Any advice - IVA vs DMP

skintandscared_2 · 16 October 2008 at 1:54PM

Can anyone offer any advice please? I have geared myself up to enter into a DMP with CCCS. I have everything pretty much ready - just waiting for the last credit card statements to arrive to add to the pack to send to CCCS.

But a friend of mine - who happens to be a solicitor - has asked me why I am not going IVA instead. He says it would be a better solution for me.... I have a huge amount of debt (£42k on one loan, an overdraft and 6 credit cards) and absolutely no assets to my name whatsoever.

Can anyone tell me how they made the choice between DMP and IVA?!

Many thanks.

RAS · 16 October 2008 at 2:16PM

Which is precisely why an IVA is not suitable for you.

Read this http://www.moneysavingexpert.com/loans/pdf-iva-guide.pdf

An IVA is for people who have assets to protect.

Remember your solicitor is legally trained. He has no training in domestic finances.

skintandscared_2 · 16 October 2008 at 2:48PM

Thanks for your reply RAS. I understand that an IVA is preferable to bankruptcy if you have assets to protect. But I don't understand the reason it should be avoided if you DON'T have assets to protect? I've read through Martin's pdf and maybe I'm missing something because I can't see that it's really any more restrictive than a DMP, but it would work out cheaper in the longrun over the next 5 years and then be gone. Whereas my DMP would take 6.5 year and I'd have a marker on my credit file for another 6 years after that.... I seriously can't work out what's best to do

Miss_Piggy_2 · 16 October 2008 at 3:07PM

IVA's are only suitable for a small proportion of people. The CCCS would talk to you about this option if they felt it was a viable one. As it is, paying off that size debt in 6.5 years on a DMP is actually pretty good!
If you are unsure then call the CCCS and see what they have to say. They are the ones in the best position to advise.
Regards
Miss P
xx

Deep_In_Debt · 16 October 2008 at 3:13PM

An IVA is the step up from bankruptcy and is basically used to protect your assests instead of bankruptcy where you could lose them.

You are also expected to release equity in your property in year 4 to make a lump sum payment towards your debt.

Don't go on the advice of your friend. An IVA is not right for you.

Deep_In_Debt · 16 October 2008 at 3:18PM

An IVA is a lot more restrictive than a DMP. On an IVA, you are stripped back to the bare minimum in terms of living expenses. A dmp is much more flexible. A lot can happen in 5 years - if you lose your job whilst in an IVA and you miss a payment, you could be facing BR having already paid loads into the IVA, whereas a dmp is more flexible where if you miss a payment, the conseqences are not so bad.

I have property to protect but an IVA was not suitable for me. I'm glad I did not go down the IVA route (I nearly did!) as I've since lost my job and would be facing BR now.

Please speak to CCCS - they recommend IVA's to a very small percentage of people and only if it's right for you.

skintandscared_2 · 16 October 2008 at 4:42PM

Thank you for your helpful replies. This is all so new to me. I'd just got my head around the DMP thing and was feeling really positive, then my friend stuck in this IVA concept and made me feel a bit silly for wanting to pay more off than maybe I had to. But I don't want anything more restrictive and I would much rather do the DMP through CCCS, even if the payments are higher, just so I can pay more off. I don't know why but the thought of IVA just scares me even more than a DMP. Obviously I'd love to not have to do either, but I have to face the fact that that is not an option!

purple-pear · 4 November 2008 at 12:15PM

I Personally Think The Iva Is The Best Option But Its Only An Opinion....

jack290292 · 7 November 2008 at 8:13PM

Having completed an IVA after first doing a DMP for two years...I also think, as does purple-pear, and IVA is a better option.
You are far more protected from you creditors and five years was quite long enough for us.
We found the IVA no more restrictive than the original DMP especially as creditors continued to contact us for increses in payments and re-started interest....none of which happened once the IVA was in place.

Sorry if that's confused you even more:o

moneysavingplumber · 7 November 2008 at 9:36PM

jack290292 wrote: »

Having completed an IVA after first doing a DMP for two years...I also think, as does purple-pear, and IVA is a better option.
You are far more protected from you creditors and five years was quite long enough for us.
We found the IVA no more restrictive than the original DMP especially as creditors continued to contact us for increses in payments and re-started interest....none of which happened once the IVA was in place.

Sorry if that's confused you even more:o

I'm inclined to agree, but it depends on your own experience, I started a DMP in around '01 or '02 but there was still constant harassment from creditors, and as a self-employed person with income tax liabilities, they had to take priority, which I paid off once but then had a load more tax liability a year or so later (admittedly by my own inept handling of my money) and again found myself facing distraint action by the Inland Revenue. Bankruptcy would have caused me a lot of problems that an IVA avoided, and I was lucky enough to always be able to make the payments (and there is little more precarious employment han self-employment) and it seems I had a very good IVA practitioner. I'm now debt free having begun the IVA in November 2003, and three out of four defaults have already been removed from my credit file at Experian (haven't checked Equifax this month) even though they don't have to be removed for another year, the last will be removed in January, meaning I will soon be able to start building a credit history again.

I take seriously the advice of all on this forum that don't like IVAs and have had bad experiences, as well as Martin Lewis' article, but I can't argue with my own experiences which were much better than others here seem to have had.

Definitely take advice from CCCS and CAB though as advised.

Deep_In_Debt · 7 November 2008 at 10:09PM

For me a dmp was much more suitable. Ok, I have a bit of equity in my property but not enough to clear my debts in full. I'm on my own, have a small mortgage and rental properties are more expensive than my mortgage where I live in the SE. I would be expected to release equity in year 4 - how is that reducing my debts when I'm due to clear my mortgage in 5 years anyway?

Anyway, at the start of my dmp, I was told it would take me 9 years to clear my dmp, however, since the start in January this year, I've managed to reduce the term to about 6 years and reducing. An IVA is very restrictive, whereas a dmp is not. A lot can change in 5 years.

I've not had any hassle from creditors since May, but I'd rather deal with them than worry about being tied down (so to speak!) and not being able to live.

Any advice - IVA vs DMP

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