extra outgoings and I am struggling

[gdr]

Hi, I am 2 years into my IVA and have asked my IP if there would be possibilities of an amendment to my original £350 per month with 50% of extra income payment (£2000 of which I haven't yet paid due to extra outgoings and am struggling). I know earn more but also pay out more on my outgoings. I have suggested I offer £500 to my creditors over the final 3 years with no 50% of extra income. Does anyone have any thoughts on what my creditors may decide? This will give them a much higher return than in bankruptcy.

[MelanieGiles]

Hi gdr and welcome to the forum

What is your motivation for wanting to do this? There will have to be clear reasoning for your suggested revision to persuade your IP to go to creditors with this suggestion? If you are being allowed to retain 50% of the uplifted earnings, and your IP is adjusting the baseline benchmark for this calculation each year, you ought not to be struggling at this stage.

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

[gdr]

Thanks for getting back to me. The reason I am struggling is that my IP is not adjusting the baseline benchmark for this calculation each year. It is still based on my take home pay when I took out the agreement in 2005, I now earn more but subsequently pay more on outgoings. Should my IP be adjusting this each year and taking into account my new outgoings?

[MelanieGiles]

If IP's don't adjust the baseline, then after a couple of years the requirement to increase payments gets out of line with the cost of living. As far as I am concerned, IPs should always adjust the baseline, but others may have differing views.

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

[gdr]

Thanks Melanie, that is what I originally thought and it seems unfair to not adjust this baseline. I am now thinking of proposing to Grant Thornton (my IP) that I pay £520 per month over the next 3 years with no 50% of extra income payable. This would give them almost £6000 extra over the original agreement in 2005 giving a total value of £27000 over 5 years (being over 25p in the pound as stated in my original agreement). How do you think this would bode with my creditors?

[MelanieGiles]

No I don't think that will work. You need the baseline adjusted to your current basic earnings, and then need to pay 50% of any overtime etc on top of that in the usual manner.

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

[gdr]

That would work well for me I think and would be happy to comply with that arrangement. In your experience, would creditors be more likely to accept that rather than declare me bankrupt as they would see considerably more money on the IVA agreement than in bankruptcy?

[hara]

May I am not understanding the original posting,how can you be struggling,as I can assume that your increased out goings should be easily met by increased out earnings,uless your are paying all of your increased earnings to creditors.
hara.

[gdr]

Hara, the reason to this is that although my income has increased, my outgoings have increased more so due to family circumstances. This means that I am currently unable to pay the 50% extra to my creditors as my IP hasn't altered my outgoings (the baseline) each year I have been in my IVA. That's why I'm hoping that my IP will agree to the new suggested terms.

[aguise]

Hi Gdr
I know I am always on about overtime and the 50%. I am only in the first year but pay my 50% each month. Therefore no bill for it at review. I like you have a benchmark set and find it quite easy to work out each month exactly what extra I need to pay. This month I have had an unexpected expense and as I ring my ac manager each month I just asked if this could be offset against the overtime and it was no problem. The same is done for any outgoing expenses as long as I provide a receipt to show the increase, I had a small rent rise and the usual payrise and the one offset the other so nothing has changed. This I feel is the advantage of speaking regulary to them, if anything changes I can ask and sort it then and if it doesnt matter then I dont worry about the review. Ask for a new income and expenditure work out your increase and they should within reason offset the one against the other.

Hope that helps.

Ang

Ang

[hara]

Dear gdr,
I have gone through my iva recently with GT.I have found every one to be extremely helpful,professional and prompt.

I am surprised that you have not had your annual I and E reviewed.
That is one of the conditions of IVA as I under stand.

Hara.

[gdr]

GT do review my income and expenditure every year but they say that the 50% which I must pay to creditors is based on the baseline set at the original agreement in 2005. My I and E has dramatically changed since then. Surely this cannot be correct and I should be paying the 50% on my current I and E baseline, not the 2005 baseline?

[aguise]

As Melanie says rises in I and E can be offset against income and overtime. Ask them about it. In effect if your rent rises by £10 a month and your wages by £15 then they can offset it by allowing the £10 and taking 50% of the £5 left therefore you would be then paying an extra £2.50 a month which you could either save and pay at review or pay over more frequently if you so wish. Or your benchmark could be taken upo by £2.50.
The only difference is the proposals, mine states 50% of all rises in basic income, and as I understand some take all of wage rises and it is only the overtime that has the 50% thing.
It would be better if all proposals had set criteria for rises and overtime as it seems less fair for some.

Ang

[MelanieGiles]

I do not agree with that calculation, and beleive that the baseline ought to be reviewed each year. I have dealt with several hundred IVAs and never encountered a difficulty with this from either a debtor or creditor.

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

[aguise]

Hi Melanie
Trying to understand so you would not ask for any of the rise from the year you are reviewing but would then increase from the review. Referring to a payrise.

Ang