does an IVA have a more severe impact than a dmp

Hello all, i have just entered into a DMP with Stepchange. My debt is over 9K.

What i want to know is that after 6 years an IVA will be removed from your credit file just like a DMP. so therefore wouldn't an IVA be a better option as i will then make much lower payments each month for 5 years and some debt will be written off. Whereas with a DMP, a huge chunk of my salary is used for the DMP and all of it has to be paid off.

I spoke to a debt advisor and she said an IVA and DMP are both the same in terms of the impact it has.

Is it also the case that not everyone will successfully be considered for an IVA, i.e. if you are earning enough to pay off all your debts you will be rejected thus wasting time and money applying for it?

i don't earn much , and a big amount of my salary is being used to pay into my DMP. Just still not 100% sure of the DMP. Just want to see opinions from anyone here and anyone who has knowledge of this. Thanks to anyone who replies

Comments

  • sourcrates
    sourcrates Posts: 28,647
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    You have only 9k of debt, an IVA is wholly unsuitable for your situation.
    They are designed for homeowners who have massive debt, and cannot go bankrupt due to their assets.

    Stick with the DMP, an IVA is a form of insolvency, all debt solutions affect your credit for 6 years.

    IVA’s do not work as you suggest, if you can afford the DMP payment, then the same amount would apply to an IVA and you would repay all of the debt, plus fee’s with no write off whatsoever, please do your own research as you appear to misunderstand how they work.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Suseka97
    Suseka97 Posts: 1,562
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    I agree with Sourcrates - but just wanted to add that I have been helping a friend lately with his debt issues and at first I thought a DMP was the way forward, but the debt advice from SC has pointed him towards an IVA.

    I realise this is the opposite to your situation - but having looked into this I see that it is because his debts are quite high and the amount he can afford on a DMP would mean he'd be in that sort of arrangement for some 12+ years.

    When it comes to debt solutions - in the main you should not look at this in terms of how much of your debt can be written off, but at what allows you a reasonable amount of money to live on, whilst clearing your debts within a reasonable amount of time.

    Also, it's worth noting that a DMP is more forgiving should your financial circumstances change over time. A lot of IVAs can fail due to unforeseen changes before the term ends and any debt is written off and you then find yourself back to square one.

    Ultimately its your choice, but I think you'll find that if you contacted an IVA provider and went through your I&E I can't see that they would reduce your monthly payment, unless you have seriously underestimated your expenses.
  • thanks for replying.

    i was asking because i received a phone call from CreditFix who asked me a lot of questions about the debts i have and how much i owe. The woman i spoke to recommended an IVA and said its a better option and to be eligible for an IVA, i would have to be at least 6k in debt. And she mentioned the amount i am paying on my DMP each month is a lot and with an IVA, i could pay a much lower amount and have some of the debt written off, as i am on a fairly low salary.
  • Willing2Learn
    Willing2Learn Posts: 6,286
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    edited 14 September 2019 at 12:27PM
    CreditFix are a commercial company, and their primary objective is to earn money from people's debt. I would be wary about taking advice from them.

    Why not post up your SOA, so that we can see your exact financial circumstances?
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

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  • Creditfix will charge you if they arrange an IVA for you- that could well be why they are suggesting it.

    There are free companies who will give you better advice.
    Aiming to make £7,500 online in 2022
  • sourcrates
    sourcrates Posts: 28,647
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    edited 14 September 2019 at 1:33PM
    smallie210 wrote: »
    thanks for replying.

    i was asking because i received a phone call from CreditFix who asked me a lot of questions about the debts i have and how much i owe. The woman i spoke to recommended an IVA and said its a better option and to be eligible for an IVA, i would have to be at least 6k in debt. And she mentioned the amount i am paying on my DMP each month is a lot and with an IVA, i could pay a much lower amount and have some of the debt written off, as i am on a fairly low salary.


    Creditfix sell IVA`s, thats why they "recommended" it too you.
    They are a Debt Mangement Company who sell these debt solutions, the market for them is quite lucrative, as they are allowed to charge fee`s at whatever rate they choose, 1000`s of them are mis-sold to individuals such as you, all the time, who do not realsie the full implications of what they are signing up too.

    Trust me when I say you would forever regret obtaining an IVA for your amount of debt.
    They are only really suitable for very large debts, (although there are no limits up or down), the idea been you pay what you can afford over the term, plus the fee`s, and the rest of the debt is written off on completion, large debts fine, big chunk is written off, small debt, not so fine, you end up paying all of it back, plus fee`s on top, good for creditfix, good for creditors, not good for you.

    This is why its so, so important to obtain free impartial advice from a sourse who has no interest in selling you something, there are a lot of sharks out there.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • If a company ring you up offering to "help" you find a way out of debt - view that with a huge amount of suspicion as chances are they're not doing that out of the goodness of their heart.
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