IVA Positive stories... and other IVA questions

lilypie

Hi, I have today had advice from Payplan, and they seem to strongly be suggesting an IVA for me. I was thinking more DMP as I have a chance of a windfall in a few years which may then clear my debts and not wreck my credit rating so badly in the long term. My hesitation with an IVA is not being able to get a mortage for 6 years, even if my windfall comes and I am able to clear debts long before the IVA would finish.

However, it is a risk, I would say the chance of the windfall is 50/50 in next two to three years BUT if it came through I could buy a house and get my life back on track quicker. We sold our house and used the equity to pay some debts but it just hasn't been enough. I don't mind renting but I don't want it to be forever.

I owe £48k (arrrghhhh!!!) if I include family debt. Payplan won't let me include repayments to my mum which is a bit of a mare as I owe her £8k which she needs for her retirement. I currently pay her £200 per month.

Situation further complicated by the fact that my husband and I are currently separating. We are renting an expensive house and I need to rent a cheaper one, which the Income and Expenditure has allowed for to a point, but once in an IVA will I be able to get another house to rent? Or will the letting agents not touch me. Ironic as I don't want to be stuck here with very expensive rent and council tax when I'm trying to reduce my outgoings!

I have been told by two close friends, one on an IVA and one on a DMP to not touch IVAs with a barge pole if I can avoid it. The girl from Payplan made it sound like I would be mad not to have an IVA. After she did the I & E with me, I am left with barely anything to support my kids with, I know days out, birthdays, school trips etc are luxuries but still hard to get your head around. Don't get me wrong, I accept responsibility for my overspending and my mess, I just want to resolve it in the most sensible way that protects mine and my children's future. Do people on DMPs tend to get hassled for their debts as this was one of the reason's she was warning me off, yet Payplan literature says due to their excellent relationships with creditors, hassling is usually not common - can't have it both ways!!

Sorry if this waffling and unclear, probably matches how my brain feels right now. I want to move forwards, accept responsibility and live within my means but I just would appreciate any advice on going about this through the correct method. If IVA, can I move to a cheaper rental when this contract finishes? Am I wrecking my credit record long term if I get the windfall in the relative short term? If DMP, no end in sight if no windfall! Can still be hassled? Still might not get accepted for rental on cheaper property on my own?

Thanks so much for any help, very much appreciated. I feel that I am in such a fog I can't make a decent well thought out decision.

cheesedoffwithdebt

HI-I am going to respond with a few facts you might need to take on board-

1-IVA's are not evil- and don't wreck your credit rating any more than a DMP does. However- and this is a big HOWEVER-even companies like Payplan get paid for running them. You have to bear that in mind when considering their impartiality.

2-with a DMP there is more flexibility- it's not a binding agreement, the advantage to you is that you could run a DMP for a while and make sure you can adjust your spending to the imposed budget and then take time to consider an IVA

3- if you are in a DMP creditors are quite free to continue hassling you -thats the downside

4- the key advantage of an IVA is that you will be debt free by a specific date, whereas a DMP could drag on for ages


I'd say you might be better to run your debt payments through a DMP initially and tell Payplan you want to take time to consider an IVA. It is legally binding on both parties- so creditors can no longer contact you asking for payments (I still get statements about what's currently owed but only once a year) but you are obligated to stick to the agreement as well.

Incidentally my DMP was with Payplan, and I got loads of hassle from creditors, not all, but yes I agree they have a good relationship with the companies who actually sponsor Payplan anyway, but they cannot stop legal process.

I am now in an IVA with an independent practitioner, but I took my time to decide, I wish I hadn't because I'd be closer to a debt free date now but your brain will be in a fog its double whammy on the stress scale.

Hope that helps.

UpToMyNeckInIt

DMP or IVA? That is the question a lot of us with large debt are faced with.

In your case, you are not a home owner, have you also considered bankruptcy? – That’s done and dusted in 3 Years.

Research each option thoroughly before deciding. Maybe have a chat with your local CAB about your financial situation.

