IVA or DMP

cymonguk

I have read the great advice coming from others for similar things on here. I have been in touch with Payplan to discuss the options and they have suggested I take a DMP at 405pm to pay toward my outstanding debt of 75k for 19 years.

They have also offered the option of IVA but have suggested my circumstances would make it more difficult to sort out.

I pay my ex 550 a month towards my daughter. This is above the normal CSA guideline, I would have to drop to 410 (ignore the issue that might cause with my ex I can handle that).

I have my house up for sale at the moment. Estimate to make 22000 from it, of which I would take 15000 due to the fact that one of the loans I had was for this house (works to house). So I would take 15k and my wife 7k Once I sell I intend to rent a house instead of buying?

Now my worry is that by going into a DMP, even though they my creditors might agree to it I might be no better off in terms of stress, etc. I would probably still end up with the phone calls etc etc?

Payplan suggested going for the DMP now and deciding if I wanted to change once I had sold the house, and things were more "stable". They didnt give a figure for the IVA tbh, but felt they were really pushing the DMP?

They also said they had done research on rental prices and it would be expected to be £450 a month 1/2 mile from where I am now? I dont know where they get these figures from?? Unles sthey are assuming a 1 bed house? As I can't see anything on rightmove for that kind of price. I would need 2 beds so I could have my daughter to stay.

Is it just that my creditors are unlikely to accept the 405 a month? and maybe if I wait then I could offer a bit more ????

Charco_2

Yet another prison sentence handed down by a Debt Management Company!

If you murdered your bank manager you'd be free quicker (This is not sound financial advice however!)

Sounds like you've spoken to a very junior member of staff who plonked your details into a computer and read out the prognosis - your situation seems to have a few complications that their computer cant handle. Payplan have only two IPs (i think) and the CCCS have one according to what i read on another forum (that can't be right surely!?), with those odds, the chances of you speaking to an experienced brain would be slim!

More difficult to sort out just means someone has to put the work in on your file.

Nothing in what you have described sounds insurmountable for an Insolvency company and it would be worth speaking to one FOR FREE - do not pay money for advice! Nothing to lose really.

I certainly would not enter into a DMP for 19 years. I wouldn't even enter into one temporarily until youve spoken to another company to see your options. You'd be throwing money away. Stuff it in your mattress for a rainy day instead. An IVA certainly sounds like your better option (unless you'd consider bankruptcy after you sell the house and permit your ex to take a larger proportion of the equity release...)
A 19 year prison sentence is no option at all!

cymonguk

Thanks did wonder if there might be some sane reason? The only thing I could think of was around the equity in my property. In the sense were they suggesting I just take it spend it and then do an iva? Seems insane to me and I doubt any bank would look on that favorably?

Only other was if the banks would expect me to only take a rental property of 450? As I have said I could see nothing near me for 450 a month unless you count shared accomodation , which clearly isn't reasonable?

Where can I find advice on genuine ip? What does ip actually mean?

cymonguk

Can the creditors insist you only spend x amount on rent? Like I say Payplan were saying that the average within half a mile was 450, yet for a 2 bed flat the minimum I can see is £550, more likely £600-650 .

Or was he suggesting this just because it would be better for the creditors. i.e. if I spend 450 on rent then I would have 350 left compared to mortgage to pay to creditors?

Choo_Choo_4

I would say thanks, but no thanks to the DMP - 19 years of continuing phone calls and letters - you'd work yourself into an early grave!

So someone was able to tell you what rented accommodation would cost in your area on a 10 minute phone-call? Unlikely! They've probably been given a guideline of what can be paid out on rent in relation to your income or the likes but this is a guideline.

You will pay whatever the norm is in your area for rent. By selling up you'll free up the monthly mortgage expenditure which is bound to be more than what you'll pay renting - so why don't you look into the renting possibilities now so that the move might go through quicker when the time comes.

You hope to get £22k from the sale of the property, giving £7k to ex-wife and keeping £15k for work previously done to the house - what do you mean exactly by this? I'm presuming that you used one of the loans or something to pay for this? So are you thinking of paying off this loan or what?

If this is the case - don't do that.
This £15k would be better going into the IVA arrangement and would certainly catch the creditors attention - you should also be allowed to keep a few £ to allow for relocation costs, deposit for rental property etc ...

If you were to pay one creditor then this would be called a preferential payment - and other creditors would not look kindly on it.

So with £400 per month x 60 months and a possible £10-13k equity (if it sells for what you think) coming into arrangement that's a pretty decent offer to creditors and presumably realistic for you - this would all need to be confirmed by an IP anyways.

