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By Nick27
Hello. I am on a dmp (have had one for three years) and I am considering the IVA option but am very nervous about this. Can you tell me if an IVA will make it harder for me to get a mortgage in the future - ie more so than a DMP? Also what kinds of proof to you have to provide for income and living expenses - I am self employed just to add to the complications! Thanks a lot
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By James Falla
Hi Nick27. Welcome to the forum.

Before advising about whether an IVA would be a better option for you it would be useful to understand how much you owe, how much you currently pay into your DMP and whether you are a home owner. Can you give us this information?

In terms of your specific questions, starting an IVA should not make it any harder for you to get a mortgage in the future and may even make it easier. If you are in a DMP your credit rating will not start to improve until your debts are paid in full. If you start an IVA this will be recorded on your credit file for 6 years. After this your file will be clear. As such if it is going to take you longer than 6 years to clear your debt using your DMP, an IVA could offer a real advantage in this area.

In terms of proving your income, if you are self employed you will need to provide past trading accounts / tax returns if you have them to give an idea of what you have been able to earn in the past through your business. You will also need to produce a trading projection for the next 12 months to show that the business can support you. Do you think this would cause you an issue?
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By Hayden
Hi there Nick27

As James said, it would be great if you could give us more information about your situation. It will then be easier to advise you on the possibility of an IVA. If I were you, I would not be worrying about getting a mortgage at this stage. In the current climate if you are self employed it will not be easy to get a mortgage even if your credit rating was squeaky clean. Even then you are going to need a deposit of at least 15%. As such the best thing to do would be to concentrate on clearing your debts as fast as possible so you can start to save for your deposite. If you can start an IVA it will normally sold your debt problem faster than a DMP so it is probably a good option for you. However you could also consider bankruptcy.
By Nick27
Hi guys

Well my total debt is currently around £38k and I am paying £350 a month into my DMP so as you can see if I carry on like this it is going to take 10 years to pay my debt. I do not currently own a house but I would like to consider getting one in the future hence looking at my options. Would I be eligable for an IVA? I not you have mentioned the bankruptcy option but wouldn't that make my chances for a house purchase in the future even worse than an IVA?
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By James Falla
Hi Nick27

If you can afford to pay £350 a month and your self employed accounts and trading projections back this up then I see no reason why you should not start an IVA. This would be a far better option that you have at the moment as your debt would be settled in a maximum of 5 years rather than as you say paying for 10 years plus in a DMP.

In terms of whether declaring bankrupty instead of going down the IVA route would actually make it any more difficult to get a mortgage in the future, this is debatable. Both solutions affect your credit rating in exactly the same way. After 6 years the records will dissappear from your credit rating. It is possible that a mortgage lender might ask you whether you have ever been bankrupt in the future in which case you would have to say yes, however you could then find a mortgage lender who does not ask the question. Overall I feel that the question about how your credit rating will be affected should not feature majorly in your decision making. More important would be the affect of bankruptcy on your business bank account and assets etc which might sway you against bankruptcy in this instance.
By Carla
Hi Nick27

It does seem as though starting an IVA would give you a real advantage over the DMP you currently have. I am not so sure about the bankrupty route as it could cause you issues for your business bank account. If I were you I would have a chat about your options with one of the experts at BeatMyDebt.com. I am sure they will help you decide on the right route to take.