IVA

A question about : IVA

Hoping someone can help?

3yrs into an IVA, with a projected Ј11k to pay back. Currently paying a dividend of 44p in the Ј.

Having got this far, keen to see it through to completion.

Just been made redundant, in receipt of Ј20k. My dilemna is as follows:

- We owe our inlaws Ј10k.
- I will need to keep back 6 months budget whilst I seek alternative employment.

How will this situation be looked upon by our IVA practitioner? we are with StepChange.

thanks in advance

Best answers:

• Can anyone help, thanks
• Hello Fred,
  Sorry to hear about your redundancy. You will need to discuss this with your IP as this would be considered a windfall and although you may be able to keep some of the money whilst you search for a job, the rest of the pay out should be offered into the IVA.
• thanks for the response.
  I understand we may keep 6 months of our agreed budget whilst I look for a job, so 6 x Ј2,200 = Ј13,200. This leaves Ј6800, of which we owe our parents Ј10,000. Is it unreasonable to offer this to the IVA as a final settlement given that we have a projected Ј11,000 to pay? This also assumes that our parents can wait for the monies owed to them, which I suspect they cant :-(
• Your IVA company are unlikley to agree to that as if you owed money to your parents they should have gone into the IVA as a creditor.
  Your IVA company will probably allow you to retain 6 months worth of salary to tide you over until you find a new job and then review your income and expenditure if you do find a job, if you do not they may need to call a variation meeting with creditors to see if they will accept the payments you have made to date in final settlement.
• Yup, if your parents 10K was not mentioned at the start and you mention it now you may be in a serious breach of the IVA as you needed to of stated ALL your liabilities from the start.
  Keeping quiet probably isn't an option as the payout will show up at the annual review.
  Was your take home salary Ј2200 a month?
  Best speak to your IP and go from there.
• If you have the same IP as me a SC then you're not going to get anything more than the 6mths allowable, they'll expect the balance asap, so they can have their 15% cut before spreading the balance to your creditors. Speaking to them about the balance being used as F+F would be a good idea as i'd imagine it's about the expected return over the next 2yrs.
  Unfortunately I was advised by them that any monies owed to family couldn't be added to the iva and that they would either have to accept they wouldn't receive the money back, or we pay the back from our allowances.
• Really appreciate everyone's feedback, thank you
  Whilst I understand we are bound by the terms of the IVA I'd like to think there is a little room for negotiation. In the event that we are unable to mutually agree how the money is carved up what options do I have?
  i.e. If I allow the IVA to fail is there then an option to negotiate directly with my creditors?
• Hi Fred,
  Sorry to hear of your predicament.
  However, it would be foolosh to 'let' the IVA fail. You would at best, be back to square one: By the time creditors add statutory interest (up to 8% p/a I read somewhere), and your IP adds his fees (say Ј4K for the sake of arguement), my guess is that you would be left with an amount owing at least equivalent to your original debt.
  There is a big risk that creditors may then push for bankruptcy.
  If you really want to pay your In-Laws back, best to let the IVA run for its remaining 2 Years, and then go from there.
  I know the feeling, I owe my Dad Ј2,000. He knows about the IVA, and would rather wait a few years for the full amount, rather than get 36p in the Ј over 5-6 Years.
  Hope you find new employment soon. Good luck.
• Thanks UpToMyNeckInIt, agree that it would be foolish to let this fail after 3 successful years, but desperate to pay our parents back.
  With regards to bankruptcy, we are homeowners but have zero equity in our house so not sure if this is something the creditors would pursue.
  Sounds like paying back our parents now isnt an option as the IP would fail the IVA, oh well.... onwards and upwards
• Having declared my redundancy, I am now in negotiations with the IP for a full and final settlement figure. I have been advised not to spend any of the redundancy money until we have an agreement in place which is fine with me.
  My final questions are:
  1. Can they claim the money without my consent i.e. now they know its there can they just take it and just leave me with the 6 months net salary that I am entitled to?
  2. If we don't agree on a full and final settlement what happens next?
• Your IP should have to give you official notification if they were going to take any money from you other than your agreed payments.
  Good luck with the F+F and finding employment soon, please let us know how you get on
• Playing hardball with the creditors!!! We have Ј6k remaining from my redundancy funds, I've made it clear that these funds will ONLY be made available to the IVA for the purpose of a full and final settlement.
