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can you sell your house while on a dmp and do you have to tell them

You may find it difficult to get a mortgage at the moment and to save up enough to finance the costs of moving. You would need to speak to the person managing your DMP to see whether it is allowed and whether creditors have any claim on the equity.

Yes - there is nothing to stop you selling your property whilst in a DMP, and if there is any equity you could perhaps use this to clear a chunk off your debts.

Hello jayne.6,

There is nothing at all to stop you from selling your home while you are in a debt management plan.

You do not need to tell your debt management company though they may establish that there have been changes to your expenditure when they next review the DMP.

As Melanie has written this could be a uniquely good opportunity to reduce your overall debt level. Many creditors would prefer to accept a reduced settlement (and write-off some debt) rather than continuing to accept debt management plan payments over the coming months and years.

Andrew - do you see any changes coming to the DMP arena requiring people to declare more about their assets, and those which are sold whilst the plan is in place?

I don't Melanie.

Unlike an IVA, debt management plans do not include the contribution of assets such as equity in a home.

Of course a debt management plan does not provide protection against creditors taking legal action to use a debtors assets to help deal with debt should a creditor wish to.

I think that is right - in that consumers should still have the choice as to whether the benefits of a shorter, perhaps more painful experience in bankruptcy or IVA, is better than a longer and uncertain, but perhaps more flexible solution in the DMP.

Given that one of the ideas I gather being mooted at the moment is a regulated DMP with perhaps automatic debt write off at the eight year point, this could indeed become the preferred solution to lenders and consumers alike.

That sounds like a good idea.

I think we already have it - it is called an IVA! Will we see 8 year IVAs one wonders aloud?

That wouldn't surprise me!

Interesting discussion. The 8 year DMP could actually make it more difficult for IVAs to be approved for people without equity. Could it end up that IVAs become the solution for those with equity to release and creditors insist on the longer DMP for those of us without equity. This would theoretically give them the best return but reduce the options for debtors. I hope to return a 100% dividend with a good wind and a few promotions but the 5 year term was the most important factor in choosing my iva. I am 32 now and want to recover from my debts while I'm still young. I'm sure there are people at lots of stages in life that feel they need a short sharp shock rather than a more drawn out (even if more comfortable) solution. My worry-wort mind does love to jump the gun!!

If creditors pushed for this option I believe that bankruptcies would shoot through the roof. I doubt if too many people with no equity or even a property would agree to pay over 100% of their surplus for a period of eight years when they could petition for bankruptcy and pay over a percentage for three.

Five years is a reasonable compromise and any movement towards eight may actually backfire for creditors. I have noticed an increasing number of clients opting for bankruptcy rather than entering six year IVAs with a likely extension to seven.

Quite agree Michael - people are not going to agree to an 8 year plan if they could be debt free in 3 with bankruptcy.

It was just a hypothetical what if really. I totally agree 8 years is too long for an IVA. But I also think that we make a commitment and take responsibility when we make our choice; to take that choice away would also contribute to a higher failure rate.

I don't see the lending community agreeing to this, but it will be interesting to see what the two trade associations - DRF and DEMSA come up with in terms of suggestions, as well as the OFT in due course.