Will I be better with IVA in long run or paying slowly?

squirreltop

I realise an IVA can cut down the payments and limit the period to 5 years.

My situation is that I can continue to pay off my debts on accounts that have frozen interest and payments according to means over the next 6 to 8 years with income and ad-hoc future lump sums I am prepared to do this.

However, I have been told an IVA repairs the bad credit record after 5 plus 1 (6 years total) from its start date and you can start to build up the record again. In contrast, will my plan to take time in paying the debt off in full mean I have to wait another 6 years after these debts are discharged i.e. in 12 to 14 years for this to happen???

I would rather take the repsonsibility for my debts, but I might think twice if I (and by extension my familly) are actually penalised (relative to an IVA) for doing it.

Or am I mistaken?

Can anyone advise what the situation is? Thank you

lexie2005

Hi there, I am not aware that an IVA repairs your credit history at all else I am sure more people would want to take them. There was a post possibly a sticky that shows you how an IVA works on your credit history that may help you understand it better......

Rabbit-in-headlights

Hi sqirreltop,

sadly you are correct - bankruptcy and IVA stay on your credit file for 6 years from when they start, so for an IVA that's 1 year after it is completed (assuming it completes in 5 years).

For a DMP, where you pay the entire balance off, the black mark stays on your record for 6 years after final settlement of the debt.

Most people on DMP's (check out the DMP Mutual Support thread on the main DFW board) accept this on the basis that they don't ever want to obtain credit again anyway. The main impact though would be on a mortgage - you would probably still be able to get/renew a mortgage but the interest rate would be higher.

The other issue with a DMP is that some creditors won't totally freeze interest or charges, although after a few months (so I'm told) they usually settle down. And because there is no legal protection, your creditors can change their mind about accepting your reduced payments at any time.

On the positive side, you do have the satisfaction of repaying all your debt, and DMP's can be more flexible than IVA's, so if your income falls for any reason you can renegotiate.

Personally I have just started a DMP (October) - about half my creditors have frozen interest so far, I remain open-minded about how long the DMP will last if the others don't do the same, or at least reduce the interest to less than my monthly DMP payment. If that doesn't happen then I will look again at a possible IVA (I was advised by CCCS that because I should be able to repay my debts in full on an DMP in about 6 years the creditors were unlikely to accept an IVA, where they would not get the full debt cleared).

For now I am being patient and hopefully I will be able to continue on the DMP. If the balances are increasing due to interest exceeding my repayments I will have to take more drastic action!:eek:

Hope you find this useful, keep posting and let us know how you get on!

Rabbit