On The Brink of Moving to an IVA from a DMP - Sanity Check

BlueOcean55

Hello MSE Folks,

I've had a very long and bumpy road with debt. Now 50 I've been trying to do the right thing for the past ten years, dealing with chickens coming home to roost from a credit overspend spiral that lasted from university through a corporate job, burnout and redundancy and into self employment (Ltd personal service company for freelance work).

Total debt after redundancy paid off a fair chunk was about £42k. I've had a DMP going for four years now, and have paid £180 monthly like clockwork. It would take me 17 years to complete the DMP so my DMP company is now preparing an IVA application to see me clear in 4.

My query is really around the annual review and how invasive the whole IVA process is. The DMP has allowed me to get on with things largely uninterrupted. My business doesn't have any real capital yet and is still in a growth phase, but all they've worried about is the general annual stats and that the payments go through.

The IVA agreement has come with a lot of detailed scrutiny. I'm not fiddling anything with my DMP (life is still stressful and on the edge every month), I don't have assets and live in a house owned by my partner, but I'm happy. The thing is my income is very variable (freelance work is feast or famine) so my actual costs vary wildly over any given year - my budget supplied has always been an average. On top of this my elderly parents are infirm and well into their 80s, so I often take care of bills/other large items through my account, sometimes over £500. This all makes my current account statements a bit of a box of frogs.

Given the above situation, how sensible is an IVA? At some point there will be an inheritance, and pension, a work breakthrough (the business prepares projects for sale) or any other type of windfall, but obviously I'd like to keep as much of that as possible for the future and have this debt, for which I have paid a huge amount in interest over the years, dealt with tidily.

Any thoughts very welcomed form others who have experienced this type of situation.

RAS

No personal experience but have been around these forums a while.

You do realise that if you get any sort of windfall, you could well end up paying back the full amount of your current debt and the IVA fees that'll be £4-9k? And that around a third of IVAs fail? If you really want to do an IVA at least speak to the debt charities as their fees are at the lower end.

IVAs are intrusive so I'm not sure how well they manage the feast or famine income (they have annual reviews but do expect you to maintain the agreed payments whatever your income), or the situation with your parent's needs.

Grumpelstiltskin

Is your DMP with a charity or fee charging company?

BlueOcean55

Grumpelstiltskin said:

Is your DMP with a charity or fee charging company?

It's funded by "donations from the credit industry", so a charity I believe.

BlueOcean55

RAS said:

No personal experience but have been around these forums a while.

You do realise that if you get any sort of windfall, you could well end up paying back the full amount of your current debt and the IVA fees that'll be £4-9k? And that around a third of IVAs fail? If you really want to do an IVA at least speak to the debt charities as their fees are at the lower end.

IVAs are intrusive so I'm not sure how well they manage the feast or famine income (they have annual reviews but do expect you to maintain the agreed payments whatever your income), or the situation with your parent's needs.

Thanks RAS. Yes, I would expect that to be the case with my DMP as well though, as any windfall would be picked up by that annual review. I;ve been advised that creditors would have a stake in any windfall for a limited time, but once the IVA is discharged my pension at 63 for instance would not be liable.

Regarding my parent's situation it might be best to open a separate current account to handle all that.

Grumpelstiltskin

Did your debts default before you started your DMP ?

BlueOcean55

Grumpelstiltskin said:

Did your debts default before you started your DMP ?

No, it was part of the DMP process.

Grumpelstiltskin

Why don't you think of running your DMP yourself?

You are then in charge of what you pay and your creditors never see your bank statements, no annual review etc.

Brie

Re your parents' situation....you say they are infirm but are they still mentally ok?  If so could you instead get them to give you third party authority on their account(s)?  That way all of their bill payments would be in their name but you would be able to manage it for them.  

If you set up an account even if the intention was for it only to be for your parents' benefit some might question it and consider the money to be yours instead of theirs.  

And hopefully they've got powers of attorney set up?  If not get them to consider this asap.  Easy to DIY it, no need for expensive solicitors.   Make, register or end a lasting power of attorney: Overview - GOV.UK (www.gov.uk)

BlueOcean55

Brie said:

Re your parents' situation....you say they are infirm but are they still mentally ok?  If so could you instead get them to give you third party authority on their account(s)?  That way all of their bill payments would be in their name but you would be able to manage it for them.  

If you set up an account even if the intention was for it only to be for your parents' benefit some might question it and consider the money to be yours instead of theirs.  

And hopefully they've got powers of attorney set up?  If not get them to consider this asap.  Easy to DIY it, no need for expensive solicitors. 

Thanks Brie, Yes POAs are all set up, that might be a cleaner way to go now. They're largely there mentally but get very foggy and tired.

BlueOcean55

Grumpelstiltskin said:

Why don't you think of running your DMP yourself?

You are then in charge of what you pay and your creditors never see your bank statements, no annual review etc.

Literally wouldn't know where to start there. I've been pretty happy with the way the DMP company has run the thing so far, they've taken care of all the creditor correspondence allowing me to focus on work and other life bits. The attraction of the IVA at this point is the earlier end to the debt issue, but I don't really want 4 years of being completely controlled when my agreement will always be in good faith.