Major change of circumstances

[Snickersneeze]

Hello, I am new to these forums (or is it fora?)[?]

I entered into an IVA set up by Payplan in May of this year - about £35k of credit card/bank loan debt. I had the IVA as most debt was in my sole name or my wife was just an authorised user of the credit cards. All the calculations were done and an offer of £230 per month was made (57p in the £) At the creditors meeting, however, they demanded £350 per month and I was advised by Payplan to agree to it (despite the figures not adding up?!?[:0]) I paid it for four months... then my wife spotted a swift exit from all of the debt etc and asked me to leave the matrimonial house (which was, when we first met MY property in my own name!![:(!]) Now, with me having all my own rent/utilities etc I have calculated that I can only afford £160 per month. Payplan are advising me to extend the IVA over a much longer term so the creditors get a similar return or they may reject it !?!.

The whole idea was to be free of it in five years; I don't fancy paying it for eight or nine years... is this standard practice? The original offer took account of £15,000 equity in year 4 from remortgaging the house. Cheers, Snick.

[marsha1]

Hi, I did not think that an iva could go beyond 72months. Im sure one of the experts will be along to help you soon. If your house is in your name can you not force a sale and take some of the profit, assuming there is some of course.

[Snickersneeze]

Hi Marsha - thanks for replying. We remortgaged a couple of years ago and transferred into joint names...[:(] Also I have a young son there so there is a limit to what I can do, I fear. Her solicitor told her that as the divorce petition cites financial mismanagement as evidenced by MY IVA, she stands a good chance of getting most if not all of the equity.

In actual fact, the property is on the market although you would have thought she would sit tight. I guess there must be a twinge of guilt about the fact that it used to be my house.... or the fact that she moved a new man in within a week of my leaving...[;)]

[catullus]

Lots of issues here Snickersneeze but the most obvious question to ask first is has the Supervisor registered an RX1 against the property?

It's a caution against the property that both you and your wife would have had to sign.

[Cybus]

I would be extremely disappointed by Payplan if I were in your position in May.
Contributions were set to commence at £230. Creditors demanded an increase in the level of contrbutions of over 50%. Did Payplan explain to you how the creditors wanted your expenditure adjusted to reach such a vastly increased figure?
Creditors, if they feel your expenditure in certain areas is too high would advise Payplan what they considered to be reasonable and the combination of those adjustments would have come to the £120. Did Payplan explain this to you?
They cannot turn to you and 'advise' you to do it without giving good reason.
I am not entirely certain of how matrimonial law affects IVA's in this respect and I hope someone who does will be able to pick up on that point. Whose name is the house currently in? I'm not asking about the mortgage, but the deeds are they still in your name or joint?
An IVA can be over any term as long as it is agreed with creditors.
However, if you are living in rented and do not own a property, then bankruptcy is an option to consider in the event of failure of the IVA. I hope someone with Matrimonial law knowledge will be able to assist further.

I see since I was interrupted during my post a few of the points above have been cleared up

Tell it like it is.

[CoverItAll]

Hi Snickersneeze

"Been there". Two years into a three year bankruptcy, having transferred the house to my then wife prior to the bankruptcy, I was asked to leave. Just like you I had a child (daughter of 6) still living with her mother, so my options were severely limited by my not wishing to disturb her. I moved on, met someone else, married and created a new life, new business, and much improved lifestyle.

Right now I am sure it looks pretty bleak, but you WILL get through this, and come ouit the other side the stronger for it. Starting your IVA shows your srength of character, shows that you don't take the easy option.

You will find great suppport from terrific kindred spirits on here.

John Tegg
www.protectiva.co.uk
0845 673 9999
We will make all your IVA payments for you if Accident or Sickness stops you paying them yourself.

[Adam Davies]

Hi Snickersneeze
What a huge increase in your payments from those proposed.
Bankruptcy is an option and it will give you a fresh start.The equity in your house will be a factor though so as Catullus has indicated your case is very complex.
If bankruptcy is not an option that you want to consider then ask Payplan to call a variation meeting to propose your reduces payments and wait and see if the creditors ask for an extension to the IVA.

Andy Davie
IVA.co.uk Spokesperson and Website Manager

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

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

[Snickersneeze]

Thanks guys, for all your help and advice. Cybus, Payplan told me that a lot of creditor meetings are attended now by agent companies who are there as representatives of the creditors but are paid on the amount recovered and are therefore much more 'hard line' than the creditors themselves would be. Payplan had calculated what I could afford but the agents took a much tougher approach - no sky tv, nothing deemed a luxury, no holidays, much less allowed for food, clothing etc. They said the £120 was easily affordable and Payplan told me not to argue. Not sure whose name the house is in, either, sorry.

Catallus - not aware of any caution but I may have signed one? Wife certainly hasn't. It is annoying that I am unable to defend my wife's divorce proceedings as I can't afford legal advice.... can I get legal aid?

Andy - I am avoiding bankruptcy if I can. I work in the credit (motor finance) industry and, although I do not know it as a fact, I think my job would be at risk if I chose that option.

