F&F Means default on IVA - I.P. HELP Please !!

[smithers78]

Hi,

Sorry ahead for the war and peace posting but I dont know where to turn with this problem

I wish to a make a full and final settlement on my IVA that will match the P in the £ that was agreed would be paid at the creditors meeting. A family friend is willing to provide this money as our circumstances will change next year that will mean we can no longer meet our monthly agreed contributions.

I’m told that because of the change in circumstances this in addition to the lump sum, will be a supporting reason why the creditors will consider the full and final settlement offer plus they will receive in year 2 what they would have had to wait until year 5 to get or not at all.

Since talking with My I.P it would seem that because of the fees they have taken / will take from the lump sum as well as a extortionate cost to arrange a variation meeting, the offer to our creditors virtually halves and so our p in the £ offer is significantly reduced.

My fear is that because of the high I.P fees our F&F offer will be rejected. My understanding is that the I.Ps role is to fairly manage the process of reclaiming as much debt as possible on behalf of the creditor, but in this situation, because of the fees my I.P is imposing, I cannot now make a F&F offer that comes close to the P in the £, so how does this act in the best interests of the creditors?

The only option as I see it is to write to each of my creditors and seek independent agreement to make a F&F outside of the IVA and so defaulting on the IVA. I wanted to ask an expert what the legal implications are of this. Surely it would be my creditors whom would force bankruptcy, but if ive got prior written agreement they will accept my offer, is this a path I could take.

Any help would be greatly appreciated

Thanks
Owen

[Shining]

Hi Owen and welcome to the forum. I cannot answer this for you personally but will bump this up so an expert can, all the best x

[liamjames]

Hi smithers78 and welcome,

It would be inappropriate of me to judge another company's fees, but it seems strange that your IP's fees would increase if the term of the IVA reduces. I'd suggest that if anything, the Supervisor fee (which is paid pro rata) should reduce to 2/5 of the original agreed/proposed amount, depending on how it is limited by modifications. Obviously some work will be done for the variation, but unless your case is extremely complex I wouldn't have thought this would be too expensive.

Can you ask your IP to provide a full costs breakdown and clarify how and why the fees would increase?

Regardless of this, if you are unable to meet the agreed payments and have worked on a compromise offer your creditors should be understanding. Please try to work within the safety of the IVA unless there is absolutely no alternative... it's for your protection.

[smithers78]

Hi,

Thanks for the swift response. Having re-read the chairman’s report, there is a clause that states that a variation meeting if required should not exceed £400 + VAT. The I.P is asking for 3 times that amount just to set up the meeting. The fees written into my chairman’s report states a I.P fee of no more than 15% of contributions, which I feel is fair as of course they are running a business and must be compensated for their efforts, but the fees suggested to me that will be taken are approx 2.5 times above this 15%.

Is my I.P in breach of the agreement? If so is this a matter for the FSA?

Also can an I.P recoup lost earnings so to speak, i.e. I F&F after 2 years so they reclaim the lost earnings that would have been payable for the remaining 3 years.

I would much rather work with my I.P to resolve this, but feels like because of the fees, they are putting their interests before that of me or my creditors.

Sorry for all the questions, but what are the implications are by passing an IVA/I.P in attempt to resolve this situation direct with my creditors?

[Michael Peoples]

If the fees are excessive your creditors will reduce them and this should not affect your offer. Propose what you feel is reasonable and affordable to repay and hopefully it is accepted.

[smithers78]

Thanks Michael, but what are implications of acting outside of an IVA if I can get written agreement from my creditors. Surely, I will owe the I.P nothing more as they have alredy taken their cut of past payments as well as the arrangement fee for setting it all up. Is this right or do redemtion type fees exist with IVA operators.

[smithers78]

Sorry michael, dont mean to direct all the qustions at you. Just hoping to get a steer from anyone who has advice on this matter. Is anyone able to help with this?