I’m afraid all 3 solutions kill your credit rating for at least 6 Years, or the duration of the agreement though!!!

£48K is a large debt, so how much can you pay back each Month? Have you worked this out?

I understand you point about a potential windfall (is that a dead cert. though?). If you are going to inherit a significant sum of money, in an IVA (and possibly BR if you get it within the 3 Years), it will go towards not only paying back 100% of your debt, but potentially your IP’s fees and possibly statutory interest as well.

At least in a DMP, this just goes back to paying back your debt + creditor interest. If you go down the DMP route, I suggest you use one of the creditor-funded charities: Stepchange for example. They won’t take a fee from your Monthly payment – they make their money from an 11% donation from your creditors. Remember though that DMP's are informal arrangements, and creditors may (and sometimes do) change their stance on freezing intereest, and they are free to 'hassle' you.

You also have to consider the possibility that a DMP will last many more years (if this windfall does not materialise), than an IVA. Even if you could repay £400pcm, a DMP will last 15-18 Years (as will your knackered credit rating), vs an IVA: done and dusted in 5. If the potential windfall was not a consideration, I know which route I would (indeed I did) take!!! If you have little in the way of assets, you should also seriously consider bankruptcy.

You will find lots of opinions for and against the various options though.

Good luck with whatever you decide to do.

lilypie

Thanks for replies, much appreciated. I was under the impression that DMPs didn't affect your credit rating as badly, not sure why I thought that! I've been reading up so much that I get blurred as to what's correct. My main concerns are being approved for a rental contract in a cheaper property when my current costly contract expires and wanting to get a mortgage within six years if the windfall appears (not linked to inheritance, would sound awful if I was waiting for someone to die!!). Sometimes I think it's best to crack on with the IVA, start that ball rolling.

As I will be on my own, pay plan have worked out I can afford £170 per month. I'm quite shocked at how little I will have to live on but that's part of accepting the problem and dealing with it. Are you allowed on this forum to recommend IVA providers? It's a minefield out there. This forum is invaluable as I feel I have so few people to talk to about this.

I really don't want to go for bankruptcy if there is another way, has implications for my job. Thank you again.

Anondebtadvisor

If you know you will receive a inheritance, you could consider doing a DMP and then offer to settle the debts at a reduced amount when any inheritance does come. As you say if you enter an IVA it will be classed as a windfall and you will be expected to pay upto 100% of the debt and any IP Fees into the IVA.

Admin dont like recommendations on this forum, but you will find lots of reviews on Google if you type in IVA Company reviews, read the reviews and seek advice from 2 or 3 providers before you decide to proceed.

Max_Maxwell

To cut to the chase, Lilypie, tackling debt when insolvent is never going to be an easy ride. Each option carries the simple fact that ones creditworthiness will be shot; bankruptcy, IVA or DMP.

Everyone's circumstances are different so it's crucial to explore all the options based on your personal situation. However, on the surface, if you can afford to repay only £170 per month against a debt of £48k then a DMP is going to run in excess of 20 years, worst case. That really doesn't sound like a viable option, or the best way to spend a quarter of your life.

At least with an IVA you have an agreed term, usually 5 or 6 years, to repay what you can afford, and then be released from your obligations with no further liability. Of course I am simplifying the situation rather, but that's the upshot of it. In an IVA there will always be a light at the end of the tunnel and 5 years is an awful lot more attainable than 20.

Our views on here are mostly based on personal experience and no doubt someone else may be along shortly with a different view to mine. But my regret is delaying the inevitable by attempting a DMP before an IVA. I spent 3 years drowning and making token payments to my creditors to end up back again at the same point and entering an IVA. Had I gone down the IVA route in the first place, I would be home and dry now. Oh, isn't hindsight a joy?

Debt is a ball and chain that holds us back, but doing something about it offers us the key to remove that burden eventually. Surely, the quickest route to freedom is preferable?

Remember, like the X Factor, the pain will eventually go away.

