Just had my DMP review and been advised to switch to an IVA

giddykipper

Hi there

As above really ...... I've been on a dmp for 5 years now but still have £57k to pay off ..... which I will be paying until 2034!!!!!

So they've suggested I go down the IVA route instead.

Trouble is, my Mum and Dad are due to inherit a property, probably in the next 5 years and I would have loved to buy their place (obviously they would sell it to me as cheaply as possible), and I was hoping to use the equity in my property as part deposit and part full and final settlement on the DMP (however, I have no idea how realistic this is).

What are the chances of getting a mortgage either whilst in an IVA or just after finishing one??

I've read that I can be forced to remortgage my own home at the end of the IVA in order to release some equity but the Payplan lady said that if I don't have much equity in the property, then they won't do that ..... does that sound about right??

I owe around £65k on the mortgage and according to an online property estimator, my house is worth around £95k. How much money are they likely to want from that??

Sorry for the questions and probably for being really vague but I've only just had the chat with her (if I'd had the chat sooner, I'd probably be in my last year of paying now)!!

She said that she'd fill in all the forms tomorrow to see if I qualify for an IVA and if I do she'd get one of the IVA specialists to give me a ring at some point ..... but now I have loads and loads of questions and queries running through my head. No idea how I'll sleep tonight!

So, I'd be really grateful for any kind of advice you could give me.

:beer:

FoggyBrain_2

Hi there.

Under protocol compliant IVA's you will be expected to try to remortgage in year 5 to release equity based on an 85% LTV (which most IP's use, but not sure about Payplan).

So, on that assumption, at current values the maximum loan you could raise on a £95k property would be £80750. less the £65k outstanding, leave equity in the region of £15750.

In the current financial climate, you wouldn't be able to remortgage and therefore you would get a 12 months extension instead.

But, your guess is as good as mine as to the state of the market in 5 years. It might be possible to remortgage then, or the equity might drop below £5k, in which case it would be ignored.

At the moment you are very unlikely to get a mortgage in an IVA, it is, however, possible to get one afterward -- the longer the time lag after 6 years and the larger the deposit the better. I doubt, however, that you'd get one with a long running DMP either, as you are uncreditworthy and there will be numerous defualts on file.

I am concerned that you were advised to go into a DMP in the first place with that level of debt ( although I appreciate there might have been good reason). I would suggest you chat to other reputable firms to compare advice and to see who you gel with. You might stay with Payplan as you have a working relationship with thme, but this is a serious commitment which does need further research on your part.

giddykipper

FoggyBrain wrote: »

Hi there.

Under protocol compliant IVA's you will be expected to try to remortgage in year 5 to release equity based on an 85% LTV (which most IP's use, but not sure about Payplan).

So, on that assumption, at current values the maximum loan you could raise on a £95k property would be £80750. less the £65k outstanding, leave equity in the region of £15750.

In the current financial climate, you wouldn't be able to remortgage and therefore you would get a 12 months extension instead.

But, your guess is as good as mine as to the state of the market in 5 years. It might be possible to remortgage then, or the equity might drop below £5k, in which case it would be ignored.

At the moment you are very unlikely to get a mortgage in an IVA, it is, however, possible to get one afterward -- the longer the time lag after 6 years and the larger the deposit the better. I doubt, however, that you'd get one with a long running DMP either, as you are uncreditworthy and there will be numerous defualts on file.

I am concerned that you were advised to go into a DMP in the first place with that level of debt ( although I appreciate there might have been good reason). I would suggest you chat to other reputable firms to compare advice and to see who you gel with. You might stay with Payplan as you have a working relationship with thme, but this is a serious commitment which does need further research on your part.

I've been paying my dmp for 5 years now, could it be that at the time the advice was just different? I remember hearing at the time of horror stories involving IVA's and people losing their properties etc .... I was just grateful at the time that the creditors agreed to the dmp ..... and nothing has ever been said about an IVA since, until last night.

Would today's advice, with my level of debt to be go straight for an IVA??

Also, I'm not very clued up with this type of thing tbh. I split from my OH, had my hours cut at work, realised I couldn't afford to pay the debts, panicked and took payplan's advice, when I first started I could only afford to pay £195 p/m .... since then it went up to £275 but then I got made redundant and my new job pays less so the payments are currently £215. IVA does seem the sensible route to go down but it just seem so .... scary!!

Thanks for your reply, I'll have a ring round ...... who would you advise other than payplan and CCCS??

Thanks again

dorisday

the problem with an IVA is that if some stage you cant keep up payments maybe job loss etc you are then back to square one and with what money you have paid going for the insolvency pract. cut.
My thoughts would be for you to continue with dmp and as time goes on you may be able to put a bit aside and go for ff payments as the debts will then be old debts.
Your credit is shot in any case and as IVAs are sometimes looked upon as a form of bankruptcy my advice would be stick with the dmp.

FoggyBrain_2

The problem with a DMP is that it is informal, the creditors can start charging fees and interest anytime they like. Yes, an IVA can fail, so you do need to be comfprtable with the idea, as, unlike a DMP, it is binding on all parties. However, with an IVA you have an end point in 5 or 6 years as opposed to 43 !!!

I am afraid I cannot advise you on other companies to try, as I have already been warned off of doing this by Admin.

giddykipper

I'm not sure I feel totally comfortable with it tbh, it seems very very rigid where the dmp is not ....... and I suppose I'm still clinging to the hope that maybe one I'll be able to sell my house, offer full and final on the dmp (with hopefully a little left over for a deposit), then rent for a couple of years and try buying somewhere else down the line!?!?!

I really don't know what to do, the IVA scares me a little ..... but then so does paying the dmp until I'm 62!!!

FoggyBrain_2

At the end of the day you have to do what feels right with you. You can take some time to get genned up on all the ins and outs, at least while in the DMP you have time to think on it.

Best of luck :-)