Advised to go for a DMP - would I be better with an IVA?

dafadau

Hi,

I've been advised by CCCS to go for a DMP as opposed to an IVA.

I owe:

Credit Card £4,600
Credit Card £18,300
Personal Loan £13,600
Personal Loan £3,541
Overdraft £2,400

The DMP would be for £579 a month and take 6 years and 4 months to pay off. The DMP appeals as there's the possibility I could pay off more whenever I can (work bonus etc). However I currently live alone, and pay high rent - £1200, I'm hoping my girlfriend can move in soon ( we live opposite ends of the country and she's looking for a job here atm). I'm worried that that could stop me getting an IVA.

On the other hand I'm very worried about my creditors not freezing interest or taking court action or destroying my credit rating.

Any advice would be gratefully received!

Charco_2

That's the gamble!

Your DMP will last 6 years four months IF your creditors freeze interest and charges... which is unlikely, the charges will stop and start many times during your DMP.

An IVA will last 5 years (posssibly 6), once agreed and you'll know when the deadlines are... no guesswork.

Either way, your credit rating is going to be shot to pieces but if you cannot afford your debts properly now then it's going to get shot to pieces sooner or later anyway.The IVA would actually do less damage arguably.

Did you ask the CCCS why they did not feel an IVA was for you?

EDIT: Don't understand your edit - what would stop you getting an IVA?

dafadau

Thanks for replying!

The edit was to address the point that "living expenses must be reasonable".

I haven't spoken to CCCS yet, I've just used their tool to see what they'd recommend. Thought I'd get some advice on here to be go in fore-armed when I speak to them shortly.

An IVA would be a preferred option for me then you think?

Charco_2

I couldn't possibly recommend but given the information you've laid out so far then it's what I'D prefer... some others on here might suggest that you should just go bankrupt but provided you understand each of the available solutions then it's up to you!

No, i understand that bit of your edit... but it puzzles me that people think that that would be a problem! Obviously your creditors might stipulate that you should move to more affordable accommodation and bring in any difference to your arrangement but the reality is that your rent/mortgage is what it is! Are your creditors going to ask you to buy own brand bread and toilet paper?

If you can find accommodation much cheaper then would you save enough money to avoid a DMP or an IVA altogether?

dafadau

I'm stuck in the accommodation my job arranged for me for another (just under) 2 years, but I could either get a flatmate or hope my girlfriend gets move on! Obviously the latter would be better.

An IVA seems a far more "cast iron" solution from what I've read so far...

EDIT: Have now booked a financial assessment with Payplan also to discuss my options

Charco_2

Good luck Dafadau, come back to discuss their suggestions. If they suggest DMP ask why not IVA and viceversa! Get them to run through Bankruptcy too (even if you're REALLY not considering it - you should know your options!)

dafadau

Will do - thanks for the advice!

Chris_1066

I'd def go for the IVA. I was persuaded not to go for an IVA (by CCCS) and I really should have gone for an IVA from the outset. Hindsight is a great thing however I've paid £4k into a DMP and am now looking at a one off IVA of (potentially) £15k. The £4k DMP payments count for nothing although they have reduced the total amount. It would have been more cost effective to do the IVA.

As I'm a company director I was worried about the possible problems an IVA could cause however its still better than bankruptcy. As mentioned above an IVA lasts 5 years and your credit history is going to be trashed either way.

p.s. I have a concern that the CCCS (whilst very helpful) are a bit too keen to promote DMP's ... or am I being a cynic ?

brokeinyorkshire

I was with CCCS for a while and they never mentioned an IVA.

I am now in the process of switching to Payplan and they have said from the outset that an IVA would be a better option for me.

I think it could be to do with the amount of disposable income i have as i only have around £200 per month and it would take forever to pay a DMP off.

Slightly OT but i am also changing because CCCS classed ny DLA care allowance as income and it isn't. its for my care needs. Payplan take it into account as being for my care needs. Makes sense for me.

Good luck with it whatever you decide as its never easy.

dafadau

The attraction of a DMP for me is that it offers flexibility.

In particular, after another 2 years I'll have paid off my student loans and can increase payments quite a lot then (~£300 more). I also play to pay in various bonuses etc that I receive. I'm very worried about the interest still being applied though.

As I mentioned I'm going to speak to payplan tonight to see what they recommend.

Charco_2

An IVA is not as inflexible as people would have you believe.

Although, if you're looking to pay more then why would you bother in an IVA? If the IVA is agreed, then all you'd have to do is maintain your agreed monthly contributions and you'd know that when your five years is up that you're done.

In the IVA, I don't think you would have to pay in ALL of your bonuses... it would roughly be a 50/50 split between you and your IVA, in the DMP wou could pay it all in and still be paying and paying long after your IVA has gone away!