DMP or IVA

debtmummy10

after meeting with CAP last week they have suggested that with my disposable income of £300 ish pounds per month it will take nearly 8 years to pay off the debt with a DMP and that is if IF the creditors agree to freeze interest.
Surley it would be better to go into an IVA???
if I understand correct it will take 5 years to pay off the IVA and then 6 years to clean up my credit file so 11 in total but will take 8 years to pay off DMP plus 6 years to clean up file so 14 years????
im confused as to what is best.
they have said ultimately it is my decision and they wont advise either way but will advocate for me whichever i choose??
what do you all think is best?? :huh: :huh:

Depth_Charge

debtmummy10 wrote: »

after meeting with CAP last week they have suggested that with my disposable income of £300 ish pounds per month it will take nearly 8 years to pay off the debt with a DMP and that is if IF the creditors agree to freeze interest.
Surley it would be better to go into an IVA???
if I understand correct it will take 5 years to pay off the IVA and then 6 years to clean up my credit file so 11 in total but will take 8 years to pay off DMP plus 6 years to clean up file so 14 years????
im confused as to what is best.
they have said ultimately it is my decision and they wont advise either way but will advocate for me whichever i choose??
what do you all think is best?? :huh: :huh:

Hi

Interesting from CAP

Hard to realistically comment on the limited information you have provided here.

Have they given you advice on other options including bankruptcy?

Have you any potential PPI claims?

Have you tried talking to another free agency for a second or even third opinion?

Could you put up more details including SOA & CAPs calculations maybe?

Best Wishes

debtmummy10

Depth_Charge wrote: »

Hi

Interesting from CAP

Hard to realistically comment on the limited information you have provided here.

Have they given you advice on other options including bankruptcy?

Have you any potential PPI claims?

Have you tried talking to another free agency for a second or even third opinion?

Could you put up more details including SOA & CAPs calculations maybe?

Best Wishes

im not happy putting my SOA on here really, £324.00 is what CAP say I have for debts each months, they have not advised bankruptcy or DRO as the debts are 17, 890 i cant do DRO anyway.
I just figure that is the DMP is over 5 years it would be better (and less damaging to my creditfile in the long term) to go for an IVA. I dont want more credit cards etc but as I have said in previous posts these debts are from when i left my ex and as i fled to a Womens refuge these debts have started small and just multiplied since then in charges and interest, i want it to be over ASAP so I can move on and eventually (in 10 years or so) be able to get a mortgage.
maybe thats wishful thinking on my part.:cool:

Depth_Charge

debtmummy10 wrote: »

im not happy putting my SOA on here really, £324.00 is what CAP say I have for debts each months, they have not advised bankruptcy or DRO as the debts are 17, 890 i cant do DRO anyway.
I just figure that is the DMP is over 5 years it would be better (and less damaging to my creditfile in the long term) to go for an IVA. I dont want more credit cards etc but as I have said in previous posts these debts are from when i left my ex and as i fled to a Womens refuge these debts have started small and just multiplied since then in charges and interest, i want it to be over ASAP so I can move on and eventually (in 10 years or so) be able to get a mortgage.
maybe thats wishful thinking on my part.:cool:

Hi

Yes, fair enough & very understandable

I had not read your previous posts.

You are over the eligibility limit of £15000 & on the monthly disposable income rule as far as a DRO is concerned

Bankruptcy could be an option but not knowing your full circumstances it would be impossible to comment further on this, strange though that CAP dont seem to have advised on this.

IVAs can be a long time and things can and do go wrong (trust me I deal with failed and failing IVAs on a regular basis with many of them ending up going bankrupt anyway)

Fully understanding the pros and cons of all solutions available is the name of the game and what is best for you with affordability & sustainability the key.

The SOA affairs may have been interesting as I have seen a few that have had a somewhat different complexion shall we say after advice from another independent agency with no financial interest in debt solutions.

Maybe try the CAB or National Debtline for a confidential second / third opinion.

