MOD 5

[confusedchris]

Hi all

I have been in an IVA (Debtmatters) for 12 months and just had annual review.
I was told that because there is a MOD 5 added to my IVA - 50% of any additional income is paid regardless of increase expenditure..this is nonsensical
If your salary increases by £150 then according to the MOD 5 you owe £75 regardless of things going up around you. Your monthly mortgage payments could increase in the same year by £130 (as has happened this year to me) which would swallow up the pay increase meaning you actually have negative residual income..in this example £150-£75=£75 minus £130 (mortgage increase) leaving a shortfall of £55 per month...this can't be mathematicaly/legally/morally right, can it?

Also can you advise what happens in the 4th year of IVA regarding remortgaging, the reason I ask is that I am concerned that because we have been paying £485 pm into the IVA this figure will be used to say that we can increase our monthly mortgage payments by the same amount (assuming sufficient equity in property), firstly we are currently paying interest only (no endowment is being claimed in our expenditure) and secondly if the £485 assumption is correct there is no point to an IVA

Yes, I am confused....

Thanks
ConfusedChris

[Lisa2009]

I think i am correct in saying that when the time comes to remortgage it should be for no more than 60% of your disposable income.
Im sure if this is incorrect one of the experts will put me right.

[bagpuss]

Hiya ...(question 2) i dont think anyone can make you pay more into your mortgage, i dont think thats anything to do with your IVA.

As for question 2...i think what they are saying is correct...from what i have read on here many seem to have to pay 50% of pay rise and overtime into there IVA....although i personally dont see it as being right for the same reasons you give.

I think it would be better to re-work your expenditures at the time of the wage increase and compair that with the changes in your mortgage/bills/cost of living...then take whatever is left of the wage rise so that you can still afford everything.

Angie xx


My IVA Story......http://bagpuss.blogs.iva.co.uk/2007/09/ ... iva-story/

[Adam Davies]

Hi
You should only have to pay 50% of any overtime and bonus's.Any pay rise should be first offset by any living cost increase[like mortgage increases]You are right in that it is mad for you to have to pay over the extra before additional costs have been deducted.
Go back to Payplan after filling out a new income and expenditure form and ask them how they expect you to pay the mortgage etc.
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

[confusedchris]

Thanks All for taking the time to reply

Andy your reply is what I thought Debtmatters should have said and in fact I believe they have misinterpreted their own Mod 5....still I guess their shares are suffering....

The only time they seem interested in the Expenditure side seems to be at year end review.

This leads to another question (maybe for Andy) Can I switch administrators of my IVA and continue with the same payments plan without starting again as I am losing confidence in their 'expertise'

Thanks again

ConfusedChris

[Adam Davies]

Hi
Short answer I'm afraid and it's no.
You need to keep on at payplan and I guess you have not got past the office clerk or case worker.Write a letter to your IP and get something in writing.
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

[confusedchris]

Hi Andy

Thanks again for your reply

I understand your involvment as I too would like to help others in a similar situation

Any ideas on how to become a Debt Councellor (but I guess that the governing bodies would frown on an IVA'er) at least I'd have empathy

As you say in your interview (very good by the way) it's too easy to borrow and no one really wants to help if you come unstuck

CC

[Adam Davies]

Hi
My honest advice would be to stay an active member on this forum,you will help many.This forum is growing all he time and is widely read by all,including the creditors themselves.
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

[Phil]

HI
Sorry If I sound Thick but was is a mod 5 ?
I apologise but I am also with debtmatters and wondered what this is when my annual review comes round.

P

[confusedchris]

Hi

A "MOD5" is a Modification (add on) to the IVA - it's something that in my opinion Debtmatters skip over when they give you the news that your IVA has been accepted. Let's face it at the acceptance stage you'd agree to almost anything and when the whole IVA dream has been sold on RESIDUAL income your mind set is geared to thinking that the additional income means additional residual income..for the record I can't even remember the conversation (but perhaps that's my brain cell packing up or the anti-depressants kicking in)

It effectively means (in their terms) that a percentage, in my case 50%, of ANY additional income must be put aside to pay them at the year end review irrespective of any expenditure increases that occur during the same year.

I was initially presented with a bill for £1500 (I thought those days were over) to be paid within 14 days that subsequently reduced to £500 because Debtmatters made a mistake reading my payslips they added deductions instead of deducting deductions, not rocket science.

Still where can someone in an IVA get £500 from within 14 days (I'm not bloody royalty , "sorry swear police")..so the outcome is that I have to pay an addition £22 per month for the next 2 years on top of my IVA payment, who said I was going to be debt free in five years at this rate every time my Wife or I get a payrise I will have to give 50% of it to Debtmatters regardles of my mortgage increasing, incidentally my mortgage (Interest only) did increase by £130 per month between Oct06-Oct07.

Hope this ranting helps

The experts on this forum may have more information to share...I'm just a IVA plodder

Thanks

ConfusedChris

[aguise]

Hi Chris
We do a lot of overtime and have the 50% rule, though we can offset against any i and e rises. We pay it each month religously for the exact reason that you have had so as not to receive a bill at review, I know that if i didnt pay it straight over something would happen and i would end up dipping into it. Seems unfair you can not offset, so maybe doing it monthly may be better.

Ang

Please visit my blog at http://aguise.blogs.iva.co.uk/

[OPTIMIST12]

I agree - I have the 50% overtime / additional payments condition and deal with this on a momthly basis by sending in a cheque. In fact I make this the first thing I do when I receive my pay slip. That way there is no room for temptation to lead you into spending what you should not!!!!

[Phil]

Thanks Confusedchris for your answer. My proposal and chairmans report mentions nothing whotsoever about 50% uplift for overtime or payrise, I even rang debtmatters to check and they could find anything and they could not.I will still be prepared as I can for the review though.

P

[Adam Davies]

Hi
Confusedchris's IVA is flawed in that they could get a payrise,via promotion,but be required to travel further and incur additional expense that may come to more than 50% of the extra income.If they had to hand over the extra 50% regardless of expenditure increases they may well be worse off.
The fact that they have already been presented with an incorrect demand makes me think that the case is being handled by a junior member of staff.
A letter is needed from your IP to clarify the position
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