DMP and IVA

lil_miss

Hi there,

I would really appreciate some insight into what the key differences between a DMP and IVA is. As after looking it up they just seem to be the same things. Is your credit rating better in a DMP and can you leave an IVA to a DMP.

Many Thanks

rayday2

A DMP is kinder to your credit history than an IVA. An IVA is a very serious step to take and very close to bankrupcy. If you search on this website for IVA you can see an article that Martin did about IVA.

DMP are a bit more flexible too if your wages drop than you can adjust payments or if they go up. But it is an informal arrangement. Also a good idea if you own your own property as you do not potentially risk your home with the DMP option. A DMP can run as long as it has to so not a set time but I believe that IVA can run longer than the lovely 5 year adverts we see with floating balloons and the solution to everything!

fermi

rayday2 wrote: »

If you search on this website for IVA you can see an article that Martin did about IVA.

It is here:

Link: Guide to IVAs - Are they worth it?

rog2

Excellet info above - as always.

In short a DMP is a voluntary agreement, where you try to reach a mutual arrangement with your creditors. Usually 'managed' by a Debt Counselling Charity, or private company, a DMP is not legally binding on either the creditors or the debtor.
An IVA, on the other hand, is a legally recognised form of 'Insolvency' - an alternative to Bankruptcy, whereby an Insolvency practitioner 'negociates' a settlement figure with your creditors, and you pay a monthly amount to the Insolvency Practitioner, who after the deduction of his, often not inconsiderable, fees, will distribute the remainder equally among your creditors. Whilst not all of your creditors may agree to an IVA, providing that the majority do, then that agreement is legally binding. Your name will, as in bankruptcy, be entered on the Insolvency Register. It is, often, a useful alternative to bankruptcy, where either the debtor has property, or is in a profession to which bankrupts are barred.
It has, also, been siezed upon as a 'Get Rich Quick' scheme by several 'unscrupulous' IVA Factories, whose only interest is to make money out of your debt.
You should, therefore, always take professional advice, from one of the Debt Counselling Charities if you are contemplating an IVA.
In terms of your 'credit status' both a DMP and an IVA will result in defaults being registered on your credit reference file, so not much to choose between them really.