Confused over whether to do IVA or DMP

Mum2emily

Hi, newbie here and have spent the last couple of weeks incredibly confused as to whether to go for IVA or DMP. I have spoken to stepchange who have advised IVA but alternative DMP. I have debts totalling £28k and under IVA I would have to pay £293 a month for 5/6 years and there would be a restriction put on selling my house I have with my exhusband which is currently rented out and has no equity at present. Under DMP I would pay £253 a month for first 4 years then when my HP finishes pay £388 for a further 3 years (so 7 years in total). The thing that puts me off the IVA option is the house. I would not want to remortgage with my ex in the future-the plan is to sell this house in around 3/4 years (I would be happy to hand over any equity). I then think if I was on a DMP it wouldn't last much longer than IVA but I could keep any profit from house sale to maybe make settlement offers/pay more off my debt. I am just scared on DMP that my creditors won't freeze/lower interest and it will take much longer to pay and that they will pursue the debt. My creditors are Tesco, barclaycard and HSBC, currently I have not missed any payments and there are no arrears.

Any help/advice from others on DMP would be greatly appreciated. I have all the paperwork for IVA and DMP just can't make a decision :(

itsallabitmuch

Hey, and welcome

I'm currently on a new (2 months old) DMP and I love it.

I think it really is down to you, but I'm sure that there are many others much wiser than I who will advise you better than I could.

Bear in mind that, as far as I'm aware, you could go ahead with the DMP and switch to an IVA at a later point if you needed to.

All of my creditors froze my interest - there's no guarantee that yours will, but StepChange have a pretty good track record for achieving this.

Hang fire some much wiser responses, and good luck! Let us know what you decide x

Mum2emily

Thank you for your reply. I am glad they have frozen interest and accepted it. I did think I could try the DMP route first but (this is going to sound very lazy!) I already now have all the paperwork for the IVA and had a 2hr appt on the phone completed beforehand-so I suppose it's just having to get all that paperwork again in 6 months time as there was quite a lot! I keep reading good and bad things about both after thinking I've made my mind up!

itsallabitmuch

I know what you mean!

Our mortgage is actually only in my husband's name, but I didn't want to go down the IVA route myself as it felt wrong somehow. It really is down to personal preference, though, and I agree that it's really hard to make the decision!

I still find myself wondering whether I should apply for a DRO instead of carrying on with the DMP, but I'm going to see how things stand in August, as we will be having £100 per month freed up at the end of July.

I will say, though, that in terms of the DMP, you could still be required to pay a lump sum if you come into any money (like from a house sale). I've got a court case coming up - the judge has said it has to be heard by the end of August this year, or he'll enter a judgement against the other party regardless (the other party has been stalling for 6 years!). I'm not counting on receiving any money from this (although the evidence says I certainly should be!), but I did tell StepChange about it. They said that if I do have a judgment entered in my favour, then that money will be expected to go towards the DMP in addition to my monthly payments.

I'm not sure if that helps you to reach a decision?

Is either a DMP or IVA your only solution? Are you unable to continue paying your monthly repayments? It may help if you do an SoA - the link is http://www.stoozing.com/calculator/soa.php. You can format is for MSE and post it in here if that helps you

sourcrates

Hi,

In an IVA, any profits from a house sale would have to be paid into your IVA for the benefit of your creditors.

In a DMP, you are correct in thinking you can keep it all, no one else has a claim on your money but you.

IVA's give you legal protection from your creditors, DMP's do not, in your situation I would choose DMP as it's more flexible which matches your current circumstances, in a DMP most creditors will stop interest, those who won't, you just don't pay until they sell on your debt, once sold on, no further interest or charges can be added, so you simply add that debt to your arrangement.

When you come to sell the house, your share of the profits can then be used to get the best settlement deals available.

I must say, if you have not even yet missed a payment, you need to go about this in the right way, if you choose DMP, you should stop paying your creditors straight away, ideally follow this course of action for about 6 months, this will do two things, (hopefully) they will default you quicker (avoids AP markers on your credit file) and it will also give you time to save up an emergency fund, which, trust me, you will need.

Mum2emily

Thank you both for your help. I had a look on debt camel and seen something about a secured loan against a property that IVA can now do in your 5th year if you can't remortgage which has made me a bit scared to go down that route as want to cut financial ties with my ex husband as soon as I can rather than extend them. I haven't missed payments but I am now kind of robbing peter to pay paul and can't see a way out of my debt. I definitely don't have any issues about paying money I recieve off my debt-it's just the legallity of this house tie versus the possibilty of still being chased by debt/accruing debt through further interest or charges.

fatbelly

Mum2emily wrote: »

Thank you both for your help. I had a look on debt camel and seen something about a secured loan against a property that IVA can now do in your 5th year if you can't remortgage which has made me a bit scared to go down that route as want to cut financial ties with my ex husband as soon as I can rather than extend them. I haven't missed payments but I am now kind of robbing peter to pay paul and can't see a way out of my debt. I definitely don't have any issues about paying money I recieve off my debt-it's just the legallity of this house tie versus the possibilty of still being chased by debt/accruing debt through further interest or charges.

debt camel is a good source of info.

I agree those seem to be your choices but on the figures given there is not much to suggest an iva as being the better strategy.

I'd follow sourcrates' advice and start looking at a dmp.

National_Debtline

Hi

I agree with the others here that it’s best to start off with a DMP and see how it goes. Potentially it may only take a year longer than an IVA, and possibly even less depending on how the house sale and settlement offers work out.

If you can’t realistically afford your debt payments at the moment it’s best to cancel the payments and send this ‘hold action’ letter to you creditors.

www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-%28sole-name%29.aspx#

James
@natdebtline

Mum2emily

Thanks everyone. I will go down the DMP route and hope for the best. I feel sick over cancelling my Direct Debits and the letters/phonecalls that will follow but will try not to worry!

sourcrates

Mum2emily wrote: »

Thanks everyone. I will go down the DMP route and hope for the best. I feel sick over cancelling my Direct Debits and the letters/phonecalls that will follow but will try not to worry!

Don't let it worry you.

You are not the first, you will not be the last, creditors are well used to this happenening, that's why they spend millions on dedicated depts to deal with people in financial difficulties.

Any calls, you simply say you are getting help from stepchange and will be in touch shortly, good bye.

If it helps, you can write and inform your creditors of your situation, you will get an automatic 30 days where your accounts are put on hold.

These things happen all the time, take it from one whose been insolvent twice, trust me, nothing bad will happen, don't worry.

Mum2emily

Thank you, I think I will use the templates from above and send them same time as cancelling my payments. I just hope my creditors are understanding-it seems from the DMP support thread most are so fingers crossed.