IVA through Payplan

[jc4]

My husband and I are both on an IVA through Payplan which was approved on 4th July, 2007 but the only way it was accepted was for us to make a higher payment than originally offered. Mine is arranged so that at the end of the time I have to pay 75% of my share of the equity on our house but they made it that my husband has to have the house valued again in the fourth year and give his maximum share of the equity. Also, the chairman's report specified that his would be reviewed annually and that he should provide payslips for the three months before the anniversay date along with his P60, and also that he had to pay 50% of any extra income by the anniversay date. Now we have received a letter asking for payslips to cover from the date of the IVA meeting to the present. When I queried this with Payplan, they said that they always ask for payslips on a quarterley basis so that the 50% extra, if any, can be paid in small amounts rather than in one lump sum at the anniversary. Are they in their rights to do this as the chairman's report only specified payslips for the three months leading up to the anniversary?

Also, I do not work and am on Disability Living Allowance. Do I have to declare any increase in this to Payplan or am I within my rights to not inform them.

Due to having to make a higher payment than originally offered, we are finding it a bit of a struggle and are now wondering whether we should have just gone bankrupt. We will probably have to sell the house any way due to them wanting the maximum of my husband's share of the equity as we cannot see how we could afford to borrow it. Please could anyone help me on this.

[catullus]

Hello jc4

It sounds as though you and your husband are required to release different shares of your equity at different times and, if so, that is very unusual and, I would have thought highly impractical.

Without knowing more it is difficult to comment further on this but I wonder whether you are correct in what you say. perhaps you could check your proposal and chairmans report and post more on this.

The IP's procedure for collecting overtime etc is quite normal and, I would have thought, would make sense to you as well because the temptation to use the additional money over the year would be very strong and would only lead to problems further down the line. You will, of course, have the use of this money for a quarter but will have to pay it over at the end of this time.

Any increase in DLA will have to be taken in to account at the time of each annual review and could affect the amount of disposable income that you are deemed to have.

It is concerning that you are struggling financially so early on in your IVA and, as many posters here will testify, it is highly likely that the monthly amount that you would have to pay in a BKR would be significantlt less than you are presently paying and only for three years. On the other hand, it is very probable that if you were both bankrupt you would lose your home.

So you have to balance all of that off against each other, and ask yourself whether the reasons that you thought you wanted to avoid BKR are still valid. If not, then it may well be the route you should chose, particularly if you are bound to what appear to be onerous and overcomplicated requirements to release the equity in your home.

[MelanieGiles]

Hi there

If your IP wants payslips every three months then you are duty bound to provide them - you have an overriding duty to co-operate with the IP throughout the IVA, and I personally think it is a good idea to do these reviews more frequently to avoid nasty surprises at the end of the year.

If your are also in an IVA, you must disclose any increases in DLA to your supervisor.

You did not have to accept the higher payment, and could have withdrawn your application on the day of the creditors meeting if you felt it was unaffordable. Sadly this happens far too often, resulting in a lot of IVA's failing during the first year. What discussions did you have with the IP at the time creditors sought more money? I would personally never allow a client to accept higher payments if I felt that they could not afford it.

I suggest that you have a chat with your IP as to options, as it is too early to propose a variation. However if you do not feel able to sustain the IVA payments, bankruptcy may well be a better option for you.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[jc4]

Thanks for the replies. On the day of our creditors' meeting, our IP telephoned us saying that the only way the IVA would be accepted was for us to increase the monthly payment offered. Otherwise the IVA would fail. We were already offering a payment which was a bit higher than we would have liked but we could see no other option. We now wish we'd used another IP who may have been more in our favour than of the creditors. It is written into the Chairman's report for both of us that no reduction in payment can be applied for in the first two years. We did not wish to go for bankruptcy as we did not wish to lose the house, but I think this will happen anyway now, unless house prices drop dramatically by the end of our IVA. We don't know what to do.

[Adam Davies]

Hi
It's a slight divertion of the subject but with the new proposed SIVAs there will not be the option for creditors to ask for an increase in contribution at the meeting stage,as I understnd it.Looking at the amount of posts that have reported an increase request fron creditors at the meeting stage I am srarting to think that this may be a good thing.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[lily]

Hello JC

I cant offer any advice I am a debtor myself at the moment, I just wanted to say I really feel for you in this situation. I can also understand why you agreed to the higher amount, you wanted an answer and were prepared to give what they wanted because BR was far too scary a thought at the time. I think its such a shame that your IP couldnt fight for you, maybe you didnt know you had the option to refuse it, or couldnt cope witht the consequences of not accepting it. How can creditors/IP's agree to something that is unlikely to work??? I really do understand that its the debtors fault for getting themselves into debt in the first place but where would the IVA industry be if noone got into debt? How much would creditors lose if everyone just went BR from the off?? There is only so much debt stress people can take, even if you put forward your very best offer they want to sting you for that much more it makes life unbearable or unsustainable. I just dont understand this and it happens so often. Its not going to benefit anyone as they would be unlikely to recieve a better deal in BR. Surely any increase in your DLA is due to inflation as it always happens in April, right??

Is is really worth sloggin it out for what seems like an eternity only to shoulder yourself with a yoke type mortgage?? Every problem has a solution, somethimes its not always the one we want or can afford in this case. I really hope you find a way, thinking of you.

lily

[MelanieGiles]

Andy - your positiveness about the SIVA procedure is unlikely to result in creditors accepting the terms without change.

The more likely occurance is for them to reject, and then say that they will accept so long as the contributions are increased! Nothing really is going to change, they are just going to force the debtor into making modifications in my opinion - which of course is still allowed.


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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[jc4]

Thanks for all replies. I am now considering asking my 18 year old son, who is in full time employment, if he would be prepared to borrow money to buy my share of the equity. If he would then I am prepared to go bankrupt leaving my husband on his IVA. I feel this might take the burden off him as he would not have to be partly funding my IVA. That way we would still be able to keep the house. I feel that this is the only way out. As a husband is not responsible for his wife's debts, and vice versa, I would then not be expected to give any of my DLA to his IVA. If this would not be allowed could someone please let me know. Thanks.

[MelanieGiles]

If you decided to go bankrupt, and your son was able to make a sensible offer for your share of the equity based upon the market value of your proeprty, I am sure that this would be acceptable to a subsequent Trustee.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp