10% and 50% of Overtime Question

[Skippy]

Optimist, if there wasn't a 50/50 split of overtime, would anyone really bother doing it? I know I wouldn't!

[OPTIMIST12]

Hi Skippy -

No - nor would I!!! I can understand the Overtime / Bonus 50% clause as each "side" benefits from the 50% received. Overtime / Bonuses are not "guaranteed" and should I think be treated separately.

But its the 50% on BASIC pay increases that I honestly dont understand. Great for the IVAer if you get it - but is it really in the spirit of the IVA ethos? When you enter into an IVA your agreed expenditure is deducted from your agreed income. The remainder goes into the IVA. What happens after that will vary from individual to individual. Some people may get a basic pay increase of £300 per year - and some people may be very lucky and get promoted and receive a pay increase of £3000 per year (purely hypothetical figures). On the 50% basis one person will then be way way better off than the other even though they entered the IVA in exactly the same situation. In any event - once the IVA is (hopefully) successfully completed then the full benefit of the pay increase will revert to the IVAer.

I just think it would be fairer to all if the calculation remains the same for everyone throughout the IVA - as in Income minus Agreed Expenditure (updated as appropriate to take into account increases) = Monthly Payment. Overtime and Bonuses treated separately (50 / 50 to benefit all).

I realise from reading the forum that there seem to be any number of variations on this - and I seem to be on the strictest regime!!!

No criticism of anyone - but it just seems to make us all very unequal!!!!

[andrewgoodman121]

It seems that even the professionals have conflicting views on this subject.
To put my mind at ease ,if i bring home
£1400 net and earn an extra £200 in overtime
therefore bringing it to £1600, How much of this goes to the IVA if my normal payment is £345 as agreed and then it is the 10% clause and then 50%.
Someone please give me an answer to this one

[MelanieGiles]

No we don't Andrew - the answer really is in your IVA proposal and any modifications thereto.

In your case (bearing in mind I know the case as you are my client) you would firstly be able to keep the first £140 (10%) and then the difference - ie £60 is divided equally between you and your creditors - ie £30 each.

I am concerned that you do not appear to understand the issues, and know that you have a long chat with one of my colleagues today, so may I suggest that you telephone me on Friday (I'm out all day tomorrow) so that I can satisfy myself that you are happy with this provision.

[andrewgoodman121]

Melanie , i am more than happy with this provision as you have now told me how exactly it works.
it,s just that i have got some overtime at work coming up due to the March Budget and i have to do it as there is no getting out of it for me.
All i really want to do is be totally clear on it and be on the safe side and hand over the rightful money at the time.

Apologies

[MelanieGiles]

Andrew - please don't apologise.

You have raised a very interesting topic, and not only you have benefitted from the discussions. That is what being a forum member is all about - sharing ideas, queries and concerns. As a result of the creditors continually making their mind up about the wording of their modifications, there are an awful lot of confused people out there.

[debbie.s]

Hi Melanie
We also have our IVA with you and I can't find anywhere in our paperwork the mention of overtime, just windfalls. I have been doing as much overtime as I can to cover my husbands lost income. Some months I can earn more than enough, some months too little, but overall it seems to even out. Should I be paying 100% of overtime into IVA or just sticking to the £900 payments. My overtime is not guaranteed and could stop at anytime. I am worried We will owe more money when we do our review next month.

[MelanieGiles]

Hi Debbie - What a suprise I did not recogise you from your forum name!

I have just checked your proposal, and you have absolutely no requirement to pay over any overtime monies - and there were no creditor modifications in this regard. So carry on with the payments as you are, and if you are really struggling perhaps we need to look to see if the payments ought to be reduced if your husband's self-employed income has reduced.

Best to discuss this directly rather than across the forum.

