IVA or DMP

CoolBeans22

Please could I ask for opinions on an IVA versus DMP., We have around 32k of debt and live in rented property. Thank you.

sourcrates

Beans,

Much more detail needed before anyone can comment !!!

fatbelly

You're considering insolvency and don't own property.

Why not bankruptcy?

CoolBeans22

Sorry, not sure what to say. My husband is the main bread winner but has had to change jobs for health reasons and this has made a huge difference to us in household income. We have been advised our best option would be an IVA or a DMP. We like that with an IVA, we know it will end in 6 years and at the same time it will also drop off our credit file and we can start afresh. We also like that we won't be contacted by debtors as with a DMP as I feel this could add further to our stress and health problems. We are concerned who needs to know publically, if it may prevent us changing jobs in the future and also if we have to move to another rented property, how could all of the above affect us? With a DMP it would take us twice as long to pay off and debtors can keep contacting us. We would only want to consider bankruptcy if there was no other option but I don't feel that's currently the case. I think I would like to hear from anyone who has gone down either the IVA or DMP route and what sort of pros and cons you've experienced whilst being on the plan and if applicable, how it affected your life afterwards? I'm happy to answer any questions I've missed, just grateful for any input. Thank you.

fatbelly

Companies that sell IVAs like to sell IVAs (or dmps). They get nothing from a bankruptcy application or a DRO

Have you been advised by someone independent like CAB or National Debtline?

Bankruptcy may result in income payment for only 3 years and, like the other insolvency options, drops off your credit file in 6 years.

Creditors will be prohibited from contacting you. I could understand doing an IVA if you wanted to protect a house or a business but that doesn't sound like it applies here.

Depending on how the income and debts are split, and how much surplus you have available (sounds like 32000/144 = 220 approx.) then one of you might be able to do a DRO, which would simplify things.

sourcrates

I had an IVA, lasted 6 years, as not at the time a property owner.


For the first 4 years, it was fine, you just make your monthly payment, and life continues as normal, once a year you have your annual review, just make sure you budget correctly, everything ticked along nicely, no creditor contact, all threats of legal action removed, I had no problems at all.

It was only when my marriage ended that I could no longer afford the payments, but as id been paying nearly 6 years, my creditors accepted payments to date as full and final settlement.

Otherwise all went smoothly enough.

However, given the choice again, I would of gone Bankrupt instead, if only because it would of been over sooner, but as you don't want to do that, then an IVA is a good choice.

Lots of people champion DMP`s, and some are happy to pay for up to 10 years or longer, personally I wouldn't, I cant recommend one over another really, depends how you feel about it, that's what counts.

Whatever you do, get some professional advice from either National Debtline, or Stepchange, before you commit to anything.

CoolBeans22

We have been speaking with StepChange over the last month who I have to say have been brilliant but we need to make a decision and get cracking with it now! Can I just ask what a DRO is, is that the same as a DMP?

sourcrates

CoolBeans22 wrote: »

We have been speaking with StepChange over the last month who I have to say have been brilliant but we need to make a decision and get cracking with it now! Can I just ask what a DRO is, is that the same as a DMP?

No, a DRO (Debt Relief Order) is a kind of insolvency, but your debts must be no higher than 20k, that's why Fatbelly recommended one of you to do one.
Certain other criteria must be met also.

dancingfairy

If you have a look on the debt camel website it lists the pros and cons of each.
Dmps are more flexible but obviously can drag out longer but can be good if your situation is likely to improve ( payrises etc).
Ivas are good in the sense that as long as you pay the payments for 6 years you will be debt free but a) are often missold' by companies that want to make money out of you and b) if the iva fails you're back to square one.
Due to the inflexibility and the high chance of failure ( people's lives change a lot in a 6 year period - illness, job loss, children, etc etc) i'm not a huge fan of ivas. They're generally only useful if you have property to protect or can't go bankrupt for some reason ( ie employment etc) but an iva is a form of insolvency and is almost as bad as going bankrupt ( there is little difference).
Have a look on the stepchange website, national debtline e and debt camel website as they will give you insight into each one.
Df

dancingfairy

A dro is basically a mini-bankruptcy or bankruptcy lite for those with debts under 20k. It costs a lot less than a full bankruptcy as well. (It also doesn't have the same stigma as bankruptcy).
Df

sourcrates

dancingfairy wrote: »

but an iva is a form of insolvency and is almost as bad as going bankrupt ( there is little difference).
Have a look on the stepchange website, national debtline e and debt camel website as they will give you insight into each one.
Df

Appreciate what your saying, but you say "as bad as going bankrupt", I have to disagree, in Bankrupcy you have an official receiver poking there nose into every speck of your life fabric, there's non of that in an IVA, you fill in the forms, submit them to your creditors, then if approved, you make your payments, that's it.

There's a lot less officialdom involved, yes the fees are high, that's why there only recommended for people with fairly high debts, and things change over time, but budget correctly, and you'll be ok, the IVA's that fail are mostly the ones that haven't budgeted correctly, or have misunderstood the entire concept of an IVA (lots of people get talked into an IVA without fully understanding what's involved).