DMP or IVA how did you choose

tonyranks

dmp for me......is a debt for ever and they dont necessarily stop all the interest , why would I want a debt for over 10 years if its a large debt over 15k
iva is a fixed period, lot more discipline, which is what is needed .....debt free after 5 years but off credit file after 6 if defaults drop of same time
dmp and bad credit are twins until debt is paid, no thanks
my ten pence worth

mizzymac

Hi looking for some advice..
We are in a mess with money, we owe £70,000 and it is tearing us apart. We have a mortgage and so far we have not got behind with any of the card/ loan payments but we will never manage to get out of this without action. Have looked at options but don't know which way to turn. We are thinking of trying to mortgage to use some of the equity but do the banks agree to this when you have a secured loan?
Your thoughts would be appreciated

Bettingmad

mizzymac wrote: »

Hi looking for some advice..
We are in a mess with money, we owe £70,000 and it is tearing us apart. We have a mortgage and so far we have not got behind with any of the card/ loan payments but we will never manage to get out of this without action. Have looked at options but don't know which way to turn. We are thinking of trying to mortgage to use some of the equity but do the banks agree to this when you have a secured loan?
Your thoughts would be appreciated

First thing to say is turning unsecured debt into secured debt is very rarely a good thing. I understand how you feel as many of us on these boards have felt exactly the same thing. I was never behind in any payments, I was literally choking by continuing to make repayments at the expense of my sanity. It is a pride thing however the pattern emerges where you end up borrowing more on your credit cards in order to pay your credit card bills and it's very quickly turns into a vicious and rapid downhill spiral.

You have to take action, the thought of taking those first steps towards a debt solution is frightening. However the thought is actually far far worse than the eventual reality.

Whilst my debt was not as high as yours (Touching 40k), in the 3.5 years I have been on a DMP I now have in the region of £14k left to pay. I now live a comfortable life not in fear of opening the mail any longer. Yes my credit is screwed for at least 6 years but I care not as credit caused a truly miserable life for me and my family.

I truly wished that I would have tackled my problems at least a year earlier as pride got me and extra £6-7k of debt.

Fill in the SOA below and head over the the debt free support board. There isn't a question that you could ask that won't have an answer from the good peeps.

http://www.stoozing.com/calculator/soa.php

Meatloaf1981

Sadly for me in the public services arena, an IVA would probably cost me my job. Bankruptcy certainly would. I am considering a career outside the thin blue line which would enable me to may things make much more swiftly, but it is a big risk to take.

Bettingmad

Meatloaf1981 wrote: »

Sadly for me in the public services arena, an IVA would probably cost me my job. Bankruptcy certainly would. I am considering a career outside the thin blue line which would enable me to may things make much more swiftly, but it is a big risk to take.

Are you a police officer? Bankruptsy or an IVA will not affect your employment if you are.

Meatloaf1981

I am, and sadly it depends on your force area. Mine will not support me if I had an IVA or went Bankrupt. They are, however, supporting me through a DMP.

happyinflorida

What is your equity in your property?

That is also relevant if you're considering an IVA - have Stepchange not informed you about this? They should have done.

Sometimes creditors do an IVA and then towards the end of the IVA will look at your property value and may insist on it being used to help pay debts!

This was the situation when I was last doing debt counselling 5 years ago.

If your equity is small, bankruptcy could still be an option.

sourcrates

happyinflorida wrote: »

What is your equity in your property?

That is also relevant if you're considering an IVA - have Stepchange not informed you about this? They should have done.

Sometimes creditors do an IVA and then towards the end of the IVA will look at your property value and may insist on it being used to help pay debts!

This was the situation when I was last doing debt counselling 5 years ago.

If your equity is small, bankruptcy could still be an option.

If re-mortgage is unsuitable, they simply add a further year of payments to your IVA, so you would pay for 6 years, instead of 5.

DorisTrousers

No hard and fast rules, each individual must decide what is right for them. If this were me, I would plump for the IVA as 6 years is better than 20. I say 6 as it is extremely unlikely that a shared ownership property will be attractive to any lenders when the time comes. Currently, I know of only one lender remotely interested, and even then the qualifying criteria are extremely harsh. That may change of course. If I could give you a couple of tips, it would be these. All an IVA really is is a deal. Ok, more powerful than a DMP but a deal nonetheless. Present the best positioned deal from your perspective and then let the creditors argue with it if they wish (they do have the right to request or suggest amendments or modifications at the time of creditors meeting, but you should always get the choice to accept, reject or amend yourself as well). Part of that will be to opt for the re-mortgage clause for releasing (not, hopefully) equity, and do not allow the term secured loan anywhere near it. Secondly, make sure that the budget prepared for you covers everything. I have to disagree with the earlier poster that suggested that an IVA is always a higher payment than a DMP, the reverse is true generally, except where full disclosure is not made on a DMP. There are lots of areas of expenditure on an IVA that you would not readily budget for on a day to day basis, such as contingencies, sports and hobbies, social, etc etc. Not allowing for these may make your payment higher than is necessary, which may lead to problems later on. The key there, therefore, is to work closely with your chosen I.P. to produce a realistic budget. If you are unsure of the allowances you can put down then I may be able to help you further, but I am sure most other posters will be happy to do as well.

Jon81

Thanks all for the recent or past iva'ers do you have any views on the following senario

If I go into an iva but sell within say a year of starting would the equity be treated as the 4th year release clause (equity remaining up to 85% less disbursement)or would they want more

Would it be preferable say then to do a dmp until the property is sold and then consider options in respect of iva as would no longer be a home owner so only subject to five years not potentially six