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

Grumpelstiltskin

With a self managed DMP no one is controlling you, you are controlling your debts.

You do realize that with an IVA if anytime in the future you are asked if you have ever been insolvent you have to answer yes, a DMP is a voluntary solution nothing like insolvency.

The IVA company charge a fortune in fees so you can  end up paying back much more than the total amount of your debt.

BlueOcean55

Grumpelstiltskin said:

With a self managed DMP no one is controlling you, you are controlling your debts.

You do realize that with an IVA if anytime in the future you are asked if you have ever been insolvent you have to answer yes, a DMP is a voluntary solution nothing like insolvency.

The IVA company charge a fortune in fees so you can  end up paying back much more than the total amount of your debt.

Thanks for your thoughts. The way it is proposed at the moment is that the payment for IVA remains the same as my current DMP payment, the rest being written off after the 5th year (not 4). To that end the IVA appears to be far cheaper, to the tune of nearly £30k, even with the added fees.

I get the drawbacks about the insolvency status issue. We have a home and do not need further credit as things stand. I understand that the credit rating (which is actually pretty good right now) gets affected for six years. This is why I'm weighing it all up really.

Grumpelstiltskin

Just remember the IVA company are selling you an IVA it's in their interest to get you to sign up, so are you sure they are advising you of the best way forward for you not for them.

Personally I would bite the bullet and take over the DMP yourself, if you go over to the Debt Free Wannabe board you will get all the information you need to do this and also how to perhaps down the line get the debts cleared for a reduced final payment  if your financial position changes for the better.

RAS

BlueOcean55 said:

Grumpelstiltskin said:

With a self managed DMP no one is controlling you, you are controlling your debts.

You do realize that with an IVA if anytime in the future you are asked if you have ever been insolvent you have to answer yes, a DMP is a voluntary solution nothing like insolvency.

The IVA company charge a fortune in fees so you can  end up paying back much more than the total amount of your debt.

Thanks for your thoughts. The way it is proposed at the moment is that the payment for IVA remains the same as my current DMP payment, the rest being written off after the 5th year (not 4). To that end the IVA appears to be far cheaper, to the tune of nearly £30k, even with the added fees.

I get the drawbacks about the insolvency status issue. We have a home and do not need further credit as things stand. I understand that the credit rating (which is actually pretty good right now) gets affected for six years. This is why I'm weighing it all up really.

The IVA company have told you that in year 5 you are expected to release equity in your house towards the IVA? And if you don't the IVA is extended?

Have you discussed the IVA with Stepchange or National debtline? Stepchange certainly offer IVAs so can advise you even if you choose someone else. 

Think @sourcrates or @fatbelly could provide useful advice here. 

sourcrates

Most standard IVA`s have a re-mortgage clause in year 5, as RAS points out above.

It`s hard to know what to say about this, on paper you tick all the boxes, homeowner, 42k debt, the only foreseeable issue is if your income goes up significantly, or you come into money in the next 5 years, as if either of those things happen you could end up repaying the full 42k, plus all the fee`s etc.

The portion of debt written off is directly linked to your income and/or any windfalls you may get, if your income stays as it is, then 30k will be written off, trouble is we can`t see into the future can we.

I have had an IVA, back in the day, it was totally wrong for me, and far too restrictive, but your circumstances are different to what mine where.

I would prefer self managed DMP, and then settlement offers to clear further down the line, very easy, very simple, very flexible, and you are in charge, an IVA is non of those.

BlueOcean55

RAS said:

BlueOcean55 said:

Grumpelstiltskin said:

With a self managed DMP no one is controlling you, you are controlling your debts.

You do realize that with an IVA if anytime in the future you are asked if you have ever been insolvent you have to answer yes, a DMP is a voluntary solution nothing like insolvency.

The IVA company charge a fortune in fees so you can  end up paying back much more than the total amount of your debt.

Thanks for your thoughts. The way it is proposed at the moment is that the payment for IVA remains the same as my current DMP payment, the rest being written off after the 5th year (not 4). To that end the IVA appears to be far cheaper, to the tune of nearly £30k, even with the added fees.

I get the drawbacks about the insolvency status issue. We have a home and do not need further credit as things stand. I understand that the credit rating (which is actually pretty good right now) gets affected for six years. This is why I'm weighing it all up really.

The IVA company have told you that in year 5 you are expected to release equity in your house towards the IVA? And if you don't the IVA is extended?

Have you discussed the IVA with Stepchange or National debtline? Stepchange certainly offer IVAs so can advise you even if you choose someone else. 

Think @sourcrates or @fatbelly could provide useful advice here. 

The house is my partner's, so I've been advised doesn't fall into the purview of my arrangement. Thanks for the tip re: Stepview. I'll look them up.

BlueOcean55

sourcrates said:

I would prefer self managed DMP, and then settlement offers to clear further down the line, very easy, very simple, very flexible, and you are in charge, an IVA is non of those.

Hi @sourcrates - thanks I will look into this.

ManyWays

if the house is your partners. most creditors will insist on a 6 year IVA not 5. 
IVA reviews are typically much more intrusive than a DMP. Making large payments to your parents could be a problem and one you cant get round with a different bank account. And if your business does well, you will be likely to pay much more in IVA payments. Like @sourcrates a self-managed DMP may be preferable, both more private and allowing you to make settlement offers if your business goes well.