dmp / iva - whats the difference?

Just_Peachy

I have just completed CCCS debt remedy online and they recommend i do a dmp, please can somebody explain the difference between this and an iva? they sound very similar (sorry if i am just being stupid)

Thanks

Nick700

Good afternoon,

An IVA is a legally binding arrangement, normally for someone who owes more than £15,000, and who will take a significant amount of time(7 years +) to repay their debts based on what they can afford each month. Normally, you will pay a set sum every month for 5 years in the IVA, and at the end of this time, all your unsecured debts will be written off. In order to set up an IVA, you need the services of a licensed Insolvency Practitioner(such as CCCS), who will administer your IVA for you. While you are in an IVA, interest and charges on your debts are frozen, and creditors cannot contact you asking for payment, as the monthly payment into your IVA covers all your unsecured creditors. As it is a legal arrangement, 75% in value of your creditors who vote on your IVA must accept your IVA, in order for it to become legally binding. You can only do an IVA if you live in England, Wales or Northern Ireland.

A DMP is not a legally binding arrangement, and is most suitable when you can afford to pay your debts off in a reasonable length of time, as there is no debt write off unlike in an IVA. Creditors do not have have to stop taking legal action or freeze interest and charges, however CCCS has a good track record of this. A DMP does not involve any assets, however in an IVA, you will be expected to release any significant assets, such as your home(if you have equity) by way of re-mortgage during the IVA.

I hope that's helpful, but suggest you speak to CCCS and they will answer any questions you have and explain the reasons for their recommendation.

If you have any further questions, just post on here and we will be only too happy to help.

Nick