[catullus]

Hi Snickersneeze

The relevence of the RX1 is that it's a caution against your property, in favour of the Supervisor and would effectively prevent a sale of the property.

It's almost always a condition of an IVA that an RX1 is registered but, to be effective, both you and your wife would have had to sign it. Have a look at your proposal, in the property section, to see if there is mention of this. My guess is that it is there.

If the supervisor has registered an RX1 then your wife will be unable to sell the house without accounting to the supervisor for your share of the equity.

Again, if the RX1 is registered, I doubt that the family court,should it come to a financial division, would overturn it although very recent case law has confirmed that it would have the power to do so.

On reading your post again I see that you are sure that your wife hasn't signed an RX1 but I'm 99.9% sure that your proposal would have required one and I don't think that Payplan would missed this, so I'm a bit baffled!

[MelanieGiles]

This post serves as a warning to all peopole thinking of entering into an IVA, to ensure that payments are affordable. For this firm to advise you to accept such a high increase in contributions either suggests that the figures were wrong in the first place, or that you were being set up to fail.

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

[Cybus]

This post serves as a warning to all peopole thinking of entering into an IVA, to ensure that payments are affordable. For this firm to advise you to accept such a high increase in contributions either suggests that the figures were wrong in the first place, or that you were being set up to fail.

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

I'm very much in agreement here.

On the point of creditors attending meetings ... in the last five years, I can think of only a handful were a creditor has actually physically attended a meeting. I don't share the view of Payplan where they state -

"meetings are attended now by agent companies who are there as representatives of the creditors but are paid on the amount recovered and are therefore much more 'hard line' than the creditors themselves would be."

I think that is misrepresentative, albeit unintentional, of Creditor Representatives. If Creditor Representatives were being paid based upon returns achieved, then they would surely take a more relaxed approach and encourage acceptance of a proposal as opposed to rejection.

In your instance, I do not believe you have been given best advice. You stated that Payplan had calculated what you can afford to pay. Payplan should not be doing this. At the end of the day it comes down to what YOU think you can afford to pay and not what they think. I think it was a very misguided person who instructed you to accept an increase in the level of contributions of more than 50% without advising you of your alternatives. (For the record I am in agreement that there should be no allowances for non essential items such as Sky and Holidays)

It's possible that had this matter been handled properly, between you, you could have negotiated with creditors a compromise between the £230 originally offered and the £350 which was practically enforced upon you.

Tell it like it is.

[Martin2011]

Hi Snickersneeze.... That's all very complex and you have my sympathy for sure.. Some very sound advice above and it seems a real shame that it appears you may not have had the best advice from the start. I'm sure you've taken account of costs for supporting your child as an 'absent parent' in your new calculations. I know the CSA are finally dissapearing, but if they do get involved, they specify how much has to be paid and would be a fixed cost. If you haven't already, it might be worth clarifying what that will be now, as it would be a shame to get a demand on that front if you've just managed to re-nogiate your IVA payments.

Best of luck with it all, keep us posted on progress,

Martin

[johnz]

(For the record I am in agreement that there should be no allowances for non essential items such as Sky and Holidays)

Hi Cybus. I had to query what you wrote here. I have to ask, why should someone who has made a mistake not be allowed to have a reasonable life during the time they are trying to rectify that mistake. The average person works extremely hard and NEEDS (not wants) some R&R time. With all of TV going digital most of the time it would be cheaper for someone who is already with Sky to stay with them on the basic package than to have to go out and buy a new digital "freeview" box. And why shouldn't someone who's worked their arse off all year to pay back as much as they can and still keep a roof over their heads and put food on the table have a holiday? As long as they keep it to the cheaper end of the market of course.

If I've misunderstood your post, I apologise, but comments like that make me quite cross. Just cos someone's got into debt doesn't mean they should have to stop living. Even people in prison seem to get a better deal than that (what with playstations, free meals, free accomodation, etc, etc).

Johnz

[Cybus]

The most basic SKY package - yes, acceptable.
But subscription to packages other than the very basic, I would not be thrilled if someone owing me money was happy to spend on what is a non essential item but not repay me. That's just my opinion.

Holidays ... well being in this game as long as I have, I have come across quite a number of people who have in my opinion taken the proverbial. I do have a tendency to recall those more and hence the reason for my comment.

I was having difficulty with a debtor in that he was being a bad lad and not keeping his affairs with H M Revenue and Customs up to date and further, his contributions were in arrears. Call me sadistic, but it was a pleasure having a Bankruptcy Petition served on him .... after he had returned from his Cuban vacation, which he had funded at the expense of his creditors!



Tell it like it is.

[MelanieGiles]

There are always bad apples in a portfolio, but on the whole the majority of people who propose IVA do so because they are prepared to make sacrifices to see their debts repaid. Debtors must have some form of comforts to enable them to continue to live to a fairly frugal budget for the duration of an IVA. And a Sky basic package and a modest family holiday definately fall into that bracket in my opinion.

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