I cant really say anymore other than genuine best wishes and hope things turn out well for you.

UpToMyNeckInIt

Hi Debtmummy10,

Always difficult to advisen ot knowing your exact circumstances.

I assume that you have exhausted more conventional solutions eg: a debt consolodation loan. This would be the least damaging to your credit file.

However, if you have no significant assets (eg: your own home, expensive car etc.), and assuming it would not affect your employment, then if I were in your position, bankruptcy is worthy of consideration. That way everything is done and dusted immediately, or in 3 Years, and would be your quickest solution.

A DMP is also viable, but my problem there is that, due to the informal nature of the arrangement, creditors like to move the goalposts eg: by increasing interest etc. That said, you can be more flexible about your repayments. Realistically though, factor in 8-10 Years to pay it off.

Option4 is the IVA. This is purely my opinion, speaking as an IVA customer:

You are right to thoroughly research the subject of IVAs. Please consider the ramifications before entering one - speak to a few providers to see if it is the right option for you. Remember, just like bankruptcy, it is a form of insolvency, which in turn puts all sorts of restrictions on everything from the ability to open a bank account, or even get a mobile phone on contract.

I only went down the IVA route as I had no real option after an unexpected change in financial circumstances. That said, I am 9 Months in, and can sleep at night not worrying about debt.

Initially seek advice from the ‘charity’ organisations, but don’t be afraid to approach a private firm if they don't think you are eligible for an IVA.

Google ‘insolvency practitioner reviews’ and contact a couple of well-reviewed Insolvency Practitioners. Contrary to what some might have you believe, many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors). In fact, even charity organisations such as 'Stepchange' farm out many of their IVA customers to Grant Thornton.

The following link to Stepchange, gives a brief ‘iva pros & cons’ guide though which is a useful starting point:

http://www.stepchange.org/Debtinform...osandcons.aspx

Google ‘Straightforward Consumer IVA protocol’ which the vast majority of new IVAs are compliant with, much of which will form the basis, word-for-word of you IVA agreement. This should direct you to a link to download the pdf document. Well worth a read.

Similarly, you will have to work out your income and expenditure. Whatever is left over is your IVA payment. Regarding what is deemed 'reasonable' expenditure, google: ‘CCCS Budget Guidelines Report 2011’. All IPs that I’ve come across make reference to this. Download the pdf.

(There is a newer version, but I cannot find a link to download it. I believe the 2011 document was effective from October 2011, and used in my IVA implemented in August 2012).

However, even if the figures are a little off, it is well worth a read, as it covers every form of expenditure, right the way down to allowances for hairdressing, kid's school dinners, meals at work, even hobbies etc if so required.

If you are careful to correctly record your income and expenditure, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure (in the mistaken belief that their IVA will more likely be accepted), and subsequently have difficulty from day one. Don't fall intothat trap.

Equity release (if applicable): 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 up to 100p in the £. (Subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons). For most, equity release is not possible, so your IVA goes on for a 6th Year instead (which usually works out a lot cheaper). But who knows what the economic climate will be like in 4-5 Years time?

Bank Accounts: If any of your debts are with your existing bank, you need to open a full current account with a non-creditor institution now! (less overdraft of course). Best not to reveal that you are considering an IVA though (no requirement to volunteer such information).

Important to do this before you are on the insolvency register, as you will then probably be limited to a handful of basic accounts.

DO NOT switch to HSBC/First Direct: when they find you on the insolvency register, (which they will), they will make you close your account.

Enough for starters!!!

You have options though. Good luck with whatever you decide to do.

debtmummy10

UpToMyNeckInIt wrote: »

Hi Debtmummy10,

Always difficult to advisen ot knowing your exact circumstances.

I assume that you have exhausted more conventional solutions eg: a debt consolodation loan. This would be the least damaging to your credit file.

