IVA or DMP please advise

Clairelg13

 i have £46k debt and can only pay back £200 a month which would take about 19 years on a DMP.
Stepschange has suggested Iva and DMP not recommended.

They both come off your file after 6 years 

Iva your house is protected and I won’t get took to court or chased and all be gone after 6 years 
But I could work a DMP and will be paying for 19 years 

Im really worried about the affect of an Iva on me, I know I won’t be able to move house and get another mortgage for at least 6 years with either. so what’s the difference with an Iva to your credit score and life?
other then being on the insolvency register for 6 years and 3 months 

Surely an Iva is better than my debt will be wiped after 6 years and not pay for 19.

not sure which to do and it keeps me up and I feel sick please advice the impact on an Iva 

think you 

fatbelly

Sounds to me like you are probably going to do an IVA and you do seem to be in the sort of situation that is suited to one.

Here's an article by Debt Camel

https://debtcamel.co.uk/debt-options/iva/

Clairelg13

Thanks. Not sure what sortbof situation means but il take a read thanks 

Clairelg13

I’m just wondering the difference, it makes sense to do an Iva if there both gone after 6 years but I’m more than happy to do a DMP if the Iva totally ruins you. I’ve read all the differences on them both but wanted advice from those who’s done Iva’s 

stu12345_2

What's more important to you?
 being debt free in 6 years on IVA or debt free in 19 years on a dmp.( that's the sortof situation you are in)

your credit report should be the secondary consideration imo, after the time it takes to work out when  become debt free in what plan

unless you are in a certain type of employment that doesn't allow you to have an IVA., then credit report becomes the more important fsctor

eg for me it would take a 100 years on a dmp to pay off my debts or in 1 year in a DRO which is as severe as an IVA.

I thought to ell with my credit report , I want to be debt free in a year.

there is a phrase Christians against poverty debt charity use
" being debt free is far more important than your credit file"

sammyjammy

The IVA is a formal solution to your debt, when asked if you have ever had one on a mortgage form/credit agreement you will have to say yes.

An IVA is stricter in that any additional income you get you will need to report it and they will take a % of it towards your debts, much of the money you pay will go towards fees the IVA company charge, not your debts.

They will expect you to attempt to remortgage at the end of your IVA< this will probably not be possible.

If you go with a DMP you can do this either through a company such as Stepchange or do it yourself.  You may start by having a long time to repay the debt but inflation is your friend, your debt interest will be frozen and your income over time will rise, as time goes on you may be able to settle a debt for less than you owe.

As Fatbelly says with a mortgage and a high amount of debt you are in the situation that IVAs were introduced for as an alternative to bankruptcy that protects your home.

stu12345_2

like I said make sure you understand the rules and regulations before you sign up to an IVA.

but don't let the thinking of choosing  a dmp over an IVA cloud your thinking cos both solutions wreck your credit file for 6 years, more so with an IVA cos  it's insolvency and a dmp cos of the defaults being recorded in your file 

in fact step change will not recommend a dmp if it is longer than 10 years.

Christians against poverty will not recommend a dmp if it's longer than 5 years.

trust me I've used both debt charities 

sourcrates

After 6 years, all is forgiven, and your file is expunged of all public information, whether you had defaults from a DMP or an insolvency entry, once its gone, its gone, one debt solution is really no worse than another.

On forms for insurance etc, it may mention have you ever been bankrupt, rarely does it mention IVA or insolvency.

Choose the best option that rids you of the debt the quickest, the fall out from all of them is 6 years, so that should not be an issue for you.

I happen to agree with fatbelly that on this occasion, an IVA may well work best for you.

fatbelly

I use the world's smallest keyboard and have large fingers. I have corrected that mistake now

You will have to judge whether any of the downsides of an iva might apply to you

Are you in a career that insolvency will affect?
Are you likely to have a big change in circumstances, positive or negative, in the next 5 years?
Is bankruptcy a better option?

If no to all these, then continue to talk to stepchange. I describe them as the least worst of the IPs

ManyWays

What is your current mortgage rate and when does your current fix end?

This matters a lot because DMPS are much more flexible then IVAs. If your mortgage goes up and you can no longer afford an IVA it may well fail, so you still have almost all of your debts as in an IVA hardly anything is paid off them. 

In a DMP you just cut the DMP payment, to token payments if necessary. 

Also in an IVA you normally have to try get a secured loan in the last year of the IVA which can be very expensive. So it isn't 6 years then done, its 6 years then a high interest secured loan.

stu12345_2

if you struggle with IVA , your IVA practitioner can drop the amount you pay by 15% a month, but that means the IVA can be lengthened.

you are meant to release equity in year 5  by more than £5000 via a remortgage.

if you can't your IVA will be another year of payments instead making it 6 total

my question to you.

do you feel secure enough in your job to last the length of the IVA.

cos let's say you make £200 a month into IVA, year 3 you lose your job you can't meet your payments, your have had an IVA payment holiday, nothing has worked.

IVA ends, you find out all those £200 payments have simply went on paying the IVA practitioner fees, around £8000 and you are left owing the same balances to your creditors as when you started your iva