Can I do anything about my ever lengthening IVA ?

[chris_]

Can I do anything about my ever lengthening IVA ?
I am in the 6th (yes 6th) year of my IVA, which I entered into when I was self employed and unable to pay my tax bills due to two clients going bankrupt at about the same time. I entered into the IVA with a modification stating that payments would continue until the declared amount (75p/£) was paid. I said to my IP that if I paid the full 60 payments I would reach that anyway and he said nothing to contradict me.

Then the IP's fees started to rise - they were originally estimated to be £3000, then £7000 (when I asked about this they said that it has taken them a lot of work dealing with the taxmam at the outset and this reflected their extra work).

Okay, I thought - not a lot I could do about that. But then they continued to rise, £7000 became £10,000 then £12,000, then after 60 payments it stood at £14,000 - my IVA has continued due to the modification and I am really struggling to carry on paying due to a downturn in work.

Can I do anything about these charges ? - the IVA only had 3 creditors - the government, the bank, and a credit card company (same as bank)and I am astounded that the IP's estimated fees can keep rising year on year by such amounts - £3000 to £14000 - I have now missed several payments and I am in real danger of going bankrupt even though I have paid well over 5 years worth of payments, paid more than I owed in the first place, and me and my family have struggled for all this time - I have just received a letter which looks like they have added another £3,500 in charges since my last letter from them 10 months ago which means they have now added yet another 6 months onto my IVA -

please help, what can I do.

[Adam Davies]

Hi Chris
Your experience sounds like a nightmare.
You need to ask for a full statement from your IP and find out how much has been paid to creditors so far.You also need a firm date from your IP as to when the dividend will be reached.
You IP is on a time cost basis and is a little like an open cheque book,how your creditors have allowed this is appalling.Please post as many details as possible[total debt,amount paid in so far,the company that you are using etc etc]so that we can advise further.
After 5 years it would be sad for you to go bankrupt.
regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[chris_]

Thanks Andy,
Yes it has been a nightmare, and still is.
Below are the details from the 5th anniversary of my IVA coupled with the extra payments I have paid since then.

IP - Armstrong Watson
Original Debt - £52K

Inland Rev (100%) - £9600 PAID
Customs & Excise (100%) - £5800 PAID
Unsecured - Bank & Other Tax - £36K @ 75% - £27,490 (£9,163 PAID)

Leaving £18,327 to pay to creditors with £11,700 cash in hand
so a further £8300 required - 11.3 extra payments at £730/month

I have paid in so far £56,450 (4.5K more than I owed originally) plus have 7 more payments to go (based on last years statement, but as I have already mentioned it appears from the letter I received that they are after another 3500 in fees - another 6 payments)

The IP has taken the following in fees so far -

Nominees fees - £1500
Supervisors Fees - £12,600 (with a 14,000 est to complete - was 3K originally)
Vat on those fees - £2,511
Total - £16,611 + 1400+vat still to take

PLUS it looks like they want another £3,500+vat

To sum up, with 3 creditors at the end I will have paid in £65,210 (plus interest)of which the IP will have taken £22,325 inc vat. - for a debt of £52K.

Obviously I would not have entered into an agreement of this kind if I had been aware of the pitfalls at the time, but as it is the fees that have caused the problem year on year I was wondering if there is any thing I can do - do the IP's not have to account for the extra fees - what 'extra work' year on year over and above what they expected could possibly occur that justifies thousands of pounds being added to the fees when you have just 3 creditors ? - surely once the first couple of years are out of the way the process is simple (isn't it ?) I have on occassion missed a payment and then caught up later prompting the odd letter, but this can hardly justify an increase of the magnitude they have applied.

Also, just to reply to a point you made above about the creditors letting the IP charge these fees, with an open ended agreement that they will get 75%, why should they give a toss!

I really appreciate any help or advice you could offer, as with a very young family (wife and 20 month old son) this is now a critical time for us financially as I am the only breadwinner.

