DMP or IVA

freshstart22

Hello,

I have managed to rack up 20k on credit cards and am now struggling to the pay anything other than the interest due to current fuel and energy prices. I need to recover some disposable income so am considering either a DMP or IVA. Having spoken to two different financial advisors who both sided on opposing sides of the fence. Basically I want to take the option with shortest impact on my credit file. I would like to get a mortgage within the next 8 years.

I can afford to pay offthwae debts but not with the current interest so  DMP makes more sense to me hut a default is default so should I just go the IVA route and at least write off some of the debt?

Any advice much appreciated

Many thanks

Grumpelstiltskin

No 1 read this.

IMPORTANT - Where to seek professional impartial advice about your debts. — MoneySavingExpert Forum

No 2 Do not touch an IVA with a barge pole, they are only for home owners in certain circumstances and remember the person you have spoken to is a salesperson looking after his bonus NOT a debt advisor.

Come back when you have read up on debt solutions.

RAS

Speak to one of the debt charities above, not to a lead generator looking for £k fees.

An IVA costs about £9k in fees and the salesperson you spoke to would get a slice of that fee. They are really for people with a property to protect and over £30k in debts.

An IVA goes on the Insolvency Register and if you are asked if you have ever been insolvent, you have to say yes, for ever.

If you go for a DMP it is important to get the debts defaulted ASAP and build up your emergency fund before your actually start the DMP.

sourcrates

There is another option some people prefer to use, slightly more of a "thinking outside of the box" method.

Like a lot of things in life, there is a set procedure to debt collection, it goes through certain stages, it may seem like an ad hoc affair, but it isn`t.

Some folk like to use this instead of a traditional DMP.

It requires you to stop paying your unsecured, non priority debt, allow the collection process to proceed, along the way your accounts will hopefully be defaulted, and eventually your debts will be sold to 3rd party debt purchasers, if it makes you feel any better, token payments can be made, the end results will be the same.

This is the standard debt collection process.

It then all starts over again, they will go through there collection process, send you there portfolio of collection letters etc etc.

All this time you have been saving the money that would have gone to your debts, after a few years, the discount offers will start, its then up to you to negotiate a good settlement for each debt.
You can clear your debts this way at a discount.

All the time you obviously watch for any signs of legal action, but during the first year or two, that is unlikely.
Six years from date of default, your credit file will be cleared regardless of what happens.

sammyjammy

After the default disappears can they still register a CCJ if you've been paying them?

sourcrates

sammyjammy said:

After the default disappears can they still register a CCJ if you've been paying them?

Oh yes, but its very unlikely.

The trigger to legal action is the defaulting of an account, a creditor could, theoretically take you to court at that point, but as we all know, that would flood the courts, and the system would grind to a halt.

So we have debt collectors, and debt purchasing companies instead, your defaulted debt is visible for 6 years, but a creditor can still take legal action as long as a balance remains payable, but it usually only happens if the company is ignored completely, after a certain timeframe has elapsed.