DMP or IVA?

[SteveE]

I have unsecured debts of just over £46k, and have fortunately just secured full time employment which will give me a monthly surplus of around £200-£250 from the end of April (although that's beyond tight!).

I've spoken with the Consumer Credit Counselling Service who are advocating taking up a Debt Management Plan through them (at no charge) rather than an IVA. They state that the advantages are that the creditors don't need to write off any debt, that my assets (I own my own property which has around £30k equity left) aren't brought into it, and that part of the reason creditors sometimes refuse an IVA is because of the charges placed on top.

If at all possible I'd like to keep my house, although I'm aware that this might be the 'best' solution. In your experience, what might be the best route for me to take?
Regards
Steve

[neverending]

Hi
Well the CCC are correct in what they say,however under a DMP it would take you at LEAST FIFTEEN YEARS to repay the debts and thats presuming that you can get all the interest stopped.
You may get an IVA agreed but you would only just return the minimum dividend of 25p that is generally accepted,however this would depend on which creditors you had some will only accept a minimum of 40p.You would also have to release some of your equity in the final year.
You may be better entering a DMP whilst your equity grows and then offering a full and final settlement to your creditors by way of a remortgage.If you wanted you could also try this now,if you could say release 20k.
Speak to a few companies on this site.

regards

[go_4_broke]

Hi Steve

Neverending is right, that is an absurdly long time to be repaying.

I have to wonder about the CCCS sometimes, they do seem to be very fond of their DMP's which strangely are very beneficial to the banks and credit companies who finance them.

What's interesting is that your £46k, paid out over 15 years, is, because of the time/cost factor, worth only about £30k as a lump sum today, which I can't help noticing is the same as your available equity.

However even if you based an offer on the 20k never suggests you are in effect giving your creditors 66% which is not a bad outcome and almost certainly better than they would get in an IVA.

Worth a thought perhaps, although you will probably have to do most of the the work yourself.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

Hi Steve

You could also consider a full and final settlement based IVA now, based upon an equity release now. This has the advantage for you of clearing your debts with finality, although you will have to persuade creditors that this represents a better solution for them than the DMP.

As you have been out of work for some time, they might perceive a DMP as risky in the long term, and be persuaded to accept a short settlement now - but if you are going to remortgage the property you must be sure that you can afford to make the ongoing higher mortgage repayments.




Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[SteveE]

Thanks everyone.

Including a secured loan I already have, my loan to value ratio is 85% already, so I'm thinking that unless I pay a huge interest rate it doesn't look like I'll be able to release any more equity right now.

It's tricky to know the 'best'way forwards, with different people having different ideas!

I'll be calling the mortgage company today, to look at switching to interest only and perhaps incorporating the secured loan I already have.

Always happy to have any other thoughts!
Regards
Steve

[MelanieGiles]

That seems a good idea - and may well free up some spare money each month to fund either a DMP or contributions based IVA.

Do let us know how you get on.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk