IVA or stay on DMP?!

Moominface13

Hi all, I was hoping to gain some advice from you lovely people. I started a DMP a year ago and have been fine paying this every month. I have been given a small amount of money and want to pay off the debts that are still accruing interest but then carrying on with my DMP. I have completed my annual review (I'm with PayPlan) and will be able to pay a little more, which is fine. PayPlan have now said I should seriously consider an IVA or bankruptcy. I am happy with what I'm currently doing as I feel like if I can afford it, why shouldn't I pay off my debts. The debts aren't over £20k (not even £15k) in total and I should be debt free in a similar time frame to an IVA. My concern is that they are advising this to me more for the fact they will gain commission from this and aren't getting any from the DMP. I don't feel like I am actually in the criteria for an IVA in any event.

Also, on a side note, I was wondering whether I need to make my one off, lump sum payments direct to the companies I owe rather than through PayPlan as they are making it more complicated than I think it needs to be.

Thanks for any assistance anyone can give.

MrFrugalFever

Hi,

it is true that they will stand to make a tidy sum from an IVA but in all honesty, it’s irrelevant because overall it’s your creditors who pay it and lose out. You will just agree an affordable monthly payment after an SOA (like you do now), which will be reviewed yearly and then at 5 years you stop paying unless own a property and at 6 years it’s slate wiped clean job. 

It’s a legally binding agreement and your credit file will suffer from it for 6 years, but then it is suffering from DMP anyway.

if your debts to income ratio is quite low then maybe the DMP is the way to go but if your income is low in comparison to your debts then an IVA could be a better solution for the level of debt.

an IVA can seem quite harsh but in reality I view it as the opportunity to correct genuine mistakes and hopefully learn from them.

Moominface13

Thank you for your reply. I don't actually feel anyone should lose out due to my debts, and that I should be responsible for paying them.  I think I probably also feel that if I'm not responsible for them, then I will make the same mistake again. I just wanted to make sure that I wasn't missing something. I also don't want to make a decision like this based on a company wanting to make money rather than advising me of my best options, whether that money is from another company or not. Something to think about though, thank you.

MrFrugalFever

I felt in a similar way to you, guilt was a big factor and I weirdly insisted to the person drafting my I&E report to the creditors for my initial IVA proposal that I wanted to pay the most I could to ensure I was paying back as much as possible. IVA’s typically write off 60-75% of debt, however at the end of mine I am having just under 35% written off. I chose the route in a bit of a desperation and hadn’t really understood all my options, a phonecall to the IVA firm and some document signing was pretty much all it took. Looking back, I should have spent more time gathering facts and information, I may have got away with managing the debts informally, requesting frozen interest etc as I could have paid back a sizeable chunk each month (£800) but I think the fact that the IVA gave me a light at the end of the tunnel before it even started just made me feel psychologically more in control.

its been a tough ride, no doubt about that, but I have absolutely learnt a lesson and my entire outlook and money management style is now the polar opposite.

liggerz87

Also you could prob get a debt relief order if you have no more than 50 pound a month surplus income and debts below 20k you could be eligible for it speak to step change or cab about a dro 

sourcrates

liggerz87 said:

Also you could prob get a debt relief order if you have no more than 50 pound a month surplus income and debts below 20k you could be eligible for it speak to step change or cab about a dro 

DRO limits are changing in may, debt ceiling is rising to 30k, disposable income limit rises to £100.

Best advice would be to wait, then look at your options.

I would not recommend an IVA unless you are a homeowner, with a house  to protect, otherwise, despite what companies try to sell you, look at other options.