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

Mamjak

adyj73 wrote: »

I entered an IVA with Pay plan 2.5 years ago and they were fully supportive. They are funded by the banks as well but they acted in my best interests at all times

I had unsecured debts of £45,000 and am paying back 22%. I kept my house - luckily for me it's in or around negative equity and likely to remain so for the 5 years of the IVA. The relief of being able to live again and pay my bills / mortgage etc was amazing

My experience has been nothing but positive

Good luck whatever you decide

As an addendum - my ex wife who left and contributed to all this mess has entered a DMP but she calculated she could pay it off in 5 years so I guess that works for her. However if a DMP is going to take 20 years plus I would seriously consider IVA or Bankruptcy

Hi, new to this so hope I've quoted properly!
We've been with Payplan for 7 yrs I think now and just been paying what we can afford each month, which is regularly reviewed by them. Most of our creditors have stopped charging interest and we dont get any grief from any of them. But as our debt is in excess of £35,000 and we only pay about £220 a month, I just dont ever see any end to this. Would an IVA be better? I have read Martin's advice and we have no equity in our house, the car is owned by DH company so cant be touched, no savings. The only thing is my DH gets a yearly bonus which we have so far used to pay for big important things like getting our garage converted as didnt have enough bedrooms when DS came along. I would really miss this if they took that away. It would be lovely to know we have an end in sight but scary that there will be no room for change i.e if DH lost his job or got pay cut.
BTW Payplan did suggest we look into it but unsure if they really give best advice.
Anyone have any ideas??
Thanks Ax


Should also say that debt is between both me and DH and as I dont work am not sure if my debt will be covered by IVA so will they consider the fact i still have to pay my debt when thinking about how much we can pay?

GD2_2

If you do your own maths you can get an idea, although the bonus is a slightly different issue and would depend on how much it is.

If you carry on with your DMP then 35000 divide by 220 gives 159 and a tiny bit, which is another 13 years on top of the 7 you have already done. Assuming all your creditors, not most, freeze interest permanently, which they don't have to do on a DMP. You have no equity, so in those circumstances you face 5 years on an IVA. If equity increases but you cannot realise equity in the final year, and it will be a condition that you at least attempt to do so, then you face another 12 months "in lieu" of equity.

The bonus is different, and you will undoubtedly lose some of it as it is only fair that you pay what you can in the timescale allocated. The way it should work is this. The first 10% over and above what you normally earn is ring fenced for you to keep without penalty, the rest is split 50/50. On a monthly basis, for example, if someone took home £1,000 normally and one month, due to bonus, took home £1,100 then they can keep the lot. £1,300 means keep the first £100 and keep 50% of the remaining £200, meaning you need to pay over £100 extra that month.

Simple example, and you can extend it to an annual basis, but I hope that is clear. As for Martins guide to IVA's, forget it, it is completely obsolete, biased and a piece of sensationalist garbage. On the flip side though, have you given any thought to bankruptcy? It isn't necessarily true that you only have IVA and DMP to choose from. Where negative equity exists, it is rare for houses to be at risk in BR, unless maybe they are second homes or buy to lets etc.

I would take advice from a number of sources, who you speak to is up to you, and I wouldn't rule out Payplan as it sounds as if it was discussed with you at the beginning, so the suspicion that they may have been more keen to collect their % each month from creditor contributions on a DMP is probably not applicable here.

Mamjak

Thank you both for taking time to give me such good advice
Will have chat with DH
So much to think about, can do your head in sometimes!
Thanks again

scared-sick

[text removed by MSE Forum Team]

I really dont mind that they jumped in, they only offer advice, no-one has to take it.

As of yet I still havent made a decision about starting an IVA.
I decided to give it 6 months to have a good think about it, see if anything changes for the better and to see how I cope with the new dmp amount as I am hoping this will be the iva amount should I go ahead with it.

If I am honest with myself, an IVA is the only practible solution for me....6 years on that or 26 on the dmp. The officialness of the iva scares me and the unknown of how it will affect me in the future.

So although it definitly is not the best way forward, but for now I am continueing on the dmp until I get my head around it all. Dont want to leave it too long though as every month I pay the dmp, I know that on the IVA, that month could be a month closed to freedom!!

nottoolate

just make sure you avoid the sharks & really poor iva firms

cambridge mcduffy (peebles)
cleardebt (morgen)
debt free direct

to name a few

UpToMyNeckInIt

scared-sick wrote: »

I really dont mind that they jumped in, they only offer advice, no-one has to take it.

As of yet I still havent made a decision about starting an IVA.
I decided to give it 6 months to have a good think about it, see if anything changes for the better and to see how I cope with the new dmp amount as I am hoping this will be the iva amount should I go ahead with it.

