DMP or IVA?? Totally confused...and upset!

sajirv

Hi all,

I'm new to all of this so in need of abit of help!!

Me and my husband have only recently gone onto a debt management plan where we are paying £872 per month to clear debt of around £45,000 (ouch!!!). However, the company who arranged it for us have now contacted me and suggested an IVA where the payment will reduce to £424 per month.
Obviously the payment sounds appealing but I am now so confused as to what to do for the best.
Due to the nature of my husband's job he is often in and out of work...earning great money when he is working but then nothing for up 6-8 weeks! Which means the reduced IVA payment would mean things on the whole would be more managable and realistic.

I am concerned about the impact on our credit rating...any thoughts on which option is best for us in terms of this?

We are a home owner paying a mortgage and at the minute we are probably breaking even in terms of equity etc as we took out a 100% mortgage 4 years ago. We are in a fixed rate until next year when we would've liked to remortgage to a lower rate...would we be able to do this? and could someone explain about the 4th year equity release/extended IVA payments please? I though it was for 5 year only?

Any help would be great!! Thanks

debtfree2016

Hi Sajirv
welcome to the site... i suggest popping over to www.iva.com and seeking some expert advice from a few of the IVA companies. I pressume you have already spoken to your local CAB office for advice.

All your questions will be answered there is plenty of knowledge on this site, best of luck.

judojub

sajirv wrote: »

Hi all,

I'm new to all of this so in need of abit of help!!

Me and my husband have only recently gone onto a debt management plan where we are paying £872 per month to clear debt of around £45,000 (ouch!!!). However, the company who arranged it for us have now contacted me and suggested an IVA where the payment will reduce to £424 per month.
Obviously the payment sounds appealing but I am now so confused as to what to do for the best.
Due to the nature of my husband's job he is often in and out of work...earning great money when he is working but then nothing for up 6-8 weeks! Which means the reduced IVA payment would mean things on the whole would be more managable and realistic.

I am concerned about the impact on our credit rating...any thoughts on which option is best for us in terms of this?

We are a home owner paying a mortgage and at the minute we are probably breaking even in terms of equity etc as we took out a 100% mortgage 4 years ago. We are in a fixed rate until next year when we would've liked to remortgage to a lower rate...would we be able to do this? and could someone explain about the 4th year equity release/extended IVA payments please? I though it was for 5 year only?

Any help would be great!! Thanks

Hi there.
Question is how long will you be paying the DMP for? Quite a few years I would say. An IVA is a legally binding contract which you and your creditors would have to abide by. Creditors would have to freeze interest etc. In a DMP they are not obliged to do so, because of this your term could go on a lot longer.
You would need to speak to a professional with regards to your husbands job and lack of stable income. There may well be a way around it.

Your credit rating will already have been affected by the DMP anyway and in an IVA your credit file will be shot for 6 years from the date of acceptance of the IVA and remortgaging will be extremely difficult.

As for the equity clause, again this is something that ideally you would need to discuss with your chosen IP but basically, around the 54th month of the IVA you will be asked to try and remortgage to release any equity from your home. If there is equity and remortgage not possible (highly likely) then the norm would be to add another 12 months of payments to your IVA. If there is no equity or very little then it is possible that your IVA will conclude at month 60.
As debtfree has suggested, pay a visit to https://www.iva.com
Give a couple of the companies on there a ring and they will be able to help and advise you on what your best course of action might be.
Hope this has helped a little and Good Luck!

Foxy-Stoat_3

As stated, the last thing you should worry about is your credit rating as by now it will be less than rubbish.

Talk to an IVA company that doesnt charge YOU anything, I used Grant Thornton and had no issues but there are many out there....some charge you a fee each month, avoid these.

Good luck !

Gimpsdad

Be aware that ALL IVA companies charge a fee, there is no such thing as a free IVA. Even CCCS and Payplan charge commercial fees for IVA's. It is true that IVA fees are collected to the detriment of your creditors, i.e. they get less back than your total contributions, effectively funding the arrangement on your behalf, but it is to be remembered that it is you putting the money in the pot in the first place. In the event of windfall, inheritance, lottery win etc where the debt can be discharged in full during the life of the IVA then it will be you that funds the fees, not the creditors. This is very unlikely in the vast majority of cases however, but it should be stressed nonetheless. Where I do agree with foxy-stoat is to seek out a provider that will ask for no payemnts at all prior to successful creditors meeting. That way, if not approved, at least you have lost nothing in finding out.

Hope that helps.

sososilly

The way I look at the windfall situation is that if I got a windfall now, then I would pay off my debts with it. Yes, once an IVA is entered into, then the fees would also need to be paid back, but am I right in thinking that the interest on the debt will be frozen once entering into the IVA? An earlier post seems to say that is the case.

Therefore you could view the fees for the IVA in the event of a windfall in the future, as interest that would have accrued and would need to be paid should you not have entered into the IVA? On a debt of £45,000 thats a fair amount of interest.

Did that make sense?? Hope it did! I am definitely no expert so I am sure someone will correct me if I am wrong. I just wanted to let you know the way that I think about it.