IVA vs DMP

chewed_2

Hi All
I will try to keep this short,im currently on a dmp with cccs,paying £300 per month towards unsecured debts of £85,000 , which will at current payment will take 20 yrs to settle. Wife Has dmp with cccs paying £100 per month towards unsecured debts of £25,000 which will also take 20 yrs to settle.I have recently enquired about an IVA and have been advised that it is a far more realistic way to become debt free. Our home value is approx £120,000 against a mortgage of £60,000.The IVA advisor ,(after going through a budget) has suggested a joint IVA with a monthly payment of approx £350. which will give creditors approx 13 p in the pound return and although the proposal would include us having to remortgage in the 5th year of the IVA,it was suggested that to obtain a remortgage in the fifth year would be nigh on impossible considering our credit score and so a 6th year would be added to the IVA. My question is,if a proposal was made to creditors and they can clearly see the equity that is in the house now, why would they accept a proposal offering as little as 13p in the pound when they could force bankruptcy ,force the sale of the house and release approx £50,000 equity (after costs) to service the debts? thus recieving approx 40p in the pound. It doesnt seem to make sense(not from the creditors point of view in my eyes.) So this makes me apprehensive as whether to propose the IVA which will alert my creditors to the equity in our home and may instigate them forcing Bankruptcy.s Should we leave well alone and remain on our dmp's? Thanks for reading.

Any Advice /Comments Welcome

milliemonster

Everything you have been advised makes sense and is correct, even regarding the equity, your creditors will not want to see you bankrupt believe it or not as there is no guarantee they would get anything, what they bank on with an equity clause is that the situation will change in a few years and you will either be able to remortgage to release equity, or your situation improves and you will be able to contribute more to the IVA through it's duration.

One thing to bear in mind though is the mortgage market is changing, there is already one lender who will remortgage for people in IVA's so in a few years it may be you will be able to do this and release equity rather than carrying on for a 6th year, would you be happy with that?

One other thing though, who on earth advised a DMP over that period of time for you???, very poor advice indeed.

chewed_2

Hi
Thanks for reply , first advice I recieved was to go bankrupt( which seemed stupid,with a lot of equity in a house that would be lost in such circumstances) advice was from cccs>

FoggyBrain_2

Stuff it ... I have been criticised for giving this advice before, but I am going to do it again! .... You really need to speak to a few IP's to gauge the advice and to see who you "gel" with in order to find a way forward.

A 20 year DMP is insane and the advice to just go BR is not much better !!!

Please visit https://www.iva.com where you will find a list of firms, with reviews, have a chat to a couple. The advice is free and impartial.

Gimpsdad

The reason they are unlikely to force you into BR is that an IVA will pretty much always give them a better return than BR. If you went Br now they would get very little in all probability as your equity would be swallowed up by legal costs, OR fees and the cost of an outside IP to act as trustee.

I am also appalled that you have received such disgusting advice from CCCS. It is hard to avoid the suspicion that they are more than happy to collect "contributions" for their "charity" for 20 years rather than give advice that is appropriate for the debtor instead of constantly acting in the best interests of their paymasters.