If I am honest with myself, an IVA is the only practible solution for me....6 years on that or 26 on the dmp. The officialness of the iva scares me and the unknown of how it will affect me in the future.

So although it definitly is not the best way forward, but for now I am continueing on the dmp until I get my head around it all. Dont want to leave it too long though as every month I pay the dmp, I know that on the IVA, that month could be a month closed to freedom!!

I think that's very wise. Take your time, research IVAs thoroughly (and pick a decent company - perhaps the most important bit of all).

At least you have the relative luxury of being in a DMP, and so presumably already paying back just what is affordable each Month.

I am sure everyone here will be around to advise as/when/if you need it.

Best of luck and keep us posted.

UpToMyNeckInIt

nottoolate wrote: »

just make sure you avoid the sharks & really poor iva firms

cambridge mcduffy (peebles)
cleardebt (morgen)
debt free direct

to name a few

...that's 3 big companies you've mentioned. Why are they 'bad'?

ClearDebt's IP (David Mond) won 'IP of the Year 2012' at the 'Insolvency & Rescue' Awards. I know that inside-industry 'pats on the back' are not everything. Even so, one would hope his firm would be one of the industry beacons with an accolade like that.

greenbrucelee

I am with payplan. Originally started out as a dmp but only two of my 8 creditors stopped the intrest. I could see straight away that this could go on for years and years and I am not getting any younger.

So payplan suggested the IVA route because of still getting intrest and the phonecalls and letters. I was on the DMP for 6 months before starting the IVA and couldn't be happier really although I am only 7 months into it.

It is extremely difficult as you will still have no money apart from essentials and what is included in your budget.

The average pay into an IVA is 220 per month from what I have read and this is what I pay but at the end of the day it will only equate to 37% of what I really owe and it will be done after 5 years instead of 20 which I think the dmp was going to take if I was still having intrest included in the payments although during the dmp I was only paying £178.

When you enter an iva the insolvency practicioner takes some money before your creditors take any. The IP for payplan is grant thorton and on my IVA the are taking £1700 I believe.

I have never had an issue with payplan they were very understanding and gave good advice. I always had their advice checked out and it was always 100% accurate and correct.

Make sure you check out every company before doing entering anything.

Remember payplan and CCS on the dmp side work with the creditors aswell as you. When on the IVA side they work with an IP and you to come to the best solution for your IVA to come to the best arrangement for all.

Luckily 6 of my creditors never even attended the creditors meeting so by default they had to agree to the IVA.

UpToMyNeckInIt

The following is a quote from another MSE forum member who apparently works for a large credit company.

Makes for interesting reading, and further deepens my cynicism of the creditor funded charities. No wonder they propose so few IVAs:

"I was given, this week, a copy of the latest Credit Today magazine, circulated primarily amongst the credit industry. I don't think you can buy it in the shops. The centre page spread is a huge advert for CCCS, boasting about how they are going to help many more people in debt. This is not going to come from ever more creditor referrals, but from massive advertising on TV, Press and internet. Where is this money coming from? Is it the millions in cash that they sit on perhaps? Let me quote a couple of lines from an advert that no ordinary man in the street/on the internet will ever see, as they will not dare publish it a newspaper,

"For those in debt distress, that means a more caring and considered approach to their problems. For UK creditors, it means the best possible help and advice for your customers. And, importantly, more debt repaid."

"With our debt management plans, all money repaid goes towards clearing the debt, None goes to us, Last year, we repaid over £312 Million to UK creditors. By referring customers to us, not the commercial sector, you're assured of better rates of debt recovery."

"Call us now to find out more on **** *** ****. If you'd like to know more about how we can help your customers overcome debt problems, and manage their debt repayments, contact us now."

This is an advert aimed solely at those creditors that do not refer directly. It blows away completely any lingering hint of impartiality that CCCS claim to have. They mention no ther solution than DMP, and are promising creditors a better return. Why? so they can earn more commission. It stinks. CCCS receive, I believe, around an 11% "dividend" or "donation" on what they collect. Meaning nigh on £3 Million per month in fees. Why on earth would they recommend anything other than DMP?"

GD2_2

not too late.

You assumedly have personal experience of these 3 poor firms? Otherwise, you wouldn't say such a thing?
Which means you have been on plans with all of them? That would make you exceptionally stupid. I doubt that very much, so it therefore follows that you make an assumption based upon no personal evidence whatever. If I am wrong then please share your experiences for all to see.

scared sick, the point you make about offering advice is truer than you can imagine. No debt advisor, not one who doesn't depend on creditors to pay their wages anyway, would ever advise anyone what to do. They all realise that only the individual can decide his/hers/their own fate. Never mind, CCCS offer advice though.

That would be a DMP then. Which pays all the wages. For a very long time.