Thank you for your time
Chris.

[MelanieGiles]

Hi Chris

You are being treated no less than apallingly here, and are an unfortunate victim of the time costs resolution.

I fail to see why your IP has become embroiled in your taxation affairs. If anyone ought to be dealing with this it should be your own accountant - I am sure that the bill would have been much lower.

As Andy has stated, the first thing to do is to get a detailed statement of your IP's charges. They are required to provide this to you upon request in accordance with Statement of Insolvency Practice No 9. Also ask them for a summary of their firm's standard charging rates from the time you entered into the IVA to date. I cannot understand how they can have racked up costs of this magnum, and suggest that you might like to refer the matter to the Financial Ombudsman unless you get satisfaction from your IP.

You should advise them that you wish them to confirm their anticipated future costs, and give you a fixed fee for completing the work. At least you will know where you stand, and therefore how many more months need to be paid. I would hesitate to consider bankrutpcuy proceedings at this stage - I think you just need to see light at the end of the tunnel, and see some fairplay from your IP.

Let us know how you get on.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chris_]

Hi Melanie,

Thanks for the reply it is most appreciated.

A few further points to consider are that my IP is only involved in my Tax affairs due to the fact that it was the taxman who I had the original problems with, thus resulting in my IVA - The tax man would not deal with me with regards coming to some arrangement over paying my overdue tax run up as a result of two companies going bankrupt on me. I was also self employed at the time and did not have an accountant as I had simple tax affairs and was able to fill in my own self assessment.

Also, I don't want to go bankrupt after 5 1/2 years, but I am now a few payments behind and struggling - due solely to IP fees - It is the IP who will bankrupt me !.


If I complain to the financial ombudsman, is there anything they can do ?

Can I take any other action? ie if the IP cannot come up with specific details to justify his charges can I take him to court or anything?

Basically, if they add any more fees as it appears they want to do, I don't think I will be able to keep this IVA going - my income has dropped significantly in the last six years.

Any further comments would be greatly appreciated.

Chris.

[MelanieGiles]

Hi chris

Do you own a property, or any other assets? If not, then I doubt very much whether your IP will bankrupt you as he will have to use his own money to do so. Although if your IVA proposal provides for this, then he may have no choice.

One other option you might have is to express your displeasure with your IP's conduct of your case, and suggest that he approaches creditors to see if they will accept what they have already received in full and final settlement, on the basis that you have kept to your side of the bargain in terms of monies paid in but can no longer afford to maintain contributions simply to meet fees which you do not feel are justified.

You could perhaps mention the ombudsman in passing, which might persuade your IP that this is a sensible offer, and he will then need to explain to your creditors why his costs have ended up being so high. If your IP is situated locally to you, why not ask for a meeting to see if you can straighten things out face to face?

It is a shame that you allowed your taxation affairs to get so far behind, and that you also did not have an accountant, as I think a lot of money could have been saved which appears to have been spent in unravelling matters.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chris_]

Hi Melanie,

Once again, thanks for the help.

I do not own my own home and so have no assets for a bankrupcy pay out ! - the iva however includes a condition that the IP will bankrupt me if I fall behind with my payments.

I have asked my IP for an up to date statement and the amount needed to finally pay the IVA off and await this with trepidation.

I will probably do what you have suggested with regards asking my creditors to accept what they have already had, but with it being the taxman I don't hold out any hope.

Finally, you said that if I had had an accountant at the time I could have saved a lot of money and I am intrigued by this. I tried to deal with the taxman (they were the only people I was in trouble with at the time) and they wouldnt accept anything from me. How would having an accountant changed this. The taxmans attitude was 'you owe us money and we want it now - no deals, no sympathy'

Thank you for your help
Chris.

[Adam Davies]

Chris
Please keep this forum posted
regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[MelanieGiles]

Well your IP seems to have spent a lot of your money on trying to sort out your taxation affairs, so there was obviously a lot of ongoing negotiation post-IVA which I find strange.

