www.iva.co.uk

we are currently in a DMP and have been for about 3 yr, we owe approx £29k but im just wondering if we should go for an IVA we own our home but even if it were sold it would just pay back the mortgage lenders, we really dont want to have to sell up anyway. please help!

Hi Annie,

How much are you paying in your DMP ?

What level of equity do you have in your house ?

It will help establish what the best advice is for you

Agree with Carl.

before you can get the answers you need we need to know the above plus what is your realsitic disposable income, how safe are your jobs, how old are you etc.

look forward to your reply

we are paying £170pm at the moment, i work part time and hubby full time but i have an interview for a full time job which will more than double my wage so the situation will change to paying more, we dont have any equity as the house was remortgaged b4 i moved in(3 yr ago) and again last yr to get a better deal.

lol ok im 35 hubby 40, jobs very secure, at moment monthly income 1500 but DMP as is, the £170 is our disposable income, if i get the job our monthly income will be 2000 but i will have to pay out more for car and traveling, i just think that even with the new job we will pay forever on the DMP

oh and i have two kids age 9 and 6 if that makes any difference, we dont get wftc as they overpaid me and have stopped it!

Hi annie.m

at your current run rate you would take 14 years to finish the DMP and become debt free.

You probably don't have enough monthly disposable income to look an an IVA but this may change if your job changes. Why don't you give Carl a call on Monday and just run the numbers past him and he will tell you whether an IVA is likely to be accepted by the creditors.

if that is not a likely to succeed there is another option and if the house has no equity that would remain safe.

See what Carl says - he will give you free impartial advice without any obligation and it will really help you to start sharing the problem.

Don't worry you are in the right place to get advice and help and are on the way to becomming debt free so stop worrying and enjoy the rest of the weekend.

cheers for that, i know when we started the DMP they told us it would take 15 yr! i just thought that with an IVA the money we pay to the DMP will be included and hopefully i get the new job so will be able to increase the payments which i know will happen with the DMP when i tell them i have a new job!! it would be great to know its finished in 5 yr instead of 15 [:D] i have the interview on monday so will see how it goes and give carl a call after that!
im deff enjoying the weekend i have my wine at hand !!! hope u all have a good evening too!

It does sound like you may be able to look at an IVA and you will get your debts cleared alot quicker than in a DMP + you will the protection from your creditors.

Good luck with the interview - fingers crossed.

Hi Annie,

Not sure an IVA is necessary for you. A formal insolvency is not to be entered into lightly and it may be that you have a better option.

Let's say that you can afford £170 per month today. Your family income goes up by £500 but you face additional travelling costs. If we assume that your extra costs are £100 per month you are now in a position to pay £570 per month into a DMP.

If you use a "free" DMP company to organise a DMP between your creditors and yourselves and they get interest/charges on the accounts frozen you will clear debts of £29000 in 51 months (9 months less than in an IVA).

If you use a fee-charging DMP company to represent you in a DMP, they get interest/charges frozen, and they charge a 10% monthly management fee, you will clear debts of £29000 in 57 months (3 months less than an IVA).

In both forms of DMP you will avoid the need to remortgage your house towards the end of the IVA if you have built up some equity by that time.

In both forms of DMP you will retain the option to clear the debts in full at the time of your choosing if you develop accessible equity in your home equal to the outstanding balance at that time.

In both forms of DMP you will avoid the serious step of entering into a formal insolvency.

I've been on record on many occasions on this site saying that very often an IVA represents a better option than a DMP. However, and this is an increasingly important point, as creditors have tightened up what they will and will not accept in an IVA a Debt Managment Plan has become the better option for many more people than used to be the case.

Very good points Andrew and I agree it maybe that a DMP is more suitable depending on the disposable income.

You mention "if you develop accessible equity" i am seeing more and more creditors applying for charging orders and enforcing payments at the moment, so there is always the risk of a creditor taking this action.

I would also be interested to know how many creditors will freeze interest for the full term of DMP ?

Hello Carl,

If there is accessible equity then I guess it's fair enough if a creditor seeks to secure the debt?

A very rare occurence. It has happened to one of our clients on one account in the past twelve months so in reality it's an unusual result in unique circumstances. You are right to say that in specific circumstances it could happen but it happens infrequently. In certain circumstances the securing of a debt can work in the debtors interests.

There isn't any equity in Annie's case so I guess it's a moot point?

No creditor would freeze interest for the full term of a DMP; why should they because if circumstances change for the positive and the original credit agreement can be met then why would it be changed?

In the vast majority of cases however where overindebted persons are doing their very best to repay their debts the creditors will continue to freeze interest as part of their commitment under the British Banking Association's requirement of them to deal with cases of financial difficulty sympathetically.

I guess the difference between a DMP and an IVA here (where equity accrues during the period of the debt solution) is that under a DMP the debtor could elect to make a full (or negotiate a full and final) settlement at whatever point suits them rather than under an IVA where any accessible equity will have to be offered to creditors according to the terms of the IVA.

On the question about whether creditors will freeze interest on a DMP you'll find that this almost always happens in a DMP where the DMP company actively represents the interests of a client who is doing their very best to repay the debt as best that they can.

This isn't a DMP versus IVA post. Every case is different and the only things that are important are best-information and best-advice.

Sorry if it sounded like IVA v DMP post - it was not my intention to come across that way.

And i agree if there is accessible equity then why should a creditor not look to secure the debt... The thing that i dont think is fair it that if they do secure the debt they have the power to dictate a payment, and if that payment is not met each month they can repossess !!

I to have only seen one case in the last twelve months were the client was in a DMP and a creditor secured the debt, asked for a payment of £380 (bearing in mind they were only paying £350 in a DMP) and forced a repossession as the client could not afford that payment. So yes it is a rare thing to happen.

Like you say no two cases are the same, and it does depend on cicumstances.

Hello Carl,

Didn't mean to suggest that you were turning it into a DMP vs IVA debate; just that our chat could be interpreted to be which I think is where neither of us are coming from.

Good to see that you agree the use of charging orders against an individual in a debt solution is rare.

Can a creditor really dictate the monthly payment against a charging order?

Like i said this particular case was a rare circumstance, but yes it was in court and was ordered to pay £380 which the they simply could not afford (but it didnt help that they did not turn up to court)so i can happen.