DMP

[j_s]

I have the option to go on a DMP as opposed to an IVA. Can anyone tell me in what circumstances a DWP would be better than an IVA

[go_4_broke]

Hi j_s that's an interesting question to set especially at this time of night !

I can't actually think of one except if you happened to be radically averse to the sort of quasi-legal procedures you have to go through to get an IVA set up, creditors meetings and the like, tho I'm sure others could do better.

In an IVA you you should pay less for less time and have a secure, binding agreement which is not the case in a DMP.

Which is a pretty good sales job for IVA's considering I spend most of my time here griping about them.

New to the forums - but not to debt !

[MelanieGiles]

A DMP can be an ideal method of repaying your creditors, providing that they all agree to the offer and you are prepared to continue paying until the debts have been paid off in full. Depending upon the amount you owe, and the level of your disposable income, coupled with the creditors policy on charging interest throught the DMP, will determine the length of repayment period.

A DMP would be better than an IVA for you (but not necessarily for your creditors) if you have a relatively low amount of debt or high disposable income, meaning that you could repay your creditors within a five year timescale without resorting to a formal insolvency procedure.

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

[neverending]

A DMP will return the full 100% debt back to your creditors where as an IVA will normally return less.Also a DMP will have a lesser effect on your credit status than an IVA.A DMP will have no effect on your equity where as an IVA will almost certainly require a portion of your equity.Finally a DMP is totally private,between you and your creditors where as an IVA can be made known to the general public via the insolvency register.
I would advise a DMP over an IVA if you can conclude it within 5-6 years.
Good Luck

[j_s]

Thanks for the advice. I have taken advice from so many people, all of whom have a vested interest, be it IVA companies pushing me down that line knowing they get a bigger fee or DMP as the creditors have more chance of getting everything back and a lot more. My head says try the DMP first as I always have something to fall back on and as my financial situation should improve come November it maybe a better short term fix. You've made my mind up, thanks!

[go_4_broke]

Sounds like a good strategy j_s, best of luck with it.

I'm not sure why neverending is saying a DMP would have a lesser effect on your credit status though, I would have thought it be the other way round. Care to clarify never ?

Also bear in mind that to clear the same debt for the same monthly payment you will be in a DMP for I would imagine at least twice as long as an IVA on average terms as you are clearing 100% not 30-50% of debt.

So I'm not sure what you mean about giving your creditors 'a lot more', I would have thought 'everything' would suffice!


-Best



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

[neverending]

Hi go for broke
A DMP would not be registered on your credit file as an IVA would.A DMP would not be registered on the insolvency register and a DMP will enable you to still apply for credit[not that you,d want to] wheras a part of an IVA is that you are unable to apply for credit during the term of it[unless you have your IPs agreement].
Without doubt a DMP is less damaging to your credit status than an IVA,remember an IVA is one step down from bankruptcy.
If you owe,for example,30k and you have a disposible income of £500 per month then you could pay back the whole debt over 5 years under a DMP[60 x £500] if you could get interest suspended.Under an IVA your IP fees would total approx 10k so for the same term you would return 66p dividend instead of the £1 in the £1 dividend under a DMP.
Remember your creditors will decline an IVA if they can get a better return over, a similar period ,with a DMP.
Regards

[go_4_broke]

Hullo never

Yes, I think my view was that in a either an IVA or a DMP all the original credit would be recorded as shot (ie defaulted) so it was fairly academic, at least up to the six year point, when both should be then off the credit record. I believe Experian (presumably Equifax as well) DO record DMPS's if informed by the lender, so although it is not publicly visible it is visible to other lenders for the duration.

The most likely form of credit people in this situation will want is a mortgage and those in an IVA may well be viewed as being a better bet by the lender as they have a clearly defined legal end to their debts. A DMP by is by nature a more uncertain proposition.

I agree that there may be marginal situations where a DMP is preferable but assuming someone IS able to get an IVA on good terms (ie not with your very well padded IP above !) I think they would be mad to prolong the agony for several years by voluntarily entering a DMP.

One thing I can think of where a DMP might be better if is a person had uncertain employment prospects, because of the commitment involved in an IVA. But that not being a problem, given your straight choice example above, I would pick the IVA every time. I think we might have to agree to differ on this one !

-Best





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

[neverending]

I,m not sure if most people have the choice of a DMP or an IVA.
A person looking and being accepted for an IVA is extremely unlikely to be able to propose a realistic DMP so the choice is generally between bankruptcy or an IVA.
I will say again that anyone who can propose a workable and realistic DMP should do this and if they are in this position then really an IVA should not be an "option"
regards

[go_4_broke]

I think the key phrase here is 'given the choice'.

You might be interested to read James Falla's blog, as he comments quite a lot on this issue.

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