IVA to DMP

IsitBedTime

Having struggled with my IVA for the past 3 years, I've just spent the past hour on the phone to StepChange and they've recommended a DMP.

My IVA is about to fail and I've been looking for alternatives.  

The IVA took into account my wife's full salary even through she had her own IVA so this left me considerably out of pocket throughout.

The DMP suggests that I can pay less than £100 per month and didn't take into account my wife's salary which means my income vs. outgoings are considerably different to the figure that the IVA company are working towards and this sounds much more favourable to me.

The DMP has been worked out and on my 21k of debt they suggest that it could take 19 years if I don't make additional payments, but my question is what's the likelyhood of the DMP being accepted with this length of time, the creditors are Caboot, Intrum, LC Asset American Express, Argos Financial, PRA Group & Paypal.

Does anyone have any experience of these companies accepting DMPs & is it the case that when I actually apply for the DMP will that figure of just under £100 remain or was that just the sales pitch to get me hooked on a DMP with StepChange and when I get to signing on the dotted line it'll be more like £400 per month?

Grumpelstiltskin

OK  Have you stopped paying your IVA?

Don't rush into paying a DMP, you need an emergency fund and you need to find out if the debts are enforceable ( just because companies have been accepting your money doesn't mean they are 100% enforceable.)

RAS

Your IVA needs to fail. Don't rush into other options yet.

The debt charities like to start DMPs immediately. Your debts will have already defaulted, but you need an emergency fund, individually and as a family.

Do not make decisions now. Debt collection moves slowly. Your creditors don't get to decide whether they like your DMP, or are happy with what you are paying. It's an informal option. This is assuming HMRC and CT are not amongst your creditors?

I'd suggest you started by reading debtcamel on affordability claims and learning about CCAs. Both could be relevant. 

An SOA would be useful but take time to look at the budget with which you've been living, check your costs and think about what's sustainable. For couples, generally the expectation is that each contributes to shared costs in proportion to their income.

IsitBedTime

Thanks for the replies both. 

Not stopped paying the Iva yet this months (September) will be the first missed payment. I’ve no doubt they’ll start the fail process shortly after that(?). 

Sorry to sound a bit dumb but you both mention an emergency fund, is that just for the unexpected or is there some other reason I’ve missed that that’s needed for?

Ive competed an SOA and it’s come out at about £90 spare each month, that need to be split betweeen 21k ish of debts. 

Grumpelstiltskin

The IVA won't fail quickly, nothing happens fast in debt collecting.

You need an emergency fund to cover anything that does crop up because you won't have access to credit.
What would happen if your freezer broke the same week as your car failed it's MOT?

The main thing is not to panic, just save as much as you can and keep posting here for advice.

13thlegion

A DMP is different to an IVA in that it is an informal debt solution. Your creditors don't accept it, they get what they are given.

The simple reason for an emergency fund is once you’re on a DMP, every spare penny is already accounted for in your monthly payment. If something unexpected happens – like your washing machine breaking, the car needing repairs, or an urgent bill cropping up – you won’t have any extra money to cover it. Without a little buffer, you might end up having to rely on more credit (which you probably will not have access to), which defeats the whole purpose of the plan.

StepChange usually recommend saving a small emergency pot as you go. On here we advise to have a bigger chunk before you start.  It doesn’t have to be huge – even a few hundred pounds can make a difference. Having that safety net means you’ll be more likely to stick with your DMP, avoid extra stress, and deal with surprises without falling back into more debt.

Think of the emergency fund as your “safety cushion”. It protects your DMP, keeps things steady, and helps you feel more in control.

If your IVA company had fees then best to make it fail. Too many crooks out there taking advantage.

RAS

Stepchange used to allow £30 per month towards an emergency fund, may have risen in the last three years.

If people start a DMP with now't and something goes wrong in the first few months, they have to suspend their DMP. And start with now't again, rinse and repeat. Which is stressful and people feel the lack of control. 

We all know stuff happens but perhaps one poster's experience might help.

Some 6 months after she stopped paying her debts, she came back for some advice on lender behaviour.

Another person asked how the emergency fund was going. "Not great, she'd had to pay some unexpected vet's fees and and something for the car." Hmm. She commented that "I still got £200ish, but at least had the saved money covered those extra expenses." Which was rather different to the situation before she stopped paying her debts.

Well that is what the emergency fund was supposed to do. Hopefully going forward she'd have enough saved in her vet and car pots to cover those sort of incidents but meantime it had saved her from more borrowing, struggling to get to work or whatever the consequences were.

sourcrates

You can expect it to take at least a year for your IVA to formally fail, during that time you will still be under its legal protection from further enforcement action by your creditors.

Use this time wisely, save your IVA payments into an emergency fund, by the time your creditors know what`s going on, you should have quite a sum saved, use that to make full and final offers to whoever comes out of the woodwork after that, using National Debtline resources.

If you are skilful in your negotiation technique, and use a little bluff here and there, something perhaps along the lines of  "I lost my job" or "my company is looking at reducing staff" you know, use your imagination.

A touch of bravado and a little bit of luck and no DMP may be required.

ManyWays

Do you have a house or a car worth over 4k? As £90 a month is pretty close to the DRO maximum of £75, a bit of inflation between now and the point your IVA fails could see a DRO as being an easy option for you.

In the meantime, save up any amounts you can

IsitBedTime

ManyWays said:

Do you have a house or a car worth over 4k? As £90 a month is pretty close to the DRO maximum of £75, a bit of inflation between now and the point your IVA fails could see a DRO as being an easy option for you.

In the meantime, save up any amounts you can

Hi ManyWays,

Rented house and car isn't worth more than 4k.  So perhaps that might work.

Grumpelstiltskin

Honestly if you don't have a mortgage why did you go for an IVA?

I hope you didn't fall for an advert on social media.