DMP vs IVA vs bankruptcy

punto01

Head spinning and not sure what to do!

I have been on a DMP for a few years now....I think 5. It has been a bumpy ride (my own fault) and I have restarted the plan a few times but have paid off £12k.

So - £18k remains. EXTREMELY annoyingly if I had gone for an IVA I would've been done by now and ready to move on....fudge.

Step Change have just given me some advice and said that they think I should seriously consider IVA or bankruptcy due to making quite small monthly payments currently and at this rate the plan is due to last another 11 years! I am hoping for a pay rise next year (aren't we all) but obviously there are no guarantees. My plan as always is to try and save (lol I never save anything) so that I have some emergency funds and try to make offers on the smaller debts to get shot of them so that my bigger debts get more each month.

I had a quick phone call with SC which was helpful and cleared up a few misconceptions I had about IVAs but am now just very confused about the best way forward. I can speak to their IVA/bankruptcy team and find out more which I am happy to do but am finding it really stressful as I just don't know which is the best route. I am trying to put together a pros and cons list for each route to help my decision.

Think one of my main worries is that with insolvency this affects my future career choices. I won't ever want to be a solicitor (worked in law hated it), pretty sure I won't ever want to join the police, but what else does it affect? I run a couple of community fitness classes in evenings and eventually I might want to look at setting up my own fitness business - so does insolvency put a stop to that? I won't ever be able to be on a charity committee?

There are just so many what ifs and I don't know what to do!

Having always been single, this year I met someone special and he would really like to buy a house next year Cue the massive guilt on my shoulders as I f**k this up as I can't go on the mortgage because of my stupid spending during the credit boom in my 20s (now 31).

I like the DMP - I like the flexibility of it but I can see the issue with the length of the plan and my constant ideas of increasing payments/saving could easily never happen. My interest and charges have all been frozen as far as I know (not sure about the payday loans as never hear from them) I have suffered with depression for years and am finally doing better this year but trying to make a decision about this makes me really unhappy and anxious as I find it so stressful! I almost wish someone could just make the decision for me and say right this is what you need to do.

The main thing that has put me off an IVA is that if worst happens and I lose my job I thought the plan would go tits up and all the money spent on legal fees would be wasted. SC told me that this isn't the case and even though it is legally binding there is some flexibility there should this happen - like a 6 month break etc.

I haven't spoken to my lovely man about this yet as I want to have an idea of what I want to do first. He knows about the debt and why I can't go on the mortgage. I was upfront from the start about having debt as had to explain why I still lived at home at 30 - cringe! Extra guilt - feel like a bad person for having debt and putting up this massive obstacle to our future

So any personal thoughts or advice from anyone?
Am I on the right track to make an informed decision: Speak to SC, spend a few hours researching online, maybe see a financial adviser, pros and cons list?

Westminster

AFAIK - the main reason to consider a DMP is when you have assets you wish to protect (such as a house).

So if you are renting, then perhaps an IVA or Bankruptcy may have been a better idea to begin with.

another_casualty

That's exactly why I chose a dmp. It will take me more than 11 years to clear my debt.
If I downsize, or move to another area , I will pay up then , hoefulky with a settlement figure

punto01

I guess it could seem like I've been given bad advice when I first started the DMP....but back then I had a lot more to give as a payment as I had a greater salary and fewer outgoings - maybe due to the larger sum that I could pay out they advised DMP?

sourcrates

Hi,
I had an IVA, it ended in 2013, mine lasted 6 years, as I was not a property owner, I had to pay an extra year, as I had no mortgage to renew.
The same would probebly apply to you.

There is a degree of flexibility, if your income goes down, but any monthly payments you miss, or defer, are added to the end of the arrangement, thus extending it.

I have said this before, on other posts, knowing what I know now, I would of chosen Bankrupcy over an IVA, for the simple reason it would be over quicker.

The only restriction on you if you are insolvent, is that you can't be a company director, normally once discharged, this restriction ends.

It all falls off your file after 6 years anyway, as if it wasn't there.

My advice would be, if you want a quick solution, go bankrupt, if you want to slog it out for another 6 years, choose IVA.

In terms of what you can and can't do, both have similar restrictions, it's just one will end usually after a year, and the other won't !!!!

National_Debtline

Hi

There are pros and cons for each option here if you click on the ‘Find out more’ tab for each one:

www.nationaldebtline.org/EW/information/10%20ways%20to%20clear%20your%20debt/Pages/default.aspx

Insolvency wouldn’t prevent you from being self-employed, it’s just that with bankruptcy you can’t be the director of a limited company until you’re discharged as sourcrates says. You could still be a sole trader though.

It sounds as though you are thinking about this in the right way. It’s difficult to say which is your best option without knowing a lot more about your situation but you’re welcome to call National Debtline to discuss your options with an adviser if you would like a second opinion.

James
@natdebtline

punto01

Thanks Jess and Sourcrates for the info. I will continue my research online and hopefully get some advice from NDL and SC. Those are my main concerns: thought bankruptcy was permanent and that I can't run a business so it's making me seriously consider bankruptcy now. Thanks guys

punto01

Re bank accounts - it says on the factsheet that you have to close your bank account. I have basic account with Co-Op so can I still keep that?

teddyclown

I'm not sure whether you have seen this or not, but in the Bankruptcy and Living With It section, I came across this:

https://forums.moneysavingexpert.com/discussion/4778005

...which makes a very interesting read.

fatbelly

Is there any reason why you don't qualify for a Debt Relief Order?

National_Debtline

My understanding is that your bank account would be temporarily frozen once they learn of your bankruptcy application to aid the official Receiver’s investigations, but may allow you to continue using the account at their discretion afterwards. I’m sure someone in the Bankruptcy section of the forum will be able to tell you their actual experiences of this in practice.

As fatbelly suggests, a DRO might also be an option if you meet the criteria. You need to owe under £20,000, under £50 per month surplus available on a statement of affairs, and under £1,000 worth of assets.

James
@natdebtline