Full and Final:

[Amud]

Afternoon, all .

I need a little help, and where better to come initially than here first!

I entered into an IVA with Credtfix in June 2021 (so it's coming up to a year). The total amount of debt, as shown on the app, is £35,143.04. This is split across 8-10 creditors.

To break this down briefly, £17,081.00 of this is to Halifax (loan), £5349.00 is to Barclaycard (credit card) and £4713.00 to HSBC (credit card). So these three alone total £27,143, and come to 77% worth of the debt.

My arrangement is currently to pay £268.00 a month, with £16,080.00 currently estimated to be paid back in total (all of this shows on the Creditfix app).

My question is, first of all, am I allowed (with it being only 9 months into the IVA) to put forward an offer of a F&F?

Next, if I put forward an offer, which figure do I base it on? For instance, do I base it on paying the full amount of what I would have paid over the 5 years (so £16,080.00), or the full amount of credit owed (so £35,143.04)?

If it is the full amount of credit owed, would they expect the full £35,143.04? Or could I offer between the £16,080.00 and £35,143.04 and this would be appealing to them? For example, £20,000, or even £25,000?

Just as a FYI - I'd be looking to have a family member help me with this. That's where the money is coming from. As, despite an IVA helping me, strucute all of this, it's still affecting my mental health.

Last of all, say I did eventually have a F&F accepted and I paid it all off - am I then able to start rebuilding credit again? I know it will remain on my file for 6 years from the date I entered it, but will I still be able to start building credit again if I do pay it off earlier?

Any help is much appreciated. Thanks!

[Amud]

Oh, and I forgot to add, the reason I added those three creditors in-particular and the % of debt that those three add up to is, I've seen somewhere that debtors of course have to vote (I know initially to create an IVA but also for a F&F) in favour - and that there needs to be a total of 75% in value of debt for it to be considered/accepted. Is this correct?

Also, are creditors more likely to accept proposals like this, given it will save them 4 years?

[Foggy]

Hi Amud,
There are two main ways an IVA is brought to a successful close early:

Settlement -- where you offer to pay the full outstanding debt and fees plus possible statutory interest. And -

Full and Final Offer -- where you make an offer based on IVA payments remaining, so creditors basically get what they signed up for

If you are a homeowner, it is usual to figure in 12 extra payments in lieu of equity release. With many IVA firms it is also common to reduce the actual amount offered to reflect savings in time and administration costs, however, CF is averse to this and do like the full amount on the table, although this is not their offer to make and they do not decide the amount, you do! However their support is very helpful, so it helps to keep them happy too.

Once the F&F is accepted and completion finalised you can start a rebuild so that you are on a stronger footing when the IVA drops off your credit report --- until then it won't be brilliant anyway.

[Amud]

Hi Foggy,

Much appreciated for the quick reply!

I thought I'd start by stating I'm not a homeowner, so I imagine the 12 extra payments in lieu of equity release won't apply to me.

Specific to Full & Final Offer then, is it considered as frowned upon/more likely to be refused by creditors then if, like I say, I'm only coming up to a year of my IVA?

Say I'm able to get together the £16,080 from a family member (what I'm expected to have paid once completed), would they consider this as reasonable would you say? Or would it be flat out refused?

Or would they be more open to accepting, let's say, £20,100 (25% more than the £16,080) or £24,120 (50% more than the £16,080).

I only ask because, this is completely dependent on what my family will be able to help with and offer of course.

So say for instance if it is only the £16,080, in your experience, would they consider and be open to that? As it's effectively paying it off 4 years earlier of course.

Thanks!

[Foggy]

Some IVA's have a clause that a F&F will not be considered within the first 6 or 12 months, but, other than that, they should not object. Creditors do not like being tied into IVAs either !

You are correct --- the 12 months will not apply in this case.

I would say that the offer i.r.o £16k should be acceptable. Obviously the higher the better, but this can never be second guessed. I have seen high offers refused as well as low ones accepted.

[Amud]

Much appreciated for the quick reply again!

I think my overall reasoning for doubting if an offer of £16,080.00 would be acceptable is because that basically means I would be avoiding having to pay £19,063.04 (the difference between £35,143.04 and £16,080.00).

With that being said, based on what I'm paying, I would never have paid the full £35,143.04 anyway, I know - but it still seems like something that would not have been considered (offering only £16,080.00) haha.

I suppose I'm still stuck having it on my credit file for a total of six years though, regardless of if I pay it off early and pay less, so that's a punishment in itself I suppose!

[Foggy]

If the IVA runs it's course the creditors are only expecting the £16k and have agreed to write off the other £19k, so they will be no worse off getting it in one lump now -- in fact they will be slightly better off as they don't have to mess around over the next 4 years, dealing with dividend payments. Add to that the bird in the hand element --- they have the return guaranteed and won't have to gamble on the IVA failing and, possibly, getting nothing more.

[luluj]

Nothing to add but good wishes - your offer of around £16k is a good one and creditors would get their money alot sooner that planned so would hope they looked on it favourably.