IVA v's DMP

Maximillion

Hi, me again.

Apologies for the encyclopedic proportions of this post. I'd really appreciate it if peeps could read my thoughts/situation and correct my assumptions and offer advice. Briefly I'm married, 3 (soon to be 4) kids with 35 thousand unsecured debt in my name. My wife doesn't work but attends college and all are financially dependent on me.

CCCS (automatic debt remedy - haven't spoken to a councillor yet) recommends a DMP but I have issues which make me think an IVA would be preferable.

Both IVA & DMP would leave me with a tight budget but not as tight as it currently is.

Administrating a DMP would be very difficult for me as I work offshore and cannot be around to answer the door, letters, phone calls etc. My wife would bear the brunt and it's not her IVA.

IVA would see me debt free and Credit file clean in 6 yrs max. A DMP would perhaps see me debt free in a similar time frame but I'd have to wait a further 6 yrs after settlement for a clean credit file.

IVA might require equity release but my home is joint owned with my wife & currently valued 10% less than my outstanding mortgage (paying interest only). We have a car, in my name (I think). leased with 2 yrs left.

Can anyone answer the following questions for me:

My income is variable. I receive half my expected annual wage as a salary paid monthly the other half is made up from a day rate received monthly for the days I worked during that month. Consequently. I need a buffer to ensure a regular monthly payment. Is It possible to negotiate an IVA in this situation?

My car is currently leased - I'm not sure it can be proved I need it for my job but my wife undoubtedly needs it to ferry all the children about (eldest is six and we are expecting in August) Assuming I could keep the car, what happens in two years time when the lease expires?

My wife goes to college and I pay considerably for childcare to allow this. How is education/childcare viewed by creditors/IP when establishing an acceptable budget?

My status as a seafarer means in some (fairly difficult to achieve) circumstances I can claim income tax relief. If I achieved this during my IVA. How would the proceeds be split?

My mortgage is currently on a variable rate and consequently very cheap at the moment, What happens when the rates go back up? I understand you can relay changes in circumstances to your IP but how quickly does the system react? Do the creditors have to re-vote every time or is there some leeway?

Phew! ( I think that's it for now )

Wait! last but not least, has anyone taken on an IVA and wished they'd gone DMP or vice versa. I'd be interested to hear about it.

debtinfo

Why only consider IVA's and DMP's, have you lookat at bankruptcy, might be totally the wrong way to go but you should compare all the options

Maximillion

I can't imagine I'd be accepted for bankruptcy. based on my average income I have surplus to go towards debts (just not enough). I can't imagine a judge seeing a bankruptcy application in my situation as viable or as a last resort.

debtinfo

You can go bankrupt if you cannot pay your debts as they fall due, ie you cant pay the full amount each month, if you can pay something but not the full amount then they put you into an IPA for 3 years where you pay an amount, this is usually alot more flexible than an IVA,

Obviously there are other things to consider, im just saying dont discount it based on an automatic assumption find out all the facts about all the options

Maximillion

The fall out for bankruptcy reads like more than I'm willing to take on voluntarily.

Maximillion

firstcrowcounter wrote: »

The fall out for bankruptcy reads like more than I'm willing to take on voluntarily.

That said the more I read, I'm not sure it's much worse than an IVA.

jamesd

With the IVA your credit file would be clear from six years after the last of the payments made under the IVA, not in six years.

If you have the income for a DMP to clear your debts in six years there seems little reason for your creditors to agree a dividend of less than 100% with six years of payments.

Under either a DMP or an IVA most of the contacts from creditors should cease, under the DMP the people administering the DMP would be expected to be contacted, not you, though there are a few creditors who may ignore this.

Initially the CCCS suggestion seems more sensible because a DMP will be less harmful to a credit record than an IVA.

Charco_2

So wrong!

With the IVA your credit file would be clear from six years after the last of the payments made under the IVA, not in six years.
Provided you bring your IVA to a successful conclusion then your credit file would be clear six years after the START of your IVA, not six years after the end!

If you have the income for a DMP to clear your debts in six years there seems little reason for your creditors to agree a dividend of less than 100% with six years of payments.
You may indeed be able to pay down the £35k of unsecured debt over six years HOWEVER, that most likely does not include paying down the interest and charges that would accrue during your DMP (which wont accrue in a successful IVA).

Under either a DMP or an IVA most of the contacts from creditors should cease, under the DMP the people administering the DMP would be expected to be contacted, not you, though there are a few creditors who may ignore this.
To a certain extent, your creditors would be expected to deal with whichever company is running your DMP instead of continuing to harrass you - the reality is though, a DMP is an informal arrangement and most creditors will continue to pursue you for their money.