[debbie.s]

Hi Melanie
Thanks for your reply. We are managing to keep the payments up at the moment and I know if we do reduce them we would have to extend the IVA. I would like to complete our IVA before my husband reaches 65 if we can.I think it is very unlikely he will work again as he has heart problems and would find it difficult to get another job at 62. So hopefully my overtime will continue and when I earn more than I need I can keep this money back for the monthly payments when I have less overtime. Roll on the next three years. It feels like I am wishing my life away. Thanks again !!

[MelanieGiles]

You would not necessarily have to extend your IVA term Debbie - I would merely seek a reduction of your payments based upon the change of your circumstances. Given that current IVA protocol (and unfortunately this does not affect you retrospectively but does set a good marker) allows a 15% reduction without seeking the agreement of creditors - I would be very happy to look at this for you if you could send me a revised income and expenditure statement.

You should not have to struggle unecessarily for the next 3 years - as you have your own health to think about. Give me a call for a chat about this if you like.

[sarahp]

My IVA also has the same 10%/50% clause, however i have changed my job and have a much better salary, My IVA company were aware i changed my job and has details of my salary for over a year now, yet today they have told me that any thing over the £900.00 which was my original salary when i started the IVA they will be taki9ng 50% of the 90%.
My salary is currently £1700.00 per month, and i am just now begining to feel the strain lifting. But my IP has said the want £1500.00 every 6 months from me, together with my monthly payments, and what i have paid already, I will be paying back much more than the original Debt of £19000.00. I have been advised by my IP that this is a risk i chose to take when entering the IVA.
How can i get myself out of this contract?
If i won the Lotto ( not that i will) would they expect half of that too? What have i gotten myself into?

[Michael Peoples]

The worst case is you will pay back the total amount owed plus the fees. Your IP seems to have dealt with this very well and you are over £400 per month better off than when you entered your IVA. If you won the Lotto you would have to pay your debts off but the IP would not take half of it.

It seems to me that your IVA will be a success for you, your creditors and your IP and you should be very pleased with how it has gone. You may even be debt free before the original term is up if you have managed to clear the debts.

[sarahp]

I think you are mistaken! i earn £1700.00 per month now because i have worked my ass off trying to get out of my situation. It has nothing to do with my IP dealing with me very well. I have bettered myself and got a good job. I have no problem paying off my debts in full. But at the time of entering my IVA i was only earning £900.00 per month, and struggling to pay my bills and look after my 3 children. I have been told by my IP that as well as the £320.00 per month payment, i will also have to give them half of my extra salary, which by my calculation when the 60 months finishes i will have paid back Well over £19.000. How can that be a success?

[Michael Peoples]

Perhaps I have misunderstood as I was not aware of any children in your original posting. The extra money will obviously affect tax credits and may require additional expenditure to do the job so a straight 50% uplift may not benefit you at all.

If you are earning more money the benefits should be for you and your creditors or there is no incentive for you to better yourself. If you feel you have been unfairly treated you could ask for a review taking into account all relevant changes.

As for paying back more than you owed this is not unusual but bear in mind that the interest was stopped and had you been able to borrow £19,000 at the time of your IVA you would probably have done so. The end result would have been paying back £19,000 plus interest which may well be more than the IP's fees. the IVA has allowed you to pay back your debts at a rate that was affordable and reflected your circumstances and offered you peace of mind. Had you still debt problems you may not have been able to concentrate on bettering yourself and thus improving your career prospects. I am sorry if I offended you Sarah as it was not my intention.

[sarahp]

I have not been getting tax credits...My Life is complicated, but it is due to my Husbands Immigration status, we were not entitled, as we would have had to claim as a couple.

I didnt explain myself well. No offence taken. I still feel like i have been conned.
My loan was originally £15.00 and the interest rate was very low, 5% or something, it worked out at less than £1700 in interest anyway (tesco Loans) the rest were credit cards and i now know they freeze the interest for people having financial difficulties for 6 months and then review anyway without an IVA in place so im sure that ALL this extra cash they want to take is unfounded. If i leave the IVA will i lose all i have paid already?