Any advice gratefully recieved on IVA/DMP

Foxy-Stoat_3

The point of the IVA is that you can only pay what you can afford, and thats worked out before you enter into the agreement. So you shouldnt ever have to miss a payment, and they wont make you BR if your a day late with a payment, normally after 2 or 3 missed payments with no communication then they can issue a certificate of non complance but I doubt you will let it get to that!

The tunnel is long but there is always light

FoggyBrain_2

Hi there. The site with the reviews is https://www.iva.com ... they have a sister site at https://www.iva.co.uk too. Always speak to a few IP's, as FavD says. don't go with anyone wanting fees upfront. And, I might add, the "charity" companies are no different from the reputable IP companies (they still get fees in much the same way -- only refer to them as donations from the banking industry! ). From your end of the process you will still be shelling out the same amount. The main thing is that you find an IP you are comfy with --- it's a five year relationship!

formidablelady

That made me lol . I like the review sites. I am going to do a lot more digging. I still think it odd that I will be paying 40200 out of £45000 back over the 5 years I thought the max it was supposed to be was 40-50% not around 90%.

FoggyBrain_2

No .. they work a**e about face .... calculate your disposable income, multiply it by 60 and that decides the amount repaid. for some the "write off" is significant, some pay 100p in the pound! Don't forget that on a debt of £45,000, the interest over 5 years would be the same again and them some, the way the CC companies charge!!! My monthly payment wouldn't even cover the interest I was being charged, so I would never have paid it all off!

formidablelady

Thats what I find weird. In some ways it is better to have more outgoings when you enter into it so you have less disposable income. For example if I was able to get a car on HP, me and my husband got contact lenses and we got mobile phones and if i was to spend what I used do on food ( I had cut back on food considerably) that would bump up my outgoings. Incidentally how many months of bank statements do they look at?

judojub

Hi formidable.
I don't know if different IPs ask for different things but mine wanted the last 3 months worth of bank statements from all the accounts myself and my OH have.

dancingfairy

Hi - I thought you might find this helpful.
A dmp is an informal arangement between you and your creditors. You work out how much you need to live off each month and then the rest is split fairly between your creditors. It is fairly flexible - if your situation changes you pay more or less each month accordingly. Yes creditors do not have to stop interest and charges although most do eventually - especially if you have the backing of one of the charities but it can be hard work to get there. They can also take you to court. There should be do fees to pay if you do a dmp through one of the debt charities. You would continue to pay until the debts are paid off.
An IVA is a more formal agreement - it is arranged through an Insolvency Practioner and is binding on both parties. They can be useful if there is equity in a property - otherwise bankruptcy may be a useful alternative. An IVA has set- fees as you are aware and lasts for a set amount of time - you have less flexibility to chop and change payments but obviously if a major change happens your IP may be able to work around it to help you complete your IVA. An Iva is like bankruptcy in that it can affect certain careers and I believe it has to be declared if ever asked about. In an IVA you are expected to attempt to remortgage at a certain point in time and if this is not possible then you generally agree that you will pay another years worth of payments.
There are pros and cons to both appraoches but you should make sure you understand exactly what you are signing up for.
I recommend a chat with one of the debt charities who can go through all the options with you and if an IVA is recommended you can then shop around to find an IP. Try phoning National Debtline or CCCS or your local CAB.
df

formidablelady

Thanks df it is difficult to decide which is better as the repayments seem to be nearly the same. I am more attracted to the IVA as I am worried about the unpredictability of the economic climate and I have a feeling that as things become more and more squeezed and all the cuts begin to bite the informality of the DMP might put you at more of a disadvantage.

FoggyBrain_2

On the expenses side --- you can't just rack up expenses for the sake of lowering your disposable income, I am afraid there are guidelines as to what is and what isn't allowed, and the relevant amounts. Creating new expense obligations just prior to going into a debt solution will be frowned upon. That said .. a good IP will ensure you don't live in poverty ! In fact I have more to spend these days than I did when it all went to the CC companies !

A major disadvantage to DMP is the informality of it all ... creditors do not have to freeze interest and / or charges, and can change their minds either way at any time. there is also the fact that many creditors sell on bad debts to collection agencies, some of whom are far more aggressive that the original creditor.

I would say, in very general terms, a DMP is better suited to those wanting a short term solution to offer some breathing space --- but long term is just too fragile.

formidablelady

I know what you mean about expenses but in order to try and meet my repayments I stopped wearing contact lenses, we gave up mobile phones etc and cut right down on food so my life now is already different so I am scared they will try to trim what I have already radically cut. Eg I would have say beans on toast every night instead of different meals with veg and meat etc and maybe sometimes not eat myself so my husband and daughter can. It just feels as if I should have left my life as it was and then they would cut probably what i have already instead of trying to cut it further. Do you see what I mean.