FiatFan_2

UpToMyNeckInIt wrote: »

I suggest you use one of the creditor-funded charities: Stepchange for example. They won’t take a fee from your Monthly payment – they make their money from an 11% donation from your creditors.

Not sure how the funding for dmps and ivas differ but StepChange earn the first 5/6months iva payments for "professional fees" and then take 15% from any additional monies realised from overtime, bonuses, windfalls, PPI etc for the duration. So far they've had their fee and more than the same again from us in the last 13months :eek: Must be quite profitable being an IP :rotfl:

We're in a joint iva as our professions wouldn't permit bankruptcy and a dmp would be a ridiculous amount of years. Best advice is to get a few IP's opinions on your I/E and see how they compare. I approached PayPlan first and really didn't like or agree with their advice. With a little more research before choosing SC i think i would have chosen an independant IP as SC stick quite strictly to the protocol where so others can be more flexible but still conform to the protocol.

lilypie

Thanks again for replies, very helpful and good to have the different perspectives/info. I think for the moment I might try and get a DMP until I am in a cheaper house and until my husband and I are more formally separated and I know more what maintenance I will be getting etc. Once things have stabilised, hopefully within six months, I can then look again at an IVA. I worry that there would be a lot of guess work around my future outgoings at the moment, and an IVA is so binding. Plus, I might be a little clearer about potential windfall. If it was going to be in around two years, I could then offer a settlement and look to buy again in a quicker time than an IVA would allow for, if I am understanding things correctly. I worry about what house prices will be like at the end of a six year period but then again I am massively jumping the gun as who knows what will happen. It's hard because I need to live for today and afford today but also need to think about my children's future as a single parent and make the best decision for the long term also.

Which is the best board to post on with DMP questions? Thank you

lilypie

Just thought I would seek advice from another source, heed the advice to get various opinions. Just completed the Stepchange interactive tool and it recommends bankruptcy!! Argh! I just can't do that because of work. Interesting how their income and expenditure has varied to the one Payplan walked me through. It's such a minefield!

Vikipollard

Apologies if this is in your original post, but is the £48k in your name alone? Just wondered.

I did an IVA which lasted 6 years rather than 5 as I was not on a mortgage and could therefore not be required to attempt to release equity in the property. I can honestly say for me it was the right choice as it gave me strict parameters and structure, and as others have said, a defined end date.

I won't lie, it was difficult and it seems like forever. At times I'd only got pence left in the week before payday but I have come out of it much better able to budget and with very much an attitude of waiting a week before buying an item (other than food) to see whether I really need or just want it. It drives my OH insane

At least with an IVA all creditors' interest/charges is frozen at the point of approval. However although I paid back the actual amount I owed (just under £20k) without the interest, my closure report shows the creditors only received just over 50p in the £. The rest went in 'fees'. They are still chasing the PPI claims, so I hope the creditors will receive some more.

It's a hugely personal (and difficult) decision. Again, as others have said, your credit status is screwed for at least six years whatever route you take, however it will have a definite end date with an IVA (or bankruptcy), rather than being fluid with a DMP.

You'll more than likely lose the windfall if you take an IVA. I don't know whether you are 'allowed' to make full & final offers to creditors with it. I guess it depends where it is coming from (i.e., is it a gift from someone, in which case it could be badged as that as part of a F&F offer through your IP). I'm sure someone with more knowledge will be along to advise on that.

You have my sympathy. It's a painful journey no one wants to make at what is already a difficult time for you. The very best of luck whatever you decide.

lilypie

Thank you, your story gives me hope! And I like the idea of 'waiting' before you buy, now that my head is firmly out of the sand it's amazing what a difference it makes to your spending. I think my spending has been linked for a long time to my state of mind. Unhappy at home, oh I'll just go buy something we 'need', cheer me up.... I shall be happy but skint!! Now researching bank accounts. I'm not against the IVA idea, I love the idea of an 'end date'. I just think things are too messy at the moment to come to an agreement that won't be reviewed for 12 months, so many things are up in the air. Thanks again for taking the time to reply, very grateful.