IVA vs DMP.....Please help Im going demented!

scared-sick

I know no-one will ever tell me what I should do....but I really wish they would! I feel like I am going crazy with all sorts going on in my head. I cant seem to make a decision.

Here is my story and any comments would be welcome.

I started a DMP with Stepchange earlier this year, DMP-£400 = DFD 8 years time......Great. Then couple of months in and a change in my tax credits means DMP-£200 = DFD 16 years.....not so great. Now a reduction in hours at work means DMP-£120 and DFD 22YEARS!!!! OMG is an understatement.

Now here is the dilema. 22 years is pretty unrealistic I would say, however, I have worked out that regardless of what happens I should always be able to pay the £120. I am not expecting any increase to be possible unless I win the lotto!

I looked into an IVA and the light at the end of the tunnel bit i.e 5/6 years, is the most appealing bit. In order for it not to fail I would need to have the IVA amount the same as the DMP amount. However, everytime I look into it, I read something else that makes me think NO!....This time I have read that people have started off with a realistic and affordable amount but x amount of years into it their IP has said they can afford more and this has made people struggle.

So when I first started down this debt free path, the DMP was the right way for me to go. Now things have changed and 22 years seems like an awfully long time. But with an IVA it is so official and final that if I mess it up, I could be in all kinds of trouble. And if I start it off and some IP decides I can afford more when I cant, then what. It obviously is so much worse as I would have to declare it on certain forms, it could potentially affect jobs in the future, could affect mortgage applications if I ever want to move.......but 6 years and a clean slate!!!

I keep thinking I have decided what I should do then I think again.....someone please help!!!

immoral_angeluk

How much do you owe and do you have any assets? Is there any reason you didn't look at bankruptcy instead?

scared-sick

immoral_angeluk wrote: »

How much do you owe and do you have any assets? Is there any reason you didn't look at bankruptcy instead?

Hi, thanks for your reply,

I have ruled bankruptcy out as I dont want to lose my home, bankruptcy may affect my job as opposed to an IVA which doesnt and I read it costs £7000 which I dont have.

I owe £33000 and own my home which has none or little equity in it at present.

Besides bankrupcy is even more scary!! lol

Freshstart2012

Hi

I have just decided to go down the IVA route after 3 years on a DMP basically for the same reasons as yourself.
The majority of my creditors have treated me fairly and even frozen interest on my accounts, however will they continue to do so for another 14 years ? It's a big ask.

I have managed to have my IVA proposal set at the same rate as my DMP deposit, so fingers crossed it will be accepted, if not I will continue with my DMP.

As you say 5/6 years is a lot more realistic than 14 , and that 14 could soon turn into a life time if my creditors decide to start adding interest again.

I would give it some serious consideration.

scared-sick

Freshstart2012 wrote: »

Hi

I have just decided to go down the IVA route after 3 years on a DMP basically for the same reasons as yourself.
The majority of my creditors have treated me fairly and even frozen interest on my accounts, however will they continue to do so for another 14 years ? It's a big ask.

I have managed to have my IVA proposal set at the same rate as my DMP deposit, so fingers crossed it will be accepted, if not I will continue with my DMP.

As you say 5/6 years is a lot more realistic than 14 , and that 14 could soon turn into a life time if my creditors decide to start adding interest again.

I would give it some serious consideration.

Thanks,

yes with a DMP, the worry is that at some point the creditors could say they dont agree to my payments. Like you I dont want to wait and decide years down the line when they could be valuable years towards a set end date.

Can I ask why you chose now to do an IVA? did something change or did you just find the end date on the DMP unrealistic?

Freshstart2012

Hi

A couple of my creditors have started to add interest to my balances again, meaning that I am only paying 5p per month off my actual balance with no ending in sight. This made me realise that the past 3 years of interest freezes could be terminated at any time and I would be back to square one, within a few months.

I have also had the problem of creditors changing my monthly payment date without warning, meaning that my DMP payment doesn't reach the said account in time and having to explain this each month can become tiring.

UpToMyNeckInIt

Agree with Freshstart on this one. With DMP's creditors can, and do, move the goalposts. An IVA is a legally binding contract.