However, if you have no significant assets (eg: your own home, expensive car etc.), and assuming it would not affect your employment, then if I were in your position, bankruptcy is worthy of consideration. That way everything is done and dusted immediately, or in 3 Years, and would be your quickest solution.

A DMP is also viable, but my problem there is that, due to the informal nature of the arrangement, creditors like to move the goalposts eg: by increasing interest etc. That said, you can be more flexible about your repayments. Realistically though, factor in 8-10 Years to pay it off.

Option4 is the IVA. This is purely my opinion, speaking as an IVA customer:

You are right to thoroughly research the subject of IVAs. Please consider the ramifications before entering one - speak to a few providers to see if it is the right option for you. Remember, just like bankruptcy, it is a form of insolvency, which in turn puts all sorts of restrictions on everything from the ability to open a bank account, or even get a mobile phone on contract.

I only went down the IVA route as I had no real option after an unexpected change in financial circumstances. That said, I am 9 Months in, and can sleep at night not worrying about debt.

Initially seek advice from the ‘charity’ organisations, but don’t be afraid to approach a private firm if they don't think you are eligible for an IVA.

Google ‘insolvency practitioner reviews’ and contact a couple of well-reviewed Insolvency Practitioners. Contrary to what some might have you believe, many don't charge you anything, and their fees would be paid out of your monthly IVA payment (and agreed by your creditors). In fact, even charity organisations such as 'Stepchange' farm out many of their IVA customers to Grant Thornton.

The following link to Stepchange, gives a brief ‘iva pros & cons’ guide though which is a useful starting point:

http://www.stepchange.org/Debtinform...osandcons.aspx

Google ‘Straightforward Consumer IVA protocol’ which the vast majority of new IVAs are compliant with, much of which will form the basis, word-for-word of you IVA agreement. This should direct you to a link to download the pdf document. Well worth a read.

Similarly, you will have to work out your income and expenditure. Whatever is left over is your IVA payment. Regarding what is deemed 'reasonable' expenditure, google: ‘CCCS Budget Guidelines Report 2011’. All IPs that I’ve come across make reference to this. Download the pdf.

(There is a newer version, but I cannot find a link to download it. I believe the 2011 document was effective from October 2011, and used in my IVA implemented in August 2012).

However, even if the figures are a little off, it is well worth a read, as it covers every form of expenditure, right the way down to allowances for hairdressing, kid's school dinners, meals at work, even hobbies etc if so required.

If you are careful to correctly record your income and expenditure, your IVA payment should be set at quite an affordable level. I have come across people who underestimate their expenditure (in the mistaken belief that their IVA will more likely be accepted), and subsequently have difficulty from day one. Don't fall intothat trap.

Equity release (if applicable): 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 up to 100p in the £. (Subject to the resulting payment being max. 50% of you current IVA payment for affordability reasons). For most, equity release is not possible, so your IVA goes on for a 6th Year instead (which usually works out a lot cheaper). But who knows what the economic climate will be like in 4-5 Years time?

Bank Accounts: If any of your debts are with your existing bank, you need to open a full current account with a non-creditor institution now! (less overdraft of course). Best not to reveal that you are considering an IVA though (no requirement to volunteer such information).

Important to do this before you are on the insolvency register, as you will then probably be limited to a handful of basic accounts.

DO NOT switch to HSBC/First Direct: when they find you on the insolvency register, (which they will), they will make you close your account.

Enough for starters!!!

You have options though. Good luck with whatever you decide to do.

thanks for all this, it is plenty of food for thought.
Im talking to stepchange again tonight so ill update asap.:o

cheesedoffwithdebt

I agree with depth charge its an unusual response for CAP they are usually advocates of getting things paid off over 5 years. However they do have a good reputation also for getting creditors to freeze interest, so what they may be saying is it really is either/or. An IVA is a more serious arrangement- can you not start with a DMP with the option to switch to an IVA if it doesn't work? I am sure they would be happy to do that.

poopscoop

I thought it was 5+1 year to clean up your credit file?