If your daughter comes to stay with you then this will suffice for explaining why you need a 2 bed and you should be able to continue with existing child maintenance payments provided that you can prove this by bank statements etc (sometimes a letter from other party might be requested) but I would say paper trail of money going from your account to ex-wife should suffice.

Definitely speak to one or two IPs and I think you've got the general jist at this stage that you shoudn't pay ANYTHING for advice ... have a think about things then, come back on here if you've any queries and fingers crossed you'll have made your mind up soon enough and end the sleepless nights!

IVA provide the security you need to clear this debt.
19 years (or a lifetime) of uncertainty is not an option!

Good Luck

Charco_2

Hey Cymon, IP stands for Insolvency Practitioner.

cymonguk

Yes the guy kind of phoned me at work and caught me off guward with the whole DMP thing, so I said I would think about it. After thinking about it it would be insane, and probably end up with 30years payback (I can't see any creditor accepting 19 years with no interest???).

You hope to get £22k from the sale of the property, giving £7k to ex-wife and keeping £15k for work previously done to the house - what do you mean exactly by this? I'm presuming that you used one of the loans or something to pay for this? So are you thinking of paying off this loan or what?

If this is the case - don't do that.
This £15k would be better going into the IVA arrangement and would certainly catch the creditors attention - you should also be allowed to keep a few £ to allow for relocation costs, deposit for rental property etc ...

If you were to pay one creditor then this would be called a preferential payment - and other creditors would not look kindly on it.

Yes we did some work last year from aloan which has an outstanding of 8k. It was agreed by my wife I could take the 8k out of the profit from the house and then we would split the remainder (hence I get 15k). I wasn't looking to pay off the loan with that as such, just it was a lump to be used for whatever, but I considered the £405 a month plus a lump sum from that to be a fair proposition (total value would be about 37k after the five years). The 405 is definitely affordable to me, and I could happily live with that.

To be honest I had difficulty explaining to the half wit on the phone that although I earned 2700 my actual net was 2350 after company car, company life ins, etc, but that my maint payments have to be based on the top figure (this is what I was told anyway). I dont think his computer could work that out.

I had already looked into renting previously, and had estimated that I would have to pay in the region of 600-650 for a 2 bed house. I am happy that if I save that expenditure then will share that saving with the IVA, but I am not living in a bedsit in a shared house, as that would prevent access to my daughter, in which case I might as well jack the whole thing in!! (without her I wouldnt actually mind tbh).

Choo_Choo_4

:mad: just had a reply done out and deleted it (grrr... )

So .. to start again ... if it's going to cost £600-650 for rented accommodation in your area Cymon then that's what it costs. I believe that there are guidelines in relation to how much you should be paying on rent/mortgage in proportion to your household income (maybe not more than 40%???). So if this is the case and your Gross Income is £2700, then £650 is approx 24% so no problems there ...

But surely circumstances mean that guidelines are exactly that! You'll get a 2 bed house in Middlesbrough for a lot less than the same house in London ... your circumstances just mean that you NEED a 2 bed because you have a daughter that needs her own room ...

I can't see whichever company you would go with having any problem with the fact that you will need to give your ex-wife a share of the equity from the former marital home (sure she would have a claim to it anyway and she doesn't seem to be bogging her arm in, but only you would be able to answer that ... )

I would also think that the lump sum being brought into the IVA is the best way to go and will make IVA much more attractive to creditors but make sure you insist on having some of this equity held back for relocation costs / deposit etc ...

cymonguk

Yes me and the ex are pretty amiable tbh, and she is well aware of the point about paying off the loan, we agreed early on about it. Yes she would be entitled to half the house in theory, so that is pretty standard.

Good point about asking to keep a couple of grand for the deposit, etc


Thanks for the input

Charco_2

I think you're going about this all wrong... i mean in the wrong direction.

Certainly an IVA is the better solution for you - as the DMP sounds like a prison sentence. But there are better ways to propose the IVA.

You intend to sell the house and bring in £15k - what if your house doesn't sell for that amount? In these days it wouldn't be unheard of for your house to sell for £10k less than you're expecting for example. You'll be looking at or already in an IVA when the house sells and then you'll be looking to rent... with your credit being what it is you might need to put in a bond of 6 months rent to hold the property because you're a risk... plus a months rent in advance, you might need as much as £5k re-location costs.

There could end up being very little of equity in your name being proposed to your creditors in an IVA - so you may as well continue to live in your home instead of selling up!

You could easily propose an IVA based on the monthly contributions of £400 you think you can currently afford - and if you were able to bring in anything from the sale of your home then it would be a bonus to your IVA, but if you proposed an IVA and the house failed to bring in what you promised, it would have a negative effect on your proposed dividend and could in an extreme case fail your IVA.