Initially the CCCS suggestion seems more sensible because a DMP will be less harmful to a credit record than an IVA
A DMP will NOT be less harmful to your Credit record! An IVA will be noted on your Credit File the month it starts. Most credit houses are lazy about registering it and you'll perhaps find that they register the IVA even a year or two late - but under the Data Protection Act you can insist that only true and accurate information is held about you so you can have it corrected back to the START DATE (Therefore your credit file would show no signs of the IVA after six years!).
In a DMP, your banks can register black marks against your name every month that they dont receive their contractually agreed payments so there will be marks on your credit file right up until the end of your DMP - which will then last a further six years!

RAS

Your credit record might be clear after 6 years but if you are ever asked if you have entered into an insolvency arrangment, which you will almost certainly be for any mortgage application, you have to declare that you enter an IVA or bankruptcy for the rest of your life.

Both are INSOLVENCY arrangments.

Charco_2

Both are INSOLVENCY arrangments
True, I dont think anyone has or would try to pretend otherwise. The IP who runs your IVA for you is an Insolvency Practitioner - fairly self explanatory!

On the other hand... you will still be able to apply for a mortgage! You can apply for one whilst IN and IVA - but you probably shouldn't! You can apply for one after your IVA when you have no more debts. Yes you might be asked "have you entered into an Insolvency arrangement?" and you'll have to answer honestly, and yes it will be considered by the lenders, and while it's not going to go on the positive side of your risk assessment it doesn't mean you'll be rejected either! LOTS of people get mortages both during and after IVAs.

So you could easily apply for a mortgage after six years!

Care to explain how a DMP would affect your ability to apply for a mortgage?
- X number of years on a DMP (during which, i doubt you'd get a mortgage)
- A further six years of all those defaults on your credit file after you've finished

A DMP wont stop you getting a mortgage either but you'll be an old man waiting for it to have no affect on your application!

Tixy

Charco wrote: »

So wrong!

With the IVA your credit file would be clear from six years after the last of the payments made under the IVA, not in six years.
Provided you bring your IVA to a successful conclusion then your credit file would be clear six years after the START of your IVA, not six years after the end!

If you have the income for a DMP to clear your debts in six years there seems little reason for your creditors to agree a dividend of less than 100% with six years of payments.
You may indeed be able to pay down the £35k of unsecured debt over six years HOWEVER, that most likely does not include paying down the interest and charges that would accrue during your DMP (which wont accrue in a successful IVA). interest and charges that MAY accrue during your DMP, in practice many of the creditors may be willing to freeze interest & charges or reduce them significantly. And in an IVA there will also be significant fees involved which would need to be considered in a like for like comparison.


Under either a DMP or an IVA most of the contacts from creditors should cease, under the DMP the people administering the DMP would be expected to be contacted, not you, though there are a few creditors who may ignore this.
To a certain extent, your creditors would be expected to deal with whichever company is running your DMP instead of continuing to harrass you - the reality is though, a DMP is an informal arrangement and most creditors will continue to pursue you for their money.
Have you been in a CCCS managed DMP Charco? do you have experience of most creditors continuing to pursue you? The evidence on this board seems to be that most creditors may send through a letter every 6 or 12months which the debtor can simply forward on to their DMP provider. Some may call for the first month or 2, but these calls can be stopped with a couple of letters.


Initially the CCCS suggestion seems more sensible because a DMP will be less harmful to a credit record than an IVA
A DMP will NOT be less harmful to your Credit record! An IVA will be noted on your Credit File the month it starts. Most credit houses are lazy about registering it and you'll perhaps find that they register the IVA even a year or two late - but under the Data Protection Act you can insist that only true and accurate information is held about you so you can have it corrected back to the START DATE (Therefore your credit file would show no signs of the IVA after six years!).
In a DMP, your banks can register black marks against your name every month that they dont receive their contractually agreed payments so there will be marks on your credit file right up until the end of your DMP - which will then last a further six years!

Charco wrote: »

Both are INSOLVENCY arrangments
Care to explain how a DMP would affect your ability to apply for a mortgage?
- X number of years on a DMP (during which, i doubt you'd get a mortgage)
- A further six years of all those defaults on your credit file after you've finished

A DMP wont stop you getting a mortgage either but you'll be an old man waiting for it to have no affect on your application!

It won't be a further 6 years for the defaults to clear. Defaults are places at a set point in time, usually after around 3months. Therefore if the DMP is expected to take 6years then the defaults will all have gone around 3months after the DMP.

Firstcrow - none of us no enough about your situation to be able to advise which is suitable, wait until you have spoken to CCCS, talk through your concerns and the possibility of an IVA. If you do decide an IVA is suitable for you, make sure you talk to a number of different IPs (including but not limited to the one associated to CCCS) so you are certain you are making the right decision.
Taking a little extra time to fully research the options and possible issues is well worth the time.:)