Advice please: DMP or IVA ?

Allyjl

Hi all, my first visit to the forum and last week took my first step to becoming debt free.
Ive filled in all the forms through Step Change and their recommendation is IVA (I have £40,000 of credit card debt).I am up to date with all payments , have no CCJs .I was happy to go along with this til I came on here today and started reading how rigid they are.
Would I be better with a DMP which appears to be more flexible but obviously will take much longer to pay off.
I would really appreciate hearing your experiences and advice, Im scared stiff .
Thanks so much

Tixy

Hi and welcome to the forum.

There are pros and cons to both a DMP and an IVA.
Some things to consider
- how much have you/stepchange worked out you could likely afford a month towards repayments, and so how long would a DMP be predicted to last?

-How secure is your income and how stable are your circumstances? If you are entering an IVA then you need to be as confident as you can that your circumstances won't change and that you are going to be able to afford the £x repayment per month for the next 5/6 years.

-Are you a homeowner? if so is there currently any equity in your property?

Have you actually spoken to a stepchange advisor yet? or just used the online forms/calculator so far?

Anaheim

I suppose it all comes down to the amount of disposable income that you have? £40,000 on a DMP will take forever to pay off whereas £40,000 in an IVA will take 5 or possibly 6 years if you are a homeowner to pay off.

A DMP doesn't guarantee that the interest will be frozen either. If you do go down the IVA route then the best advice that I can give you is to research thoroughly, there are some unscrupulous companies out there but there are also some really good ones - Google the IVA forum as there are some reviews and professionals that give up their time to help posters out with questions.

We have been in an IVA now for 4 years, yes it's tight but we manage and I can honestly say that it was the best decision that we ever made - the worst was that we didn't take the time to check out other companies first. We like you were up to date with all our payments but would have drowned if we had continued.

Do you own a house? Be careful with the companies that are asking you to take out a secured loan against the house towards the end of the IVA, and don't believe those that say they can wipe off 60 - 70% of your debt, that isn't true. We are paying 100% of our debt which means we also have to pay the fees, not the creditors.
It all depends upon the amount of disposable income that you have.

Make sure that you account for all of your expenditure and claim all allowances.

Allyjl

Hi Tixy,
Ive a secure job with a steady monthly income, I have approx. £6,000 equity in my home but that's a guess and not based on current market value, so could possibly be less.
They have worked out that I have £250 free per month to pay and with DMP estimate 12 years to clear the debt. IVA Seems like a no brainer but my son may well go to University next year and Ive read some negative stuff about getting help if you have an IVA with fees etc.


Ive had a quick chat with the IVA guy from Stepchange this morning and Im still confused and anxious .
Thanks Tixy

Allyjl

Anaheim, thank you. I realise it makes sense to go with the IVA ,certainly as regards to getting the debt paid off more quickly.
One concern is that they have asked about my partners income this morning, basically he is self employed and barely works due to mental health issues, much of my debt is down to keeping us afloat. He isn't aware of how serious the problem us and there is no way I can tell him. In one way Im so relieved Ive faced up to this now (cut the cards up etc) but Im anxious that I make the right decision to sort it out.
Thanks so much for your post, its very reassuring.

National_Debtline

Allyjl wrote: »

One concern is that they have asked about my partners income this morning, basically he is self employed and barely works due to mental health issues, much of my debt is down to keeping us afloat. He isn't aware of how serious the problem us and there is no way I can tell him. In one way Im so relieved Ive faced up to this now (cut the cards up etc) but Im anxious that I make the right decision to sort it out.

Hi Ally

It's routine for them to enquire about your partner's income - they are looking to establish whether you simply pay a fair, proportionate share of household expenses. What that share is depends on one's circumstances - in your case you've had to carry most of the burden for the reasons you've mentioned above. If creditors thought you were covering more of the household bills than you should be, they might reject any IVA proposed on that basis.

I hope that makes sense.

Kind regards

Dennis
@natdebtline

Anaheim

Hi Ally

We also had a daughter at Uni twice:eek: whilst in an IVA and she's just finished her Masters now, we were very lucky though and she went to uni locally, she supplemented her income with a Saturday job.

We had a clause in our IVA proposal saying that anyone over the age of 18 would be expected to pay board and lodging if there was a reasonable expectation - or something like that, and they agreed that our 18 year old would not have to pay it, so any income she earned was hers to keep

It can be done, but you have to cut corners in some areas to make up shortfalls in others. We haven't been to the hairdressers in years, nor the dentist nor the opticians, we use allowances from areas to pay for other things - a bit like robbing Peter to pay Paul I suppose, but we do benefit.

Yes she's left with student loans, and we will be in a position to help her out with the loans when we have finished the IVA
It's not an easy ride, far from it and we constantly budget, it becomes second nature after a while

I'm sorry to hear about your partner, this means that you are carrying this burden yourself and that's going to be tough. You do need support.

The problem is that one solution may work for one person but not another, for us it has worked and we are so close to the end now.

sourcrates

Allyjl wrote: »

Ive had a quick chat with the IVA guy from Stepchange this morning and Im still confused and anxious .
Thanks Tixy

Hi,


I would say IVA, as a DMP would take you for ever.


I have just finished mine, don't believe too many of the scare stories, as long as you budget correctly, especially for emergencies, then you will be fine.


There is a degree of flexibility also, with regard to your payments, should you need to, they can be lowered or raised, depending on your income.


I think it depends a lot on which company you choose to administer your IVA, some are better than others.


I have to say, for the most part, I sailed through mine pretty easily, I had a review once a year, when I had to produce my income/expenditure details etc, and that was it ,never heard from them at any other time unless there was some issue to be resolved, apart from having my name on the insolvency register, and sticking to a fairly rigid budget, it was pretty much a breeze.

Depth_Charge

Hi

Good guidance already

Just following on -

The pros and cons of an IVA need very careful examination and make sure you fully understand them (this is also the case with any other potential option / solution)

Affordability & sustainability are paramount as is getting things right at the outset

5/6 years is a long time, things can and do happen / go wrong, many IVAs have and do fail, this can / may have implications including where assets such as the home is concerned / bankruptcy

As you are a home owner particular attention should be paid to assets and equity release, make sure you fully understand this area

Have a good read at the 2014 Straightforward IVA protocol

http://www.insolvencydirect.bis.gov.uk/insolvencyprofessionandlegislation/policychange/foum2007/plenarymeeting.htm

Citizens Advice guide to IVAs below that you might also find useful

https://nedcab.cabmoney.org.uk/remedy_6.asp

Make sure you are fully advised and understand the situation before deciding on anything

On another possible related issue, have you any potential PPI misselling claims?

Best Wishes

DC