IVA or DMP

aarondlr · 2 December 2019 at 7:58PM

I've been speaking with StepChange and currently have around £23,500.00 of unsecured debt (some of this being interest on a loan).The monthly payments for their suggested solution of a DMP is around £355.00 and it would take 5 1/2 years to pay this debt off. That's without the guarantee that the creditors (HSBC/MBNA) will write off the interest. At current my monthly payments are around £545.00 and it's killing me each month.

My question, is would the monthly payments of an IVA be lower? As I previously spoke with an IP that was quite confident they could secure £150.00 monthly payments with an IVA. But, I was super nervous as they were a commercial partner.

What is the main difference between the two solutions? Trying to get myself back on my feet in the next five years to start building a better credit file.

Willing2Learn · 2 December 2019 at 8:21PM

Please could you post up your Statement of Affairs (SOA)...

aarondlr · 2 December 2019 at 8:48PM

When you say state of affairs... what exact information?

Willing2Learn · 2 December 2019 at 8:56PM

An SOA is a simple form that lists all your income and expenses, assets and debts. Please complete the online form using the link below. Please remember to hit the 'format for MSE' button near the bottom of the form, before pasting it up in this thread.

https://www.lemonfool.co.uk/financecalculators/soa.php

aarondlr · 2 December 2019 at 9:59PM

Willing2Learn wrote: »

An SOA is a simple form that lists all your income and expenses, assets and debts. Please complete the online form using the link below. Please remember to hit the 'format for MSE' button near the bottom of the form, before pasting it up in this thread.

https://www.lemonfool.co.uk/financecalculators/soa.php

I actually totaled the wrong amount it was £21,156.00.

Quote from my StepChange DMP suggestion:
To help you understand how long it will take to clear your unsecured debt, we’ve worked out if you pay £353 every month it will take you 5 years . This may seem a long time, but in reality most people’s circumstances improve.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1996
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1996

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 766
Management charge (leasehold property).. 0
Council tax............................. 50
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 22
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 11
Satellite/Cable TV...................... 30
Internet Services....................... 30
Groceries etc. ......................... 222
Clothing................................ 30
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 80
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 21
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 0
Family / Friend Loans................... 25
Work Lunches............................ 150
Mum's Phone / Internet.................. 65
Sundries/Emergencies.................... 15
Laundry................................. 10
Dentist................................. 17
Total monthly expenses.................. 1644

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Loan...........................13518.3...314.......0
Credit Card....................1982.22...0.........0
Credit Card....................5653.15...0.........0
Total unsecured debts..........21153.67..314.......-

Monthly Budget Summary
Total monthly income.................... 1,996
Expenses (including HP & secured debts). 1,644
Available for debt repayments........... 352
Monthly UNsecured debt repayments....... 314
Amount left after debt repayments....... 38

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -21,153.67
Net Assets.............................. -21,153.67

But, honestly item lines such as entertainment aren't quite aligned with requirements. This was advised by the charity as the maximum. As creditors look down on entertainment costs.

foxy-stoat · 3 December 2019 at 12:28PM

It doesn't look, to me, like your in enough debt to warrant going IVA. If say your credit card balances were treble or four times them amounts I would say good call to go IVA.

Is your Mum able to pay for her own stuff and make other savings else where?

What are the interest rates of your debts?

Told you not to take out a four figure loan last year....

https://forums.moneysavingexpert.com/showthread.php?t=5855009

So a year ago you were £12,354 in the red, now you are £23,500 down - where has the £10,000 gone?

Sncjw · 3 December 2019 at 3:34PM

Your council tax, gas , electricity looks really low.

Your food bill is £222 you could easily cut that by £100 a month. Also your work lunches. Make food to take into work. You will save £150 there.

No contents insurance . That’s important you don’t want to have to try and find money to replace your items.

Willing2Learn · 3 December 2019 at 6:27PM

Hello again,

Is your council tax calculated for 10 monthly payments or 12? Also, are you getting the single persons' discount for your CT.

Is your electricity and gas really only £60/month combined, as it seems really cheap....

Is your water metered?

Is your TV license really £11, as mine is £13/month?

Why are you spending £150/month on work lunches? It would save a bundle by taking your own packed lunches with you.

Why do your debts not have any interest being charged?

Recommendations:
You should insure the contents of your home, just in case the worst happens.

You should be putting money aside every month, as an emergency fund, so that you a kitty for any unforeseen expense.

If it were me, and the choice was a DMP or IVA, I would probably go down the DMP route...I am assuming that your creditors default all your accounts promptly, and that you would clear the DMP early with full and final settlement offers.

c_e_l · 3 December 2019 at 9:30PM

A DMP is way to clear your debts (interest free) in full over a period of time with less negative effect on your credit report.

An IVA is a way of going Bankrupt and keeping your home or any assets you wish to protect. An IVA will severely damage your credit for a minimum of 6yrs.

Seek advice from your local citizens advice, who can clearly explain the implications to both.

Hope this helps.....

fatbelly · 4 December 2019 at 10:11AM

DMP or IVA?

It doesn't look to me, from your soa, that you need either. Just get your aprs as low as possible (you say they are all zero, which seems unlikely) and then make the contractual payments. A dmp has no advantages in that situation.

However, post 1 contradicts your soa with regard to the minimum payments.

In your situation bankruptcy would be more appropriate than an IVA as you appear to have no assets to protect but I can't see that you need that either.

Skint2918 · 6 December 2019 at 5:11PM

What are the success rates on aa debt managment plan. I'm. Looking at starting one. With £29000 worth of debt and budgeted £1000 a month towards it.

IVA or DMP

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