Choosing a DMP Preferred to IVA? why though ?

Galeeno

What are the main reasons, that a person in debt (credit card + loans)
who has no property to own..

-why would choose/prefer to be in a DMP, compared to an IVA?

Even though both the DMP + IVA projections might come up with the same monthly rate ?

what are some reasons, that a DMP would be preferred to a IVA, even though the payments might be the same ?

sourcrates

DMP is non regulated, were as an IVA is a form of insolvency, and a lawfully binding agreement, you are free to do what you like in a DMP but with an IVA you must stick to fairly stringent budgeting, also if you default on a DMP the consequences are less than if you default on an IVA, you can be made bankrupt straight away if your creditors so choose.
Also depends how long a DMP would take to complete, sometimes many more years than the IVA would, obviously depends on your total debt, there are a number of factors to take into consideration when making the decision of which route to take.

dancingfairy

i believe the debt camel website has a good view of the difference between a dmp and iva. Sometimes an IVA can be like using a sledgehammer to crack a nut. Also you are pretty much bound by it (as are you creditors). If it goes wrong you fail and then your only option is bankrutpcy. A dmp is a lot more flexible and if you are able you can either make a settlement offer or, hopefully increase your payments as you go through. An IVA will expect you to attempt to remortgage (if you have a house) and I believe there may be implications with owning a car as well (as it is a form of insolvency). I believe an IVA can impact on people's careers as well. Not only that, but there are unortunately many unscrupulous companies that will sell an IVA to you, not because it is right for you, but because they can take a cut of your fees and make money from you.
Of course, if a dmp is likely to last more than 6 years and you have no assets then an IVA is worth considering. As it is a legally binding agreement you should be especially careful you understand what you are signing up for and the consequences.
df

thewhiteavenger

Galeeno wrote: »

What are the main reasons, that a person in debt (credit card + loans)
who has no property to own..

-why would choose/prefer to be in a DMP, compared to an IVA?

Even though both the DMP + IVA projections might come up with the same monthly rate ?

what are some reasons, that a DMP would be preferred to a IVA, even though the payments might be the same ?

Those questions are answered here


http://debtcamel.co.uk/debt-options/iva/

National_Debtline

Hello there,

I think most of the answers have already been given on this thread. Do take a look at the excellent Debt Camel site, it's a wonderful resource. One of the key considerations with an IVA is the home. If someone is owns their home there is a distinct risk that it could be implicated. There is a general expectation that a portion of the equity would need to be released towards the end of the IVA - this could either be from a remortgage or a secured loan. If this is not possible it may be that the IVA is extended by a further twelve months. If an IVA fails, the Insolvency Practitioner may have the right to petition for your bankruptcy, if you own a property once again there could be potential implications.

There are lots of benefits with an IVA too. The first is that it is binding in its nature, this ensures that interest and charges are frozen. As I'm sure you may already know, it is often the case that a significant amount of debt could be written-off. As a whole, the IVA industry is in a much better place than it was five or so years ago - The IVA protocol has provided a degree of uniformity with proposals and the vast majority of IVA providers are very professional and knowledgeable.

When speaking to a caller about their best option, I would generally discuss how long each option would take and what the pros and cons would be. Although IVAs are a useful option for some it is often a DMP which would be a better route - typically due to concerns around the property. For those who live in rented accommodation, a better insolvency route *may* be bankruptcy. It is typically cheaper and faster than an IVA although there are a fair number of implications to consider.

There are a good ten or so main options available to deal with debts, we've written a brief guide which you can find here.

Very best wishes,

David @natdebtline