Why choose a DMP over an IVA?????

en500cc

Why if you owe for e.g £20,000 would you enter into a debt management plan and agree an affordable fixed sum per month until the debt is repayed if you could set up an IVA for a similar amount and have a large proportion of the debt "written off". Why would a creditor "write off" such a debt under an IVA if they can see that you can afford for eg £200 per month on a dmp. Surely they just lose money left right and centre that way.

I want to get rid of my debt and am confused between the two IVA or DMP. IVA looks loads better as I pay less back???? am I right?????

icecube2009

en500cc wrote: »

Why if you owe for e.g £20,000 would you enter into a debt management plan and agree an affordable fixed sum per month until the debt is repayed if you could set up an IVA for a similar amount and have a large proportion of the debt "written off". Why would a creditor "write off" such a debt under an IVA if they can see that you can afford for eg £200 per month on a dmp. Surely they just lose money left right and centre that way.

I want to get rid of my debt and am confused between the two IVA or DMP. IVA looks loads better as I pay less back???? am I right?????

How I understand it is if you have property do a DMP, we have £46k debt & have just started a DMP with CCCs.

10past6

AN IVA is only applicable to a very, very small % of people.

This site has numerous threads from members re mis sold IVAs.

One reason for an IVA is having assets like a property to protect.

LilacPixie

IVA's are alsovery inflexible. £200 permonth may be affordable at the start but then something life changing happens, maybe illness, redundancy or even kids and suddenly you can't meet the £200. On a DMP that can be renegotiated. On and IVA it can't and your IVA would fail and bankrupsy is a very real possibility.

GeorgeUK

A Debt Management Plan allows you to negotiate a settlement with your creditors. If the amount you offer is not acceptable to them, they can take you to court for a CCJ where the judge will rule an amount you must pay them from your available income.

With an IVA, if you fail to keep up the payments, you could lose your home and be declared bankrupt. An IVA is a form of insolvency.

Miss_Marple_2

Lots of reasons, as stated above, why you would choose a DMP over an IVA. In particular if you own property and there is equity in it at the end of an IVA, your IVA payments may not be the end of your commitments

For a DMP you can either manage it yourself, and so you get total control over where your money goes, or use a non-fee paying company, where you know that all your money goes to your creditors. It maybe that when you look at how much you can afford, 5 years worth of payments would cover your debts anyway, and the amount written off would be minimal and not worth the disadvantages of an IVA ( this was my situation).

A DMP is more flexible than an IVA and easier to set up. As 10past6 says, check out the IVA sub forum for lots of stories of IVAs that have been missold or failed - it's scary stuff

Deep_In_Debt

One of the many reasons why I didn't do the IVA route is that a lot can happen in 5 years. I looked into taking an IVA in 2007 and since then I have lost my job so glad I didn't go down the IVA route in the end.

Also, as others have stated, the allowances on an IVA are very tight and inflexible. On a dmp, if you find you are in difficulty one month for whatever reason you can pay a token payment and then start again the following month, whereas with an IVA you can't. Failure of a dmp will not necessarily end in bankruptcy but failure of an IVA may.

Also, you will probably find that your first year's or so payments are paying the IP provider and not actually clearing your debts, so if the IVA does fail after a year, you will probably find your debts have not reduced at all.

If you are thinking of going down the IVA route do seek advice from one of the non-profit providers, CAB, CCCS or Payplan who are not out to make money out of you and will recommend in your interests.

Wilmot1428

I've often wondered the same - I started a DMP with Payplan in October 2005 and my account with them still says i wont be debt-free until december 2016 as I'm only paying £150 a month at the moment but this has just been reduced down from 250 a month as we moved house (rented) and other circumstances have changed etc
Ive written to all of my creditors over time asking for settlements etc but none seem willing to, so im more than happy to keep paying them all through
Payplan - albeit for a long time