is there a differnece IVA & DMP

jillyflower

Hi Folks,i know this is a dumb question but is there a difference between an IVA & DMA, if so what is it.
Thanks jill

Not_so_wise_one

Yes,
A DMP is more of a gentlemans agreement from your creditors to freeze interest etc. and then you work out an affordable amount that you can pay back over x amount of years, can be anything (a friend of mine looked at one and it would have taken him around 20 years to pay off!) Sometimes however your creditors can and have decided to start adding the interest back on.

An IVA is done through a licenced insolvency practitioner and is a legally binding agreement between all parties and is usually for 5 or 6 years maximum. Fixed payments based on disposable income and then extra bonuses / overtime you split 50/50 ish (I think new protocol comlpiant ones' allow you the first 10% and then you split the remainder.

Very quick explanation, no doubt someone will add more info later.

Nargleblast

One of the advantages of an IVA is that once it is agreed then your creditors are not allowed to hassle you any more, any correspondence you get from them should be forwarded to the IVA administrators to deal with. With my IVA, should my circumstances change and I have problems with the payments, then the administrator has the authority to reduce the payments by a certain amount, but anything further would have to be put to the creditors for their agreement. And yes, anything more than ten percent over the agreed earnings amount has to be split 50-50 with the IVA company ( it's fair enough, after all it is my debt). After about four and a half years you have to look into releasing some of the equity on your home (if you are a homeowner) and if you are unsuccessful (you have to produce 2 quotes/refusal letters from banks) then your options are either get a third party to pay in a lump sum (family member usually) or extend the IVA for a sixth year. Either way it is all done and dusted in 5 or 6 years and the creditors are usually guaranteed to get back more than half the money owing in that time (the rest is written off). Your credit rating is totally stuffed for 6 years after that completion date, but would you want to be borrowing any more money anyway? A DMP is more informal but as NSWO says it can take many years to become debt free depending on what you owe in the first place. An IVA is more structured and you have to be disciplined about it because if it fails then bankruptcy is certainly a possibility (although a DMP could also fail and bankruptcy would be an option there.) If you decide to look into an IVA I suggest you talk to whoever manages your DMP as they can put you in touch with a reputable firm.

jillyflower

Thanks narglelblast, hope you don't mind but could i just get it clear that you are saying your credit rating is rubbish for 12 years with an IVA, I wouldn't want to borrow again but it affects things like renting etc which is what worries me.

Not_so_wise_one

No, it is always 6 years from the date of default. So eg. You start IVA 14/05/09, your default date is 14/05/09, the your credit record is shot until 14/05/2015.
It doesn't run while you are in the IVA and then for 6 years after you complete. Just the initial 6 years

robbies_gal

i was also wondering the differnece-iveheard all differnt reasons to do one or the other

i just dont know wot would be more suitable for me

we havent gone into arrears yet but soon will just cant afford the minimum payments anymore

ccvictim

will CAB set up dmp's?

cabbage

Generally speaking the costs for setting up an iva can run into thousands. I've known some that have charged £8k. As OP said, this is money that could be going into paying off your debts.

A DMP via CAB, payplan, CCCS is free to set up although some DMP companies (not CAB) charge the credit co's a portion of the debt to cover their costs. However, 100% of your payment goes towards paying off your debt. If the creditor is giving you hassle after a DMP is set up, refer them to the organisation who set up the dmp - you don't have to deal with this.

A DMP will take longer to pay off your debts, but at the end of the day there is something to be said of paying off all your debt yourself. If its unlikely you will pay off your debts its worth asking if the debts can be written off or perhaps look at other options.

RAS

Hi

You would be best to talk through your options with one of the debt charities listed here http://www.moneysavingexpert.com/loans/debt-help-plan#help


if an IVA is appropariate they will help you. if not they offer other options.

gabby, come over to the debtfreewannabee forum and post an SOA and we may be able to sort something out.

robert71

I struggled with this one too. There's some really big differences between the two and they both offer different pros and cons. I think you need to get some professional help deciding which is for you. I used a site called talkaboutdebt to help me work it out. Sure there are lots of other though.

DotNetter

Nargleblast wrote: »

After about four and a half years you have to look into releasing some of the equity on your home (if you are a homeowner) and if you are unsuccessful (you have to produce 2 quotes/refusal letters from banks) then your options are either get a third party to pay in a lump sum (family member usually) or extend the IVA for a sixth year. Either way it is all done and dusted in 5 or 6 years and the creditors are usually guaranteed to get back more than half the money owing in that time (the rest is written off).

Hi there, can you give any further information about the equity release part? I'm worried that I'll enter an IVA and then when the housing market recovers the equity in my house might suddenly be £20k+ and I won't be able to get the money to buy it and then i'll be forced to sell my home!

What you've said gives me hope (if I've read it correctly) that if I can't get the money to buy it then the IVA is simply extended for another year but that my home is safe?

Cheers,


Wayne