Any advice

A question about : Any advice

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 (Ј42k 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.

Best answers:

• Which is precisely why an IVA is not suitable for you.
  Read this https://www.moneysavingexpert.com/loa...-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.
• 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 :confused:
• 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
• 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.
• 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.
• 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!
• I Personally Think The Iva Is The Best Option But Its Only An Opinion....
• 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
• 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.
• Having spent months doing our research into an IVA, we eventually applied via CCCS, and were one step away from signing the official documentation, however, because:
  Quote:
• 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.[/quote]
  I think it depends on how many creditors you have. Some are better than others I had 13 different creditors and trying to keep up with all their letters, calls etc when I haad a DMP was a complete nightmare. Once in the IVA all that stopped. I am just speaking from my own experience.
• I am now in year 4 of an IVA, have no assets, was talked through bankruptcy before the final stuff went through and I havent had any problems at all. If I get the odd letter from my old creditors,I just ring BE and they sort them out. When you first set your iva up, they go through your expenditure with you - and they have a maximum that you are "allowed" to need for each thing - (eg - there is a max of Ј40 a month for pet food - to cover people who have pets on prescription food or have two or more pets) I was told that if I wanted to I could claim the maximum for all my living expenses,and end up with more money for me - I didnt, though occasionally I wish i had!!
  They know I have no assets - my car is only worth Ј1500, and I rent, so no property and its not a problem.When I rang and asked, they said that some people release equity to end it sooner - its not compulsory at all.
  I dont know what happens in the final year though - ( btw - I changed jobs in teh middle, told be straight away and they were really helpful - I was lucky enough to get another job before I needed to pay them again,so it didnt matter, but I didnt get the feeling that it would have been a massive problem if it had taken a month or two) Im durrently paying the half of my extra earnings as an extra add on to my monthly payments - presumably I can do it as a lump sum at the end of my time...
  anyway - just because you dont have a home to protect,dont let it put you off looking into an IVA - they arent half as bad as people would have you believe - the only people Ive ever heard bad mouth them are people who have been told they are bad,never anyone who has gone into it with their eyes open....
• Sorry to be thick but what is a DMP?
• A DMP is a debt management plan. You can start one with companies like CCCS and PayPlan. You fill out a budget sheet and come to a figure you can afford to offer to creditors. You send that one monthly payment to CCCS or PayPlan and they divide it, pro rata, between your creditors. They also try to negotiate reduced or frozen interest with your creditors. You carry on the plan for as long as it takes to pay everyone off (which obviously can depend on whether they freeze interest or not!) But you don't have the five-year cut off that you get with an IVA, with any debt left outstanding written off.
• It is only possible to raise funds to pay the IVA off early if you can present a third-party that is willing to pay in directly. They cannot give you the money as that will be seen a a windfall, which will come under the agreement.
  My brother considered doing this in his IVA but his supervisor advised against it in the final year as it would have opened up a further review of his finances and may have cost him more alot money overall.
  I probably would have been able to arrange an early settlement too but decided against it and kept my head down after my final review, as I'd managed to get right the way through without any increase in payments. After my last payment I just had a courtesy call from one of the directors of the IVA company saying they were getting everything ready to close it down and a few days later I received the Certificate and final report.