IVA clause worded unusually, anything I can do?

[tash]

Hi,

I took out an IVA in Oct 06. When I oringinally discussed this with the IP, I was told I would pay £357 per month which was fine. I signed the agreement and the IVA was set up. A couple of months later, I called up to discuss something else and I was told that part of the agreement I signed stated that I had to pay 50% of any earnings over a certain amount on top of the £357 I am already paying.

I said that I hadn't noticed this in the agreement and it was never discussed with me at any point when setting the agreement up. The response was that in my case, the clause had been worded unusually so neither myself, or the advisor I spoke to noticed it at the time. This means that I am now paying in excess of £800 to cover a £40k debt and I am worse off than before. Is there anything I can do about this apart from bankruptcy?

[Sarah]

Hi And welcome to the forum... I am afraid to say that this is a pretty standard clause in IVA agreements in fact i do not think that you would find anyone on here that does not have that... I have to say as well that this was not mentioned to me until the very last phonecall that i had with them before my IVA was agreed. I am not sure (and someone else may be able to advise) but i do not think there is anything you can do. Sorry!

[ivoriva]

£357 to £800 is a mighty leap, did you have a very substantial pay rise, bonus or something? It would help if you could provide a bit more detail on exactly what lead to this increase.

Im speculating, but it could be you are paying back something you have received over a short period, so that you arent behind come a yearly review? In that case, your payments should drop again once this shortfall is made up. If this is the case, you could offer to pay it back over more time or by way of additional payments at the end of the agreement - you will need to discuss this with your IP and make it clear you cant make payments at this level.

As for the modification you mention, this is very common place. Im suprised that your IP didnt know what it means, how exactly is it worded? Do you have a copy of the modifications, you should have had them in the chairmans report when the IVA was approved - plus you should have had to return a signed agreement accepting the modifications.

[aguise]

As Ivor says this is pretty standard, we have to pay 50% of overtime as you say above the set earnings amount. I also think these are probably catch up payments and as soon as you have paid the extra back they will drop again. Ring your supervisor and find out. You must have earned a lot of overtime or had a huge rise for this amount of increase does it not say for how long or maybe it is just for the one payment? Ringing them is the only way to find out.

Ang

[tash]

Hi,

Thanks for your replies. I do understand that it is a common modification but when I spoke to my advisor originally, they told me that there were no modifications on the IVA so it was a bit of a surprise to find out 3 months later - additionally, it was not made clear on the chairmans report and the advisor admitted this as they had not noticed it either. I have recently had quite a substantial payrise but I suppose the upside is that I may pay off the total debt in less time than the 5 years - fingers crossed!

[todd71]

Bit of a bummer tash but think ahead and keep positive every month is closer to being rid of the debt

Good Luck

[tash]

Yes this is true I guess and to be honest, i have almost finished the first year and it has gone pretty quickly. The other positive thing is that at least the interest has been frozen so its not all bad and has taken a lot of stress away from me!

[MelanieGiles]

This is rather odd. Either this was a modification on the day of the meeting - which should have been included in your Chairman's Report - or it was written into the proposal initially. If it was in the proposal, then this ought to have been brought to your attention when the IVA took you through that before signing. If it was modified in at the creditors meeting, then this should have been discussed with you - as you are the only person who can accept IVA modifications.

I do not feel that you are worse off than when you started. If you are paying over 50% of your increased earnings, then you are keeping the other 50% for yourself. Most IVA clients do not have that luxury. And you are also getting the benefit of an interest free period for the next few years. My advice, for what it is worth, is pay even higher contributions using your 50% of increased earnings, and get the IVA concluded earlier.

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