I nearly became a DMP victim courtesy of CCCS (before they became 'Stepchange'), and went with an IVA with a private firm, as CCCS said I was not eligible for one. The cynic in me thinks that this is because Stepchange are funded by the banks etc. (a fact they make no secret of if you look at how they are funded on their website), and that therefore they sway you towards a DMP, as that way the creditors get the most money.

Go to www . iva . com, and contact a couple of well-reviewed Insolvency Practitioners. Many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors).

If you are careful to correctly record your income and expenditure, there is no reason why your IVA should ever become un-affordable. That said, I have come across people who underestimate their expenditure and subsequently have difficulty.

To assist you regarding what is deemed 'reasonable' expenditure: All IPs make reference to the CCCS guidelines (If you want to refer to them, google:

'cccs budget guidelines report 2011'

...and there you have it - the full (and I believe, current) guidance document - free to download as a pdf. It covers every form of expenditure, right the way down to guideline allowances for hairdressing, kid's school dinners and pocket money if so required.

scared-sick

UpToMyNeckInIt wrote: »

Agree with Freshstart on this one. With DMP's creditors can, and do, move the goalposts. An IVA is a legally binding contract.

I nearly became a DMP victim courtesy of CCCS (before they became 'Stepchange'), and went with an IVA with a private firm, as CCCS said I was not eligible for one. The cynic in me thinks that this is because Stepchange are funded by the banks etc. (a fact they make no secret of if you look at how they are funded on their website), and that therefore they sway you towards a DMP, as that way the creditors get the most money.

Go to www . iva . com, and contact a couple of well-reviewed Insolvency Practitioners. Many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors).

If you are careful to correctly record your income and expenditure, there is no reason why your IVA should ever become un-affordable. That said, I have come across people who underestimate their expenditure and subsequently have difficulty.

To assist you regarding what is deemed 'reasonable' expenditure: All IPs make reference to the CCCS guidelines (If you want to refer to them, google:

'cccs budget guidelines report 2011'

...and there you have it - the full (and I believe, current) guidance document - free to download as a pdf. It covers every form of expenditure, right the way down to guideline allowances for hairdressing, kid's school dinners and pocket money if so required.

Thank you for this.

I think I have my budget sorted and as long as the IVA amount was the same or similar as my DMP amount then I could manage. I spoke to Stepchange today for a budget review and they agreed that the amount would be acceptable and something to do with a 15p in the pound (which I didnt understand) also being feasible. So on principle it looks like it would be a viable option, however when I asked if she could refer me to the IP people she said she couldnt until I had an up to date value on my house (felt a bit like a fob off if im honest as I only wanted to ask them questions)

If I were to do an IVA, do I have to provide proof of every expenditure example, insurance policies, mobile bills, proof of lunch money etc or only the ususal wage slips, proof of debts etc?
also I have a small savings account for my son, would this get taken off me to put into the IVA, it isnt much but would like it to remain?

I may ring an IVA company tomorrow and see what they say. An IVA just seems like such a big step but my DMP is unrealistic.

UpToMyNeckInIt

scared-sick wrote: »

Thank you for this.

I think I have my budget sorted and as long as the IVA amount was the same or similar as my DMP amount then I could manage. I spoke to Stepchange today for a budget review and they agreed that the amount would be acceptable and something to do with a 15p in the pound (which I didnt understand) also being feasible. So on principle it looks like it would be a viable option, however when I asked if she could refer me to the IP people she said she couldnt until I had an up to date value on my house (felt a bit like a fob off if im honest as I only wanted to ask them questions)

If I were to do an IVA, do I have to provide proof of every expenditure example, insurance policies, mobile bills, proof of lunch money etc or only the ususal wage slips, proof of debts etc?
also I have a small savings account for my son, would this get taken off me to put into the IVA, it isnt much but would like it to remain?

I may ring an IVA company tomorrow and see what they say. An IVA just seems like such a big step but my DMP is unrealistic.

I think the '15p in the pound' refers to the actual dividend that each creditor would receive if you switched to an IVA wit equivalent Monthly payments. (I know it's lower than some guides may suggest is acceptable, but I know of other IVAs offering only 8p).

