IVA vs DMP: yea but no but yea but..

maxkpp

This must already been discussed over and over again. But every time I made up my mind on DMP and heard someone said something about IVA, I got doubt again. Few days ago, someone rang me trying to sell them service to help sorting out my debts. He said that IVA is way better than DMP because:

- It is backed up by court whereas DMP isn’t (creditors on DMP scenario still able to court us for one and many reasons i.e not paying the debt), meaning that once the IVA approved creditors have to agree with it.
- It will only takes 5 years to clear the debt regardless for IVA whereas DMP may takes more, which mean I could save loads of money (thousands) and get back on track (credit reference back to normal, 12 months after 5 years),
- Both are affecting credit score at the same level.

He added that the reason why companies like Payplan, doesn’t encourages me to take IVA is because it is partly funded by the creditors, and they don’t qualify to give advice on IVA related matters.

Now I am fully understand that everyone got some bad and good things to say about everything, but, seriously, are those things mentioned above true? At the moment I am on DMP, and in the state of confuse. Please share your thoughts. Thanks.

mazza25

I think alot of it depends on your level of debt and number of creditors. There are more experienced people here who will tell you the differece.
Be wary though, the company that called are trying to sell you a service, they obviously deal in IVA's so want you take up one and manage it for you, therefore they will 'big up' an IVA, regardless of whether it is right for your individual service.
If you are already in a DMP, and your creditors are happy(ish) I don't see why they would try court proceedings

maxkpp

Mazza, thanks. At the moment, I got about 19000 debts from several creditors. In DMP it translates to about 7 years to clear it and obviously 5 years flat if I am on IVA. By the time I am done with DMP, I could have been back on track a year earlier. What I am trying to find out is whether the things that this guys said regardless he tried to sell his service or not, is true, so then I could do whatever suit my situation the best.

gonzo127

ha well you have to love these companies creative use of fact.

yes DMP's are not backed by the courts, however this is because it is not as serious of an action as a IVA

and yes your creditors could still take you to court to get a CCJ, however this is generally rare, as most of the time if it does go to court the judge will only order you to pay the same amount you are paying on your DMP, and sometimes will actually order LESS!

yes it only takes 5 years to do a IVA however you will have to declare an IVA for the rest of your life when asked (same as bankruptcy), and it will still be on your credit file for 6 years which is the same time as a DMP

yes an IVA can save you lots of money in the long term because a % of the debt gets 'wiped out', however if you default on your IVA the consiquences are so much harsher

just try to keep in mind that a IVA is ONLY suitable for a 5% of people, and that there are reasons for this

also if you are worried about the motives of a perticular debt charity there are others that you can contact which are funded differently, for example from my understanding christains against poverty is funded by the churchs so has no conections to the creditors, citizens advice is also not funded by the creditors

this person who called you works for a company, and as every other company it is designed to make money, and with this will offer you the solution which will make them the most money and not what is best for you, this is the reason why we always tell people to speak to a debt charity as they are not out to make money from you

Tixy

maxkpp wrote: »

- It is backed up by court whereas DMP isn’t (creditors on DMP scenario still able to court us for one and many reasons i.e not paying the debt), meaning that once the IVA approved creditors have to agree with it. this is true, you could still be taken to court, however it is not that common. The flip side is because a DMP is informal should you have a change in circumstances and need to reduce your payments (eg you lost your income) then you can do this more easily on an informal DMP rather than an IVA. If you were unable to keep up with repayments on an IVA then it is quite likely that the IVA will fail, you will have paid a lot of money in fees and may still have to consider bankruptcy.
- It will only takes 5 years to clear the debt regardless for IVA whereas DMP may takes more, which mean I could save loads of money (thousands) and get back on track (credit reference back to normal, 12 months after 5 years), IVAs sometimes go on for 6years if you have no equity to release.
- Both are affecting credit score at the same level. It depends. With an IVA you may have to legally declare you have had an IVA for the rest of your life if asked. This is not the case with a DMP.

He added that the reason why companies like Payplan, doesn’t encourages me to take IVA is because it is partly funded by the creditors, and they don’t qualify to give advice on IVA related matters. Payplan can and do advise and set up IVAs, in fact they make money out of it - they make no money from a DMP as they don't charge you a fee.

Now I am fully understand that everyone got some bad and good things to say about everything, but, seriously, are those things mentioned above true? At the moment I am on DMP, and in the state of confuse. Please share your thoughts. Thanks.

Remember as well that the majority of your creditors have to agree to an IVA. If you are currently in a DMP and they expect to get full return on their money it is quite likely that they will refuse the IVA. Also the level of debts and the amount you can afford will also affect the likelihood of them accepting the IVA. If they are going to get back 75% of their money in 5years they are far more likely to agree to it than if they are only projected to get back 40%.

Have you read this - http://www.moneysavingexpert.com/loans/pdf-iva-guide.pdf

Have you asked Payplan (and any other charities you spoke to) why they have not suggested a DMP for your situation? They may be able to explain quite specifically why they do not consider it suitable for you.

maxkpp

Cheers Gonzo&Tixy,