www.iva.co.uk

My husband is currently considering an IVA vs a DMP of 40 years.

It all seems great until the bit where he could be expected to release equity in our home? Surely this is just transferring the debt to a more dangerous place further down the line?

How likely is this to happen?
With a terrible credit score it is unlikely we will be able to re-mortgage or get any sort of loan. What is your advice?

Equity is not easy to release and most IVAs are extended by a year. However if he reamins in a DMP he could receive secured charges against his equity anyway and ultimately someone could make him bankrupt. A 40 year DMP can never be the best option.

Hi and welcome,

Speak to one or two companies before making a decision.

Andy Davie/Vincent Bond who post on here (details under the expert link on the left hand side of the page) will give you some free advice.

I certainly agree with Michael that a 40 year DMP isn't good - it's worse than a mortgage!

Hi and a very warm welcome.

40 years is a long time within a DMP and the dangers of secured charges as brought to light by Michael may happen.

Why not talk to 2 or 3 companies to gain some case specific advice. At the moment equity can be addressed with the 12 extra monthly payment but do ask the question with whoever you speak to as there are other ways that may need to be discussed. Only proceed when 100% sure you are ready.

Hi Liz 40 year DMP? He will probably not live to pay it! An IVA might be a better alternative so speak to some IPs. As regards the property this can probably be dealt with as part of the IVA proposals, perhaps by adding an extra year to the IVA making it last for say 6 years instead of a standard 5.

6 years has got to be better than 40...!

Plus an IVA is legally binding whereas a DMP is not.

The one thing you must not do is nothing.
I looked into a dmp 2 years before I went for a iva. Was put of a dmp owing to the number of years it would take to pay off.
So done nothing thinking I could work it out on my own.
2 years later I was in more debt and went into a iva, For me it was the best thing I've done. now debt free.

Thanks for all you helpful advice. We are currently on an DMP, so its definitely in hand, just it's not sustainable.

I don't really understand how we are supposed to release the equity.

In the interest of honest the debt total is 67K
and our mortgage is 240K and we're on an interest only mortgage, so we'll be lucky to have anything left.

The chances are that you wouldn't be able to release the equity anyway. You might have to just carry on for a sixth year.

Much better than 40 years!!

You also need to consider any secured loan requirement further down the line if you go into an IVA.

We went into one because one of our credit cards would have taken 40 years to pay based on minimum repayments.

An IVA might take 6-7 years of your life that is 5 times less than what you are looking at with a DMP.

Only ever go into an IVA because you have to bearing in mind that it is one step down from bankruptcy.

However, with your level of debt it may be a far better option than a DMP.

If you have such a large mortgage it is likely you will struggle to get a refinance anyway even if there is equity. It is certainly worth looking at an IVA and seeing if it is an option. There is nothing to lose and you can remain in your DMP if an IVA is not suitable or gets rejected. Most firms will propose IVAs without upfront fees and if the IVA is rejected you have lost nothing.

40 years is a lifetime of debt repayment.

I just advised a couple in their 70's who had 300 years to go on a DMP...!

70 is the new teenager now?

They would need more lives than a cat to repay that debt!