DMP or IVA. Which and why?

LowEbb

Hello all,

I posted this in the IVA & DRO section earlier today and one of the users of that board has kindly directed me in the direction of you guys over here.

I've tried posting a link but am unable to do so as i'm a new user and it's a sign of spamming so here is what I posted in said thread:

Hi all,

Newbie here so be nice please

I'll cut to the point and explain why it is that I've signed up to this forum and are posting today. Basically, i'm in my mid 20's, in full time employment in the banking industry and have amassed unsecured debts of approx. £12,500. 50% of the debt is an unsecured personal loan with my current employers and the rest is on credit cards - one of which is my current employers.

I have a number of concerns that i'm hoping the good people of this forum will aid me with - firstly, I have been in contact with PayPlan who, following an Income & Expenditure calculation, have advised that I enter into an IVA. Naturally, I'm concerned that this could have a serious impact on my employment. My role is customer facing though not regulated - anybody have any experience of the impact of this? I've looked through the HR Policies and it doesn't shed a whole lot of light if i'm honest.

Secondly, is an IVA definitely the right option for me? Admittedly, my credit rating has been obliterated by late or missed payments so the impact it would have on that isn't huge (i'm not looking for any further credit/mortgage any time soon) but considering my debt is extortionate would a DMP be a better option?

Any advice/suggestions would be greatly appreciated.

Any help or advice you could give would be greatly appreciated.

Tixy

Hi and welcome

Did you discuss your job with Payplan? what did they say about it?

How much have you / payplan calculated you could afford to put towards your debts each month? If you did a DMP (and if creditors all froze interest) how long would be the DMP be predicted to last?

I have read cases of people employed by banks who have entered a DMP for the remainder of their debts but continued to pay the employer debts at the full rate on the basis that their employment could potentially otherwise be at risk. That may mean their DMPs take longer but I have certainly seen at least one case where this was sugggested by stepchange.

At £12,500 that is quite a small amount to be entering an IVA with. I'd possibly consider getting a second opinion, perhaps by contacting one of the debt advice charities such as stepchange.

~Beanie~

I may be wrong, but I was under the impression that you need to have debts of £15,000 or higher in order to be eligible for an IVA, in which case you don't owe enough. If PayPlan have advised you that an IVA is best for you though, it must be correct.

Nobody on here can advise whether it is the right option for you on the information you have provided. We don't know how much you earn, how much disposable income you have left after paying living costs etc.

Have you tried posting and SOA on here?

LowEbb

Hi Tixy, Hi Beanie,
Thanks for your replies.

I've shed a bit more light on the other thread but sadly I can't post the link.
I have had a second opinion from StepChange and they suggest a DMP rather than an IVA (and to be honest, i'd rather a DMP).

My current income is circa. £16000 p/a and the following amounts are regarded as my disposable income after discussions with Payplan (£142 p/m) and StepChange (£172 p/m)

One further query I have is that I understand that if I take an IVA I would have to change to a seperate bank account as I currently bank with one of my creditors - one of my debts is an overdraft facility (£650). Would the same apply for a DMP?

Find_The_Real

The thing that should have been mentioned with an IVA is that you are still liable for the whole debt, plus IP fees plus interest until completion, so you could end up paying more especially if there are PPI sums as well as these have to be paid into the IVA. Plus there are additions of any bonuses and windfalls, so given the level of debt and the fact the term will be over 5-6 years (depending on any equity release and how they vote) although it may seem a large debt, in relative terms it is not much for an IVA. Plus there is the issue that quite possibly it will affect your job as it is form of insolvency.

The bank account question could be a difficult one if you are required to have wages paid into an account affiliated with who you work for as a lot of financial institutions have this proviso as part of their T&C's. It would probably be an idea to go through your contract of employment as well so you get an idea. However most people recommend a new basic account away from creditors due to right of offset.

StepChange are good but can be a bit of a stickler for how payments are allocated so there is also some good advice from this website about self-managed DMP's

http://mymoney.nedcab.org.uk/moneyadvice/

~Beanie~

Link to the other thread for a bit more info: https://forums.moneysavingexpert.com/discussion/4774521