DMP vs IVA

[PeeBee71]

Hi,

I am in a position where I am considering an IVA or a DMP. One thing is certain, things cannot continue as they are. I have debts of around £31,000 all unsecured. I owe 5 different creditors; Barclays (personal loan & Overdraft), Halifax (card), AmEx (card), Tesco Finance (card) & Monument(Barclays subsidary) (card). Barclays are owed just under 50% of my total debt, with Halifax second with around 30%.

I am currently up to date with all of these debts, have no missed payments or reduced amounts.

However, I am in effect paying off all these bills and then living off the cards - Nothing is being paid off.

At a guess, through an IVA over 5 years, I would repay £18,000 (assuming a £300 per month payment). A similar arrangment with a DMP would take around 8 and a half years (assuming they freeze interest, and my personal circumstances do not change).

My question is which course of action, in the long term is most likely to be the least destructive to my future?
I am also concerned as to what would happen should any IVA get refused?
I pay in a company pension plan, as it stands, it is £82 per month. I really do not want to stop these payments - Will creditors insist I do?

In terms of assets, I rent accomodation, my car is worth £3.5K, £4K at best.

I am assuming that the first port of call is to open a new bank account somewhere regardless - As presumably Barclays will try to claw back the overdraft as soon as I tell them there is a problem.

Any and all advice is greatly appreciated.

Cheers

Pete

[PeeBee71]

Thanks for the reply.

Having gone through various calulations, I reckon I have £300 per month which I could use for either an IVA or a DMP.

My current obligations to creditors amount to £780 approx per month


There are some circumstances that may change in the next 4-5 years. I currently pay £420 to my ex partner for child maintenance. This is not through the CSA or courts, but an agreed figure between the two of us. It is non-negotiable. However, my oldest is 16 and my youngest is coming 13 so, in theory at least, in 4 years, I will have an additional £420 income. This is leading me down the DMP path, as at that point in time I will be able to pay £700 odd per month off a DMP, or indeed come off the DMP altogether and resume standard payment (assuming this is an option?).

In essence the immediate future is of the most concern. I have X amount coming in, and X amount going out, which is essentially the same figure. I am living almost exclusively on credit that is paid off, and then taken out again.

I have made contact with the CCCS and the National Debtline - Also applied for a smile account this morning, but they weren't able to let me know immediatly, which I guess is not a good sign.

I shall give it a couple of days to hear back from them and then go into the high street and open an account if possible.

[PeeBee71]

oooerr...

I definitely had a reply. But it seems to have dissapeared. I'm not talking to myself, honest guv(s)

Perhaps the stresses and strains of debt are becomming a bit much!

[freelili]

things are disappearing today,

LILY

I asked God for a solution and have to live with his reply.

[ordinary_world]

Andy,
I think my response to PeeBee71's message has vanished - is there a technical glitch with the website?

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[admin]

Again, many apologies to all those who have lost their posts while we were combatting the spam attack today.. please post again, the site is now safe!!
admin

[MelanieGiles]

Peebee

Your case is suitable for an IVA based upon the facts you have presented.

It is difficult to say which route is the best for your future, only you can decide that. In terms of credit forgiveness, in my experience there is always someone out there who will lend you money - and at the moment that ought to be the least thing from your mind.

You should not offer to stop your pension contributions, but may well be asked to by creditors if you propose an IVA. As I see you seem to be favouring the debt man=agment option, I suggest you try this yourself intially to avoid paying charges to a debt management company.

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

[ordinary_world]

Peebee - dont worry about the smile account, it takes about a day or two for acceptance and then a week or more for final checks to clear! If you've not defaulted on payments yet then I doubt you'll have a problem....and even if you have it takes a month for it to register on your credit file! (I think).

Best



OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[PeeBee71]

Right having thought things through a bit, I feel I have two options, to start with - If these don't work out, then I will go the IVA route.

Option 1
Get a new account open
Take the £300 per month and split it between my creditors on a debt ratio basis - I.e. Barclays get £150 per month, Halifax get £90 etc.
Write a letter to each creditor explaining the circumstances, and asking them to freeze interest. Sent payment with each letter.

Option 2.
Do a DMP through someone like Payplan or such like, so as to deflect some of the flak, and also perhaps a better chance of interest on the accounts being frozen? Or do I stand as much chance of this happening if I go it alone?

[PeeBee71]

. In terms of credit forgiveness, in my experience there is always someone out there who will lend you money - and at the moment that ought to be the least thing from your mind.

You should not offer to stop your pension contributions, but may well be asked to by creditors if you propose an IVA. As I see you seem to be favouring the debt man=agment option, I suggest you try this yourself intially to avoid paying charges to a debt management company.

Hi Melanie,

Thanks for the reply.

To elaborate.

The main reason I am verring towards a DMP is that I am slightly concerned that under an IVA, my child maintenance payments would come under scrutiny, and since they are not "official" in as much as they are not court ordered or through the CSA, but under a personal agreement, creditors would force me to go down this road. This is not something I want to do, nor do I want to start getting my ex partner involved.

With regards to future borrowing, of course borrow more money is not something I am going to do for a while, however, one cannot see what is round the corner, and to this end, I wanted to take the least damaging course with regards to my credit rating. Of course, I understand whatever option I take is going to have ramifications.

[MelanieGiles]

Hi PeeBee

The majority of child maintenance payments I see are subject to private arrangements, and creditors are unlikely to question this too much so long as you can provide evidence of the receipts.

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

[Adam Davies]

Hi PeeBee71
It may be worth you at least discussing a possible IVA because the biggest advantage that an IVA offers over a DMP is the protection from creditors in terms of further action and further interest Your change in payments towards the children can be built into your IVA.
I am not recommending an IVA but just feel hat you should consider it
For info your overdraft will be included within the IVA and your car would be safe.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[PeeBee71]

Many thanks for all the replies.

Obviously I will take onboard as much advice as I can before coming to any sort of decision.

With regards to evidence of reciepts. I do not have reciepts of payment. What I do have is evidence on bank statements of a transfer of monies from my account to my ex's account on a monthly basis.

Rent is similar story. I share an apartment with a friend who owns the property. I pay him on a monthly basis, but it is all very informal, would a creditor require anything more that a letter from him saying "Yes, Pete pays me X amount per month?"

[aguise]

Yes I think all that they will require is your friend to write a letter confirming how much rent you pay and I would have thought bank statements showing the transfer to your ex's ac is proof of what you have been paying.

Ang

[PeeBee71]

Ok - so, just had a long chat with a guy from the CCCS. He agreed with my numbers, of having around £300 available for creditors. He gave me the pros and cons of DMPs and IVAs (to be honest what with the amount of reading I have done on both, there wasn't much I didn't already know ).

He didn't have any feeling either way between an IVA and a DMP, he said I could go both ways and it was really up to me to decide which one I felt most comfortable with.

With regards to fees for an IVA, it's £2,500 at the start plus 10% per month - Which based on payments of £300 equates to £1800.

DMP fees are free to set up, then 10% per month of payments, which obviously on a debt of £31,000 equates to £3,100 - So much the same really. Any opinions on whether these are competitive?

I guess I could start of with a DMP, and move over to an IVA if necessary. Does anyone know if having been in a DMP has any benefit or detriment to an IVA application?