DMP VS IVA....Help Please!!!!!!!!

fallen_angel_5

Hello,

Im a newbie to the forum (although i've been looking at it for weeks)

I have contacted Payplan who have been really great and efficient, but now im faced with the decision of IVA or DMP??? im desperate for some advice.

Im 27, a working mum of a 6 year old and im ashamed to say that im in £20,000 debt!!!

I have researched the pro's and con's of both options but find different facts each time and still dont know what to do.

I want to make the best choice for me and my daughter's future as I dont have a mortgage yet etc etc.

I would love to hear from anyone who has any info re: my options or who have been faced with the same decision as me.

Thanks

Fallen angel

hypno06

I have not opted for either of those options, so not much help I'm afraid. However, plenty of people on these boards are in one or the other so will be able to help you decide.

At the end of the day though, you have to go with what YOU want, and what you feel is right. Don't hesitate in asking questions on these boards and if you want to, give CCCS a call to see what they say - they may say the same as payplan, or they may give you some other bits to consider which may help you make your decision.

Good luck, and whatever you decide, keep posting x

fallen_angel_5

Thanks for the tips :j

hypno06

bumping up for the OP as I wasn't able to help yesterday - hope someone has some info that would be useful for Fallen Angel.

CLAPTON

whether a IVA or a DMP is either possible or best for your circumstances needs a bit more information about your circumstances

you need to Post an SOA and tell us a little about your circumstances

an SOA is a statement of affairs see
http://forums.moneysavingexpert.com/showthread.html?t=107280

also tell us do you rent or do you have a mortgage..if so how much is the house worth and how much is the mortgage.

smilealot

Hi,

I was in exactly the same position a few months ago. Nearly £27k of debt... ouch! Anyway, I decided to go for the DMP for a number of reasons. I wanted to pay back all of the debt, not just pay five years worth and have the rest written off. I would've felt guilty that I hadn't taken full responsibility for my silly spending (not that I am saying you shoudl feel this way, I don't know your story, it's just how I felt at the time). I didn't want to lose my car because I would've been a massive upheaval and as I'd recently bought it would've made my money issues more transparent which I didn't want (you lose it usually if it has a value over £4k approx I think). I didn't want to enter a legal arrangement. IVAs can be considered (rightly or wrongly) as "more serious" than DMPs. Also, the budget I get for my DMP is fairly generous.

However, it will take me over 14 years to repay my debt 5 years seems much more palletable! Your credit rating will be screwing regardless which option you choose.

The other factor for me was that I found it hard to choose between the options, so I decided to go with the DMP and leave the door open to an IVA in the future (I think an IVA was all a bit too much for me to deal with at the time), whereas, once you are on an IVA, you wouldn't usually switch on to a DMP.

As CLAPTOP says, it's very difficult for us to assess your indivdual situation, so thought I'd give you some background to mine, in case any of it rings a bell. Feel free to ignore it as it's not even advice as such!

Good luck with whichever option you choose - keep in touch!

smilealot :rolleyes2

fallen_angel_5

Hello,

Thank you so much for your response, it is so relieving to know that there are other people who are going through the same thing, as I have no one to talk to about this..........

My SOA is as follows:
INCOME
893 (SALARY PT TIME)
72 CHILD BENEFIT
212 TAX CREDITS

OUTOINGS
Rent £350 (housing assoc rent)
Water £22
Council tax £72
Car insurance £44
Tv license £10.50
SKY £30
BT £12
SHOPPING APPROX £240


HSBC LOAN £ 278 (15,500)
HSBC CC £99 (3,500)
EGG CARD £27 (1000)
TESCO C £18(600)

Payplan have said i'd need £240 each month for a DMP or Iva, which I can do.
Like you I feel that I'm responsible for my debts, so should try my utmost to pay it all off. I really want to whatever is going to be best for my daughter and my future............I want to do the best for my credit rating.
I have currently only missed one hsbc payment which i have now paid.

I feel that there is somthing that people arent telling me about which option is best and the consequences of each option. I've done as much research about these options as I can.

Any further light you can shed would be greatly appreciated.

Thanks again

Falllen angel

dreamer999

Hi

An IVA is an official agreement arranged through an insolvency practitioner. I was advised by CCCS that should I not be able to meet payments to my creditors there could be more serious consequences. With a DMP should your income decrease you can ask creditors if they will accept lower or even token payments and obviously should your finances improve you can increase payments reducing length of DMP. Whereas with an IVA your monthly payment is set for the length of the agreement.

I decided to go for a DMP because it is more flexible and the consequences of not being able to meet monthly payments are less severe.

As smilealot said you can always decide on an IVA at a later date.

Hope this makes sense.

Broken_hearted

I opted for a DMP and found it good if a little hardgoing at first. Always take proper advice before choosing which path to follow. Don't let the debt control your life, enjoy your little one. There are loads of free things to do with children which bring you closer together much more than spending on expensive days out/toys ever did.
Anyway thats how it worked for me. Good luck.

danno_4

Hi,
I work in the insolvency industry so i will try and be of some help to you.An IVA is a legal and binding agreement that as to be sought through the courts.You make an offer to all your creditors say 25% in the pound,Then you have to get 75% of your creditors to agree with your offer.If they do then all creditors have to abide by it.(A creditor who may have voted against it has to abide by the agreement)Also you have to also abide by it and start making the payments that you have agreed to make.Now if you fail to make the payments then your IP could ask to make you bankrupt.Has will an agreement you make yourself with your creditors is not legal & binding.If your were my client then i would advise the latter.
kindest regards.
ps;An iva is quite excpensive to do,Cost around £2500;
Danno

CLAPTON

whether you do a IVA a DMP or just continue to manage, its really important to get your budget as accurate as possible. this is because you are committing to live within this for five years (in the case of an IVA) and whatever it takes in a DMP.

your budget doesn't seem to be a realistic one for living month in month out, year in year out. e.g. clothes for you and the kid, any kiddy expenses/activities/hobbies/school trips etc....have you considered the kid's expenses as he/she gets older, any travelling expenses, any socialising, modest xmas, birthday presents,
remember once agreed it difficult to go back and change.
Is this budget the one discussed with Payplan?

At the moment you finance show
income 1177
spending 780
available for debts 396

and debt repayments of 422
so showing a shortfall of only 30 if the budget is accurate.
however, that just emphasises the importance of revising the budget

is there any way of increasing your income without losing tax credits?

also ... i'm not sure why you consider your credit rating important but if you do either an IVA or DMP your credit rating with be trashed for six years.