From DMP to IVA - good idea???

bectoria_2

I've not posted on this forum for a while now but wondered if there was anyone to give me some advice.

I've been on a DMP with payplan for nearly 4 years now, as a result of this I have 1 CCJ and charging order.
When I set up my DMP I was happy with the advice payplan gave me as it offered me a way of managing my debt however now I'm struggling to see any end to my debts as I'm looking at around 30 years to pay them off.

My debts are around £65K from my stupidity spending too much on credit/store cards etc. They are all my debts and none of them joint. At the moment I pay payplan £200 a month. On top of this I have a loan with a credit union, the repayments for this (£326 a month) are taken from my wages so when I set up my DMP I was advised to leave this seperate to prevent any risk of my employers becoming aware of my situation. There is currently about £3K outstanding on this. Obviously when this is paid off the £326 extra a month would go into my dmp but I'm still looking at over 10 years to pay everything off.

Over the last few days I have been seeking advice to find other options to pay off my debts in a shorter period of time and was considering an IVA or F&F offers. There is about £45K equity in my half of our property but I have no idea how to release this to make F&F offers. Our mortgage is currently with Coventry building society and they will not even look to increase our mortage due to my bad credit rating.

If I went onto a IVA making say payments of £550 a month is this likely to be accepted and would I be expected to release equity as well in which case I'm back to the original problem of not being able to!

Any advice please, I'm not looking for a quick fix just a light at the end of the tunnel based on real advice, I'm afraid of all the horror stories I heard about IVAs.

cheapround

Hi

We have an IVA and our monthly payments are about £530 per month, I would not hesitate to recommend this route. I was worried, like yourself, about taking one on but we are so much better off financially and have to budget every month now. If we had a DMP we would have been paying it off for the next 30 years.

With regards to the releasing equity, I cannot see how this is possible to anyone with an IVA as my existing mortgage provider would not let me have any more money anyway, I am certainly not going to pass any credit scoring! Unless you are expected to find a company who will but I would imagine they would charge a huge amount of interest and then you would end up paying less on the IVA every month.

Hope this is of some help.

Nargleblast

If you are unable to release any equity in your property in year 5 of the IVA then your IP (Insolvency Practitioner) will discuss other ways of finishing the IVA with you. I think most people opt for doing a year extra on the IVA.

Charco_2

You cant generally simply OPT for an extra years payments, it has to be realistic.

If your are expected to release around £5k of equity then you'd be far better off paying an extra year into the IVA as you'd be taking out a mortgage at a less than favourable interest rate. However if you need to realise £15k of equity then paying an extra year is not going to be an option really... however, if a friend or family member was able to step in to lend you the difference then that would also be acceptable.

If you can, then the extra year is the better option be a mile and in these days of house prices through the floor then you'd be hoping your equity levels aren't going to be massive.

bectoria_2

Me again another question.....I've asked payplan about the possibility to move onto an IVA rather than a DMP and they say its not possible based on the following.....

If I were to enter into an IVA my monthly payments would be £477 a month for 5 years (£28,620), in year 4 I would be expected to release £40K equity (even though I can't as no one will lend to me) making the total I repay to my creditors £68,620 which is more than I currently owe!

Can this be right???? Would I really be expected to release so much equity as well as monthly payments? I know payplan are supposed to be the experts but the figures just don't seem to make sense.

Any advice please?

Charco_2

Is £477 what you are currently paying towards your DMP?

Sounds like Payplan are talking out their poop-chute BUT explained a different way it might make sense to you... without the full facts and figures I couldn't possibly assume to advise but think on it like this:

You CAN of course submit an IVA Proposal that would see you paying back more than you currently owe (but obviously not including five years worth of interest)
Say you owe £50,000 and over five years, you paid back £60,000 your IP would have fees of say £5,000-£7,000 and you would have paid your creditors back maybe 106pence in the £ for example... which is pefectly fine.

I know you are looking at a DMP and thinking £477 a month off a debt of £65k is a long time (11 and a bit years) especially when Interest won't be frozen all the time (so, as you pay, the debts might not even be going down all the time) and your creditors can still write and call you demanding more money.

However the big question is this, regardless Payplan's rubbish about paying more than you owe: ARE YOU INSOLVENT NOW?
Are your creditors demanding more money from you every month than you can actually afford to pay? I fear if you have equity of around £40,000 at the minute then the answer is no!

So do you have £40,000 of equity in your property?

I would seek a second opinion first on the amount of equity and then on whether or not an IVA is a solution available to you!

PS - As regards releasing so much equity, you'd be expected to release as much as you cna afford.