My DMP Is Not Working Can I Change to an IVA?

If you are currently in a debt management plan but are worried that it is not working for you, we consider the possibility of switching to an IVA.

There are a number of reasons why your debt management plan may not be working.

Very often even if you are making your DMP payments on a regular basis, not all of your creditors will agree to stop adding extra interest and charges to your accounts.

As such, despite your payments being made, some of your account balances just do not seem to go down.

In addition to the difficulties of paying off your debt, some of your creditors may still continue to harass you for money.

If you are a home owner, your DMP will not protect you from your creditors taking court action against you and applying for a charging order against your property to secure their debt.

Why change to an IVA?

If you feel that your DMP is not working for you, because it is an informal agreement, you are actually allowed to stop paying it and change to a different solution.

This means that if you feel it is a better option for you, you can stop paying your DMP at any time and change to an individual voluntary arrangement (IVA) which could offer you a number of benefits.

The key advantage of an IVA over a DMP is that you agree to repay a fixed number of payments (normally over 5 years). Once these have been paid, any debt which is still outstanding is written off for good.

In addition to the fixed repayment term, once your IVA is in place, all of your creditors must stop adding their interest and charges by law. You therefore know that your debt balances will not keep rising.

Another advantage of an IVA particularly if you are a home owner is that your creditors cannot take any further action against you. This means that your home is protected from charging orders.

Implications of swapping to IVA

Despite the advantages offered by an individual voluntary arrangement, before you decide to make the change you need to make sure you understand the implications of doing so.

Some people worry that because an IVA is a formal solution their credit rating will be worse off. If you are already in a DMP, this is actually not the case. Your credit rating is no more affect by an IVA than it is in your DMP.

In fact, you may well be better off because your know your IVA will be completed in a fixed time after which your credit rating can start to repair itself where as in a DMP this will not happen until all of your debts are repaid in full which could take many more years.

However, if you are a home owner, the implication of an IVA is that you will have to agree to release equity from your property to help repay your debt if you can do so.

The amount of equity you will have to release will generally depend on what if any re-mortgage deal you can get. Ultimately if you are unable to get a remortgage, then the equity in your property may be ignored and instead you will have to add twelve extra payments to your IVA.

If you earn bonuses or overtime, how much of these you can keep will also be restricted if you start an IVA. You will be able to keep up to 50% of the extra that you earn. However the other 50% will have to be paid to your creditors.

Changing is simple

Very often you started a debt management plan because it seemed to be the easiest way to get your debts under control quickly.

However once your DMP has been running for a few months, you can then see for yourself how it is working. With your creditors no longer screaming at you, you have more time to think and research your options.

At this stage, many people do decide that in fact a DMP is not for them and want to change to an IVA.

Making the change is then relatively simple. It is just a matter of speaking to a debt expert who can help you. Normally you continue paying your DMP until your IVA has been accepted. You then simply stop making your DMP payments and flip them into your IVA.

You should certainly not have to pay any fee for leaving your DMP or for putting paperwork together to start your IVA. If you are asked to pay such a fee, then choose a different IVA expert and this is certainly not necessary.

Related DMP articles

If you are interested in reading more expert articles about debt management plans, please click on the following link:

http://www.beatmydebt.com/forum/viewforum.php?f=49

What to do next

If you are struggling with debt, visit beatmydebt.com

Our experts are available to speak to you about your debt problem and offer advice and solutions.

Our vibrant debt forum gives free access to experienced industry experts and others who have suffered with debt problems.

Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.

James Falla is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Debt Management Plans, visit our website at http://www.beatmydebt.com

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How to Get Out of Debt Easily and Relatively Quickly

Debt Management Tips

Generally speaking, it is very easy to get into debt with today's modern way of living. Regardless of the fact how much people make, there is always a chance that they will have financial problems at some point in their life and that they will need some good tips on how to get out of debt. These tips have proven to be very useful to many people all around the world, as they helped them get out of debt and start over with their life. Although it sometimes might be hard to believe, there is a solution to any problem and one of the best solutions for financial problems is getting good, professional advice on how to deal with your financial hardship.

Debt management is quickly becoming one of the most important things all over the world and good and reliable debt management tips are sometimes very hard to find. In reality, the best debt management tips boil down to being responsible about spending the money you do not really have. Although credit cards can be useful in many situations, people are advised to think more about how they will make money instead about how they will spend it. As we all know, making money is far more difficult than spending it. On the other hand, if you really need to use a credit card, you should always remember to use it responsibly and to come up with a plan on how you will pay your debt before you get into debt.

The easiest way of knowing when you need debt management tips is by determining how much money you owe and how much money you make on a monthly basis. If the amount of money owed is greater than the amount of money you are capable of earning, it is high time that you got some useful debt management tips. People often think that the financial predicament they are in is very bad and that their money problems will never be solved, but with a good debt management plan almost any financial problem can be dealt with.

People all around the world are having financial problems, and this is why you can rely on debt management companies to help you with your financial problems. When you think about it, financial experts are there not only to give you advice on how to make more money, but also to use their extensive knowledge and experience in order to help you get out of debt quickly and relatively easily.

Nemanja Boskov is an ambitious writer working on Freelancer.
If you would like anything written for you, contact Nemanja Boskov at nemanjaboskov at gmail dot com

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Debt Collectors Must Treat You With Dignity and Respect

Third-party collection agencies are hired by original collectors to recover monies owed by people who have fallen behind on their bills. Perhaps you have been contacted by a debt collection agency, and are not able to pay what they demand. Whether you just overspent, made a mistake on your budget, or you have become a victim of circumstances such as unemployment or disability, it certainly doesn't feel good to be delinquent on your debts. You may feel guilty about not being able to pay, or you may feel that you don't owe the debt due to a mistake on the part of the collector. You may be in the process of disputing a debt when it is sold to a third party or debt buyer.

But no matter what the circumstance, there are some things that debt collection agencies are simply not allowed to do. Below is a brief overview of debt collector laws, and what to do if you are ever in a situation where an agency is using these illegal debt collection tactics.

Harassing Phone Calls

Collection agencies are not allowed to call you prior to 8 a.m. or after 9 p.m., unless you have told them they are allowed to call you outside of those hours. Additionally, if you have informed a collection agency that you are not to receive personal calls at work, they are then not allowed to call you at your workplace. If they continue to ignore these rules, they are breaking the law under the Fair Debt Collection Practices Act (FDCPA). Furthermore, you may inform them, in writing, that they are not to contact you about your debt via phone, period. Of course, this does not make the debt go away, but they will not be allowed to call you about it any longer.

Making Threats

Using obscene language, hollering, telling you, "We know where you live, so you better pay us," and similar threats are not to be tolerated. They are flat-out illegal. Similar threats, such as threatening to repossess your house or car (if they are not a mortgage company or title holder to your car), are bogus and illegal under the FDCPA. They may also try to threaten to garnish your wages or have you arrested. If your state allows a lawsuit to be brought against you for the debt, and they win, they may be able to collect via wage garnishment. Otherwise, they have no power to take your items or wages. Furthermore, owing debt is a civil matter-debt collection agencies have neither the authority nor the credibility to get a warrant issued for your arrest.

These are just a few examples of illegal debt collection practices that are used by unethical collection agencies. If you are ever in a situation where you are being harassed, do not tolerate it. Contact a fair debt attorney to assist you, and file formal, written complaints with your state's Attorney General and the Federal Trade Commission.

Sergei Lemberg, Esq. is the Principal of Lemberg & Associates, a law firm specializing in fair debt collection law, lemon law, and other consumer law.

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