Minimum Dividend

[OPTIMIST12]

I have a condition in my IVA (added as a modification) that the creditors must receive a minimun percentage dividend in order for the arrangement to be satisfactorily completed. This percentage was the same as the estimated dividend set out in my proposal (and is obviously a fair enough modification) but I just wanted to remind people starting their IVA that balances continue to increase between the time you provide them to your IP and your Creditors meeting. So do remember if you get a modification setting a minimum dividend that you will probably have to pay some extra money in at some point as the actual balances in the claims will be higher than the balances were when you started out on your IVA.

It is easy to get a bit swept away on the day with the relief of your IVA being approved so I think it is important to remember that modifications are important and to listen to them carefully. From reading the forum it seems that most modifications are fairly standard but its better to be safe than sorry.

Good Luck to everyone with their Creditors meetings!!

[Skippy]

Sadly it seems that some IPs (no reflection on anyone on here!) don't seem to explain the modifications carefully enough to people. As you say it's so easy to be swept along and be so grateful that something is being done that you will agree to something you don't really understand. Knowing what I know now, I would never have agreed to the no variations in the first 24 months modification. 2 years is a long time and a lot can happen - interest rates rising for example.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[OPTIMIST12]

Hello Skippy -

I had a "no variation during the first 24 months" condition as one of my modifications too. However, mine goes on to state that this only applies in the case of early settlement (which I assume means if I were to propose a F + F settlement). Am I correct in thinking that your modification meant that there could be no variation in your case for ANY reason during the first 2 years? It seems that there is more than one version of this particular modification.

[Skippy]

Yes, mine meant that there could be no modifications whatsoever in the first 2 years. I realised 4 months in that I really couldn't afford it (there was an error in my figures that no-one including me picked up), so I spoke to my IP to see if a variation was possible, but because of the modification it wasn't, hence my bankruptcy. I didn't want to struggle on for 2 years, the variation to be rejected and go BR anyway! The way your modification has been worded is much more practical.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[Adam Davies]

Hi
I think this modification needs ditching,there can be genuine reasons within the first two years for changes.
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

[sonyse2t5]

That's why it is important to have an IVA meeting arranged ASAP from the day your contractual monthly payment to Banks stops. The accounts will continue to accrue charges and arrears and they will not be written off and be added to the final balance at the Cred' meeting. Or do a short DMP to freeze the debt.

[MelanieGiles]

I have not seen this modification in one of my client's IVAs for over six months - and even before this it was extremely rare.

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

[Adam Davies]

Hi
I think the creditors are scared of you Mel !!!
They probably drop it into the soft touch IPs
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

[OPTIMIST12]

Skippy -

It must have been devastating for your IVA to fail after all the setting up simply because of the "24 month" rule. Was there no chance of putting forward a brand new proposal with new figures and starting an IVA again if these were accepted? Or was this simply not an option? I imagine your creditors will receive a much lower return from your going BR than from an IVA?

[Skippy]

It was partly my own fault for missing an error in the figure (mind you, Dave missed it as well!) - I pay Dave £200 'rent', but when the proposal was drawn up they included £556 of Dave's salary with mine and then said I paid £556 towards the mortgage so I still had to find the £200 from somewhere!

To be honest I didn't even think of putting another proposal forward - I've got no assets apart from my car so BR seemed the best option for me, and with hindsight I should have done it at the beginning. I was only paying 27p in the pound, so I don't know if a lower proposal would have been accepted.

My IVA proposal said that my creditors would receive 27p in the pound in an IVA, and 2p in the pound in BR. To be honest, they probably won't receive anything.

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[pixie]

Hi
I have both the no variation and minimum dividend mods in my IVA. I was told these were fairly standard and didn't really think about them. I would have agreed to virtually anything to get it approved! The only bit I did question was the extension to 6 years if the minimum dividend wasn't met within 5.
At what point would the final figure be submitted by the creditors and would the ip pass this on?

Pixie

[MelanieGiles]

Some creditors can take for ages to submit their claims, but your IP ought to be able to give you an update of creditor claims at the three month point. It your IVA was properly researched beforehand, however, you both ought to have a fairly good idea as to the level of debts you have already, so I would not have thought you will need to pay too many additional payments.

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

[pixie]

Thanks Melanie

I'm sure the original figure was accurate but with interest mounting it could well be more. Hopefully this will be offset with another mod which reduced the fees.

Pixie

[OPTIMIST12]

I have found a paragraph in my "Standard IVA Conditions" headed "Variation Of Claims". This states - "A Creditor's claim may at any time be withdrawn or varied". Is it safe to assume that this applies only until such time as the claim is lodged with the I.P. prior to the Creditors meeting? Or are there exceptional circumstances where a Creditor can increase their claim AFTER the Creditors Meeting thereby increasing the payments required to meet the Minimum Dividend? If so this could play havoc with all my careful calculations!!!!!

[MelanieGiles]

Some claims cannot be properly crystallised at the date of the creditors meeting - for instance HMRC liabilities which cannot be calculated until the end of the year, or a landlord's contingent claim for unpaid rent. This could mean that more money needs to be found to meet guaranteed dividend payments - which is why this is a dangerous practice if there are contingent claims out there!

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