So since my last blog I have spoken to James from Beat my Debt to find out if I could stop my DMP and should change to an IVA.
I have to say he was very helpful and really helped put my mind at rest on some things. Firstly, I was not even sure if an IVA would include my payday loans but it does and will also stop any further interest being added as an IVA will give me legal protection from my creditors.
So this means that I can include all my debts from my DMP as long as the creditors agree to the proposal, although James said there should be no issue for me on this which is great. I also thought that there would be a big fee to start an IVA but there are no upfront costs, the fees are taken in the first few months or so direct from my payments.
Apparently as a DMP is informal I can stop the payments almost straight away but it is best to start the IVA process as soon as possible to stop my creditors charging interest again or taking any action.
I have been told that my house will not be under threat at all but I may have to release some equity from it in the last year of my IVA although I understand that this would only happen if there was quite a bit of equity in it and then only if I could re-mortgage which would be unlikely due to my poor credit rating.
I may have to have my IVA extended for another year if there was equity that could not be released but I am happy with that, plus I doubt there will be any equity in my home then either as there is none right now but you never know as they say house prised should be rising…
I thought that there may be a risk of my work finding out about my IVA, maybe payments were taken directly from my wages or something but this is not the case, no one needs to know unless I want to tell them. I have told my sister as she is very supportive and knows my financial troubles, it has been a great help talking to someone about this.
After talking to James it does seem that starting an IVA really is my best option, I only have to pay monthly for 5 or 6 years and then the rest of my debt will be written off! My DMP was going to take at least 9 years. Not only that, I was told that even though I was in a DMP there was still a small possibility of getting a charging order from my creditors on my house as it would not protect me from this like an IVA would.
I am relieved that I will not need to move so I do not have to upset my daughters schooling or her. I was really feeling a bit ashamed of the fact that although I was already in a debt management plan I then borrowed more money and I felt a bit stupid once I got myself into this difficult situation but I understand that this happens quite a lot and James said if I start an IVA my expenses will be assessed again and it may end up being that I pay less than in my DMP.
I now feel that there is hope again and I will be able to pay my debts back without borrowing more money and struggling each month so much.
One thing that James has advised me to do is open a new bank account. I have been using a managed bank account while I have been in my DMP but that costs me £10 a month. I now know I can have a free account with the Co-Op. I am a bit worried about having to go through the process again and changing over my direct debits but I will be saving quite a bit so I think it is worth it. Not really sure why I was not advised about this when I started my DMP……?
The next stage is to speak to the Insolvency practitioner and I understand they will call me in a couple of days. I will let you know how it goes once I know.