthly payment, the amount your creditors get is less because the administrator gets their cut too. If you've been on a DMP your creditors might not be happy about taking a cut...

You need the agreement of 75% of your creditors to be able to do and IVA. But bear in mind that is 75% of the AMOUNT of credit, not number of creditors. So, for instance, if you owed £40k, with £30k owing to one single creditor and the other £10k being spread around a few credit cards, the £30k creditor would basically hold the trump card as to whether or not you could go ahead. If they accepted the IVA the others would have no choice. But if they refused, the IVA would be refused. I have read that it can take MONTHS for an IVA to be accepted or refused.

If you miss even one payment your creditors can apply to make you bankrupt. And you will have potentially thrown away £1,000s in the meantime, paying an administrator.

They are the things that spring to mind. I will come back if I remember any more!!!

Homegrown_Idiot

Miss_Piggy wrote: »

As you are on a DMP and paying them already I canot see what benefit your creditors would get from you transfering to an IVA.

Miss P
xx

I must admit I was wondering why they would agree to this also.

skylight

An IVA is harsher in monetary terms. For you. Your living expenses are scrapped back to the bone - which may be acceptable to you now but most failed IVAs are due to unforeseen circumstances ie you lose your job? Tough, as the IVA want the money. Its not "pay back what you can afford", its pay back what they say you can afford.

Your creditors also may not accept your IVA proposal, leaving you in a worse position than now - there are fees attached to an IVA and even the debt charities have to charge these. If the IVA fails, your only alternative will be bankruptcy.

Its very rigid and 5 years is a long time.


I am not totally anti IVAs - they help a vast number of people. They also hinder a vast number of people and if in 3 years time bankruptcy becomes your only course of action due to the failed IVA, then all the money paid in is "lost".