Yes, your IP might want an approximate house valuation at this stage. This is because most protocol-compliant IVA's have an equity release clause. Knowing how much equity you may have will assist your IP in advising how likely this is to affect you. That said, it should not hold up the IVA process - a simple guide price from Zoopla was sufficient to set the IVA up in my case.

(Bear in mind that, however unlikely it is currently likely to happen, most IVA's require homeowners to (subject to a property valuation in Month 54 of the IVA), attempt to release equity via remortgage / secured loan up to 85% LTV to increase creditor dividend (subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons).

Concerning proof of expenditure. Providing it fits broadly within CCCS guidelines, and that you can prove it by way of receipts, bank statements etc if so required (probably only going to be worried about big-ticket expenditure), you should be able to factor them in at review time without too much hassle.

I can't see someone wanting to see all the £2.99 Greggs Bakers receipts you may rack up (I'm not saying you do - just an example!!!). But if your car running cost are higher than allowed for (as in my case), I had to prove the additional expenditure (service records, business mileage accounts etc). It got accepted though, even though it was higher than the guide 'allowed'.

If Stepchange try giving you the fob-off, shop around - at least you can do so at your relative leisure as you are already in an affordable repayment plan.

Let us know how it all goes.

scared-sick

Might try and ring payplan or someone tomorrow. I am a bit worried about ringing an actual IVA company as worried they might try and persuade me to go down that route only as it is in their interest.

I must have changed my mind a hundred times today about which way to go. Each time I think it is a definite decision, then I change my mind!!!

Here is me thinking out loud about the main pros and cons:

IVA and DMP both same amounts

IVA 6 years
DMP 22 years

IVA has maximum term
DMP has no maximum

IVA freeze interest
DMP not frozen and even if it was creditors can unfreeze at any time

IVA reduces for definite every month
DMP may go up as well as down depending on interest

IVA fresh start after 6 years wiped clean
DMP fresh start may not be until 6 years after last dmp payment

IVA legally binding
DMP flexible

IVA need to declare, may affect jobs,
DMP no need to tell anyone

IVA under scruitny by IP
DMP trust agreement and up to me to manage

IVA payments could go up at IP's discretion
DMP more or less my choice within reason

IVA once started probably will have to declare forever
DMP if I pay it off and clean up credit file, fresh start

So there you go, the dilema in my head!!

Have I missed anything major?

System

scared-sick wrote: »

Thank you for this.

I think I have my budget sorted and as long as the IVA amount was the same or similar as my DMP amount then I could manage. I spoke to Stepchange today for a budget review and they agreed that the amount would be acceptable and something to do with a 15p in the pound (which I didnt understand) also being feasible. So on principle it looks like it would be a viable option, however when I asked if she could refer me to the IP people she said she couldnt until I had an up to date value on my house (felt a bit like a fob off if im honest as I only wanted to ask them questions)

If I were to do an IVA, do I have to provide proof of every expenditure example, insurance policies, mobile bills, proof of lunch money etc or only the ususal wage slips, proof of debts etc?
also I have a small savings account for my son, would this get taken off me to put into the IVA, it isnt much but would like it to remain?

I may ring an IVA company tomorrow and see what they say. An IVA just seems like such a big step but my DMP is unrealistic.

Hi and thanks for your post.

We hope you don’t mind us jumping in; we came across your thread and wanted to help out.

It sounds like an IVA could be a viable option for you, and our IVA company provides an award winning service.

You would need to provide some proof of income and expenditure to enter an IVA, we’d also need up to date valuations of your property.

In regards your son’s savings account, we’d need more details of what this entailed at the drafting stage of the IVA proposal before we could establish whether this would be excluded from the IVA.

If you want to discuss this further you can either give us a call or you can send us a private message and we’ll get someone to call you.

We‘ve also written a blogpost about the differences between an IVA and a DMP. You might find this useful.

http://moneyaware.co.uk/2011/07/12-differences-between-an-iva-and-a-dmp/

We’ve also written a blogpost on the pros and cons of IVAs which you might also want to read.

http://moneyaware.co.uk/2011/07/iva-the-pros-and-cons-of-individual-voluntary-arrangements/

I hope this helps.

Kind regards,

Mat