  Fully aware that the funds are "due to be paid into the IVA anyway" as per the terms of our agreement however, if our offer is not accepted then seriously considering using the funds to pay off a debt with parents and facing the consequences of a termination / breach.
  The offer has been presented in a take it or leave it style, its a dangerous tactic for sure, one that others would perhaps perceive as wreckless / ignorant but to be honest I'm at a point where I actually don't care anymore!
• Interested to know the outcome of this Fred. Keep us posted as our company is running massive layoffs next year so I have a similar situation brewing...
• Absolutely delighted to report that our full & final settlement offer of Ј6800 was accepted yesterday (had the IVA ran its term the projected balance was Ј11,000) so that's a saving of 38.2% by concluding it early.
  Now for the really interesting bit....
  Today we received written confirmation from our IP, this contained an illustration of how the voting was concluded. To my amazement 5 creditors failed to show for the meeting and therefore "LOST THE ABILITY TO VOTE", it just so happens that the 5 who didn't vote were those we had the largest debts with. Of the 6 creditors who did vote we received a full house (only 75% FOR was required but we got 100%).
  My advice to anyone who is considering offering a Full & Final Offer would be as follows:
  1. Do NOT be afraid to make an offer, if you owe Ј20,000 and want to offer Ј5,000 go for it!!! What do you have to lose?
  2. Do NOT allow your IP to cloud your judgement, these so called charities play the good ethics card but they are not as impartial as you may think, at the end of the day they are getting a cut so if you believe your offer to be sensible then assert yourself and insist that they present it to the creditors.
  3. Most large corporates are keen to get "toxic debt" off there balance sheets,so once again do not be afraid to offer a low amount.
  I would like to think that perhaps we got a bit lucky in that 5 of my biggest creditors didn't vote, but the more I think about it the more I think that perhaps its quite common that they don't all attend / vote in which case this whole process is very inconsistent!!!
  Good Luck to you all and if I can help with anything please ask.
  Onwards and upwards to a debt free future still hasn't sunk in, what a journey :-)
• Nice one Fred - A wonderful account. Always nice to hear of a positive outcome. A Happier than expected Christmas coming up for you no doubt!!!
  Just goes to show how, as useful as the advice on these forums is, each case has to be considered on its own merits.
  Your observation about creditors wanting rid of 'toxic debts' is spot-on, hence why so many are sold to firms like Max Recovery etc.
  Voting rules are the same as with your initial IVA proposal. (I had a similar situation in that my main creditor - Ј15K with MBNA, did not bother voting).
  Nice to hear as well that it is possible to disagree with your IP, and still come out on top.
  In fairness to your IP, they did put your case forward convincingly enough that it ultimately got accepted, and it cost them money to do so (you did play 'hard-ball' and took a big risk mind you).
  ANY IP (charity or private sector), is going to be cautious about advising a customer to do something that hits them in their pockets!!!
  I agree that, in drastic change in financial cicumstances like yours (ie: where you have lost your job), then as you assert, it is clearly worth considering a 'low offer' F&F. There is after all a risk that the IVA may have failed had it gone on and you were not able to secure new employment - a possibility that was not lost on your creditor's I'm sure.
  However, my only word of caution to others contemplating a similar strategy: Some IVA companies 'charge' for proposing variation meetings, including F&F proposals, with these charges being bunged onto the end of your IVA if your F&F proposal fails. So ultimately there is a risk that this could cost the customer. (I suppose I can understand that: Otherwise any chancer could ask their IVA company to propose a low F&F at any time they feel like it).
  PS: How is the job-hunting going by the way? If you have not already done so, I hope you find new work soon.
• AFTER YOU PAY the f & f settlement what shows on your credit score and does this have a long lasting effect? Can anyone advise me please
• AFAIK a F&F to end an IVA early just shows as a completed IVA on the credit record.
• Just had my Full & Final accepted - and I know when I was searching for answers it was a minefield. So here's my story:
  I started my IVA in October 2012, as after a business failure I ended up with debts totalling Ј192K. The IVA was eventually negotiated at 9.9p in the pound - or in easy terms: Ј400 per month over 60 months. Plus the usual of re-mortgaging, PPI etc etc.
  I've been lucky to have an offer from a family member, and just this week the creditors have accepted Ј9K as full and final, against the Ј14K I had left to pay! No re-mortgage as the equity just isn't there, and a PPI feed in of Ј2.7K.
  So all I can say is: don't be afraid to offer a low(ish) amount, cash is king and a lump sum to a creditor is clearly enticing!
  Good luck with all your plans, big weight off my mind