If the taxman was so adamant about his position, then why has your IP spent your money in dealing with it. I suggest that you get a full explanation, and as a matter of interest what was the agreed Inland Revenue claim compared to the figure you disclosed on your original statement of affairs?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chris_]

Hi Melanie,

I see where you are coming from now and you have hit the nail right on the head - why are the Ip's fees so high.

My taxation was NOT complicated and was straightforward and the inland revenue and customs and excise 'claim' was exactly what I had informed them it was via Vat statements, Self Assessment and PAYE. There was no argument or disagreement, no hidden tax demands - nothing dodgy - just straightforward tax.

My ISP told me that it took a bit of time to get the taxman and vatman to actually get their paperwork sorted out with regards the IVA claim,(there was a merger of government departments dealing with debt recovery going on at the time) but it was NOT complicated and this explanation I accepted as the reason they put the fees up to £7,000 from £3,000. - I wasn't happy about having the fee increase for something that I had nothing to do with but I had to accept it.

It is the increases year on year SINCE then that are the issue. I have never had an explanation or warning it was happening - nothing, just every year I get another IVA report showing me the fees have gone up again.

What could they possibly have done to justify another £7000 increase over the last 3 years once the IVA claims etc were sorted ?

Thanks
Chris.

[MelanieGiles]

That is a ridiculous explanation - and why is your IP charging more time just because the taxman is taking time to submit claims. The merger of departments, which every IP in the country has had to deal with, is irrelevant.

You need to get a better account of how your money was spent than this!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Adam Davies]

Chris
Do not let your IP off the hook until, and if, you get a thorough explanation.
If you do not then I would urge you to contact the financial ombudsman,as Melanie suggests.
regards


Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[chris_]

Thank you for your time and advice it is greatly appreciated.

The IP told me (after year 2 of the IVA) that the fees had gone up (to 7K) because they had been writing letters etc to the inland revenue etc trying to get them to finalise everything and that it had taken a lot of time sorting this out. - This I accepted but must admit was surprised at the extra 4K it cost.


As previously mentioned however, even if that was a valid argument how on earth could my IP keep on increasing the fees year on year after this by another 7K if the only 'extra' work was the odd letter and reminder if I missed a payment or was late with my annual statement ?

It certainly sounds like I have been ripped off right left and centre and I think of all that money gone in fees which could have gone to giving my family a better time of it.

I will definately now have a go at my IP and then the financial ombudsman, but before I do could someone answer a couple of points for me on that.

(1) If the IP cannot or will not give me reasonable, proven reasons for the extra fees - what do I do then ?

(2) Does the ombudsman have any powers that will actually help me sort my IVA out, or is it toothless.

(3) Should I get in touch with my creditors myself and deal with them outside my IP ?

(4) Depending on the response from my IP, is it worth getting a solicitor involved, and are there any who specialise in this sort of thing, as 2 years ago I phoned one up and they were about as much help as a chocolate fireguard.

Thanks again for your time and I will keep you posted on my progress.
Chris.

[MelanieGiles]

Chris - to answer your specific questions

1 Remind him of his responsibilities under SIP 9 and threaten to report him if he does not comply and give you the information. Tell him that you have taken professional advice in this regardx. The fact that he will not provide the information he is required to do suggests there is something to hide.

2 The ombudsman, and your IP's own regulatory body, have powers to address any overcharging on fees.

3 I would not suggest this at the moment. Leave dealing with the creditors to your IP.

4 That will bring you more cost which you cannot afford. Leave it to the ombudsman if that is the way you intend to go.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chris_]

Thank you Melanie,

You have been a breath of fresh air through my IVA experience, please keep up the good work on these forums as I am sure there are more people out there suffering in silence, and as like me they have not known where to turn for help or advice.

I will keep you posted on my progress.

Chris.