[liamjames]

Hi,

Thanks for the swift response. Having re-read the chairman’s report, there is a clause that states that a variation meeting if required should not exceed £400 + VAT. The I.P is asking for 3 times that amount just to set up the meeting. The fees written into my chairman’s report states a I.P fee of no more than 15% of contributions, which I feel is fair as of course they are running a business and must be compensated for their efforts, but the fees suggested to me that will be taken are approx 2.5 times above this 15%.

Is my I.P in breach of the agreement? If so is this a matter for the FSA?

Also can an I.P recoup lost earnings so to speak, i.e. I F&F after 2 years so they reclaim the lost earnings that would have been payable for the remaining 3 years.

I would much rather work with my I.P to resolve this, but feels like because of the fees, they are putting their interests before that of me or my creditors.

Sorry for all the questions, but what are the implications are by passing an IVA/I.P in attempt to resolve this situation direct with my creditors?

Hi smithers78,

I'd alert your IVA company to these modifications and ask why they feel they don't apply in this case. I'm sure they'll be able to provide you with an answer.

If you're not satisfied with that answer I'd inform the IP directly and give him an opportunity to discuss this with you personally. He must tell you his licensing body and how to take this complaint further if you can't reach an agreement.

As Michael says these fees will be scrutinised by creditors and there is no reason to worry too much at this stage, but it's definitely worth a phonecall.

[smithers78]

Thanks for this, but from the phone calls ive had with my I.P it would seem that the fees will be extracted prior to the offer being made, i.e. the creditors may not know what the full offer is as what is being put forward in the offer is less their fees.
I just feel that the people that should be advising me through areas I don’t fully understand are working against me. I may just be reading this all wrong, but the fees are above what is in my signed agreement and surely if an I.P makes a profit from an IVA, then it’s not in their best interest to pursue a F&F. This is what it feels like anyway.

[liamjames]

Thanks for this, but from the phone calls ive had with my I.P it would seem that the fees will be extracted prior to the offer being made, i.e. the creditors may not know what the full offer is as what is being put forward in the offer is less their fees.
I just feel that the people that should be advising me through areas I don’t fully understand are working against me. I may just be reading this all wrong, but the fees are above what is in my signed agreement and surely if an I.P makes a profit from an IVA, then it’s not in their best interest to pursue a F&F. This is what it feels like anyway.

Your IP is required to give creditors a full breakdown of receipts and payments. There is no way that he'd be allowed to take a fee without disclosing this to your creditors, and you should ask him to clarify this for you in writing.

If you act outside the IVA you will need to be extremely careful and get everything agreed in writing. I'd definitely advise against it unless you have no other option, and try to keep faith that your IP will act in your best interests. If he fails to respond to your complaints with satisfactory answers, you can go to his licensing association and they'll investigate further.

[liamjames]

As an aside, it is an IP's duty to act in the interests of both the individual and their creditors. If there is reason to believe that they are acting for personal gain, then they seriously risk losing their license.

[smithers78]

Liam, many thanks for the advice. Ive requested a costs breakdown from my I.P, via third party company as My I.P seems to only correspond through this other company. I'll see what say. Thanks for taking the time to respond.

[smithers78]

Hi, just to pick up this thread again, I wanted to ask if anyone has any legal knowledge about what im asking. i.e if I make an offer to my creditors outside of the IVA, could the I.P take proceedings against me or anyone else for that matter, as the offer would satisfy my creditors, but it may have other implications. Any help with this would be much appreciated.

Thanks

[kallis3]

Unless you fail your IVA then you should not make an offer to your creditors outside of that as it is a legally binding agreement on your part and theirs.

The decision is up to you. If you think that you can pay your debts off then let the IVA fail and make an offer.

[nepensioner]

Hi Smithers
Having revisited your initial post I really think there may have been a communication breakdown with your IP and you need to help him/her sort this out. I understand you may feel the fees are high to call a variation meeting but you can be reassured that if they are then your creditors will sureley request they be modified and be brought back into line. Also, remember that it is your IVA and your IP needs to listen to and act on your request to offer a F & F, in my personal view you will gain nothing by trying to go it alone