Going on IVA after 2 years on a DMP - any downside?

thinkpositive1

I have been on a debt management plan for almost 2 years and whilst this has given me control over finances again and I have always viewed it as positive, I am seriously considering an IVA as a better option.

I wondered if anyone had any experiences that could shed any light on whether I am missing something obvious - any pitfalls?

In a nutshell, if an IVA is agreed with my creditors I will be debt free in 5 years time and have a clear credit record in 6 years.

At the same monthly repayment levels it will take almost 16 years for my DMP to be clear !!!

I have looked into the pros and cons with some rigour and the one main thing that worried me was if under an IVA agreement, creditors would seek some £ from equity release in the 4th year of the IVA.

My house is in negative equity as it is and whilst no-one can predict house prices 5 years hence, I have been informed that even if my house is worth more in 5 years than the value of my mortgage (I have a 100% mortgage) - which will be unlikely - I would only need to find 3 mortgage lenders who turn me down for that to be sufficient to inform creditors I have no equity. My mortgage is for the best part of £190K and the value is probably no more than £170K at the mo. To get a remortgage in 4-5 years time even (optimistically) at 90% loan-to-value, my house would need to be worth in excess of £210K before there is any equity to release - possible but unlikely.

There were many other queries which I generally feel very satisfied with and wish I had gone down the IVA route 2 years ago instead of a DMP.

I know the terms of an IVA are more severe than a DMP and I will have to ensure every monthly payment is met for 60 months but I have not missed any DMP payments and so that is the same issue irrespective of IVA or DMP.

Am I missing something here as it seems obvious that in my circumstances I should be looking at an IVA as the best solution in any case?

thinkpositive1

Footnote - I have read the Guide to IVAs (are they worth it?) on here and it says that private firms encouraging IVAs do so as they make £000s from them yet I have been told mine would cost around £600 (2 months of IVA payments) only.

Advice / thoughts welcomed

lookingforthelight

Hi,

Surprised no one has been able to help (unless its all via a different forum).

Anyway, I am in a similar boat to you. I am about to start a 12 year DMP. I am a contractor in financial services and think an IVA may block me becoming permanent if the employer does a credit check. After I am made permanent I will look again at an IVA for the same reason as you - its over in 5/6 years.

The only downside I see is that you often have to declare an IVA on various application forms but I'm not sure if this is only while your on it.

I would also try to save a small rainy day fund as I'm not sure how flexible the payments are if the bioler breaks down etc.

I'll be interested to read any replies you get.

Good luck

RAS

The fees for an IVA are paid from your monthly payments and can easily be £6000 over all.

If you have no equity to release, you will almost certainly have to pay in another year's contributions.

Do you understand that an IVA is an insolvency arrangement and that your name will be on the Insolvency Register permanently and will have to be declared to any creditor if they ask, for the rest of your life?

katu

I didn't know that about an IVA!
I was thinking that perhaps once I am in a permanent job that I could look at an IVA so that it's cleared quicker but now I am having second thoughts, I will be able to pay more in a DMP once in a perm job and then it will be paid in the same time.

I would think carefully about it before you decide. Perhaps ask teh company you are doing the DMP through what they suggest?