Offering a F & F & variation questions!

[h.o]

I haven't posted for quite a while as things have been very busy, but basically both my wife and I have IVA's.

When the arrangements were put in place (November 2005) we were both in full time employment.

Now we have an unexpected (but gorgeous!) little one and my wife has decided not to return to work, purely because we have been unable to find any childcare arrangements that would cost sufficiently less than her income to make it worthwhile.

We have taken a break from both IVA's to sort out our current finances, see what extra income we can generate and look at putting a variation together.

As my wife's IVA is for a substantially lower figure than mine I asked (purely out of interest) what would be acceptable as a F & F on her arrangement. My IP hasn't given me a figure to put forward but says she has £9142 of payments outstanding (which I assume includes IP costs because the estimated divi to creditors was £8315).

There is a chance that her parents may be able to give her around £4000 - £5000 but only if it is used to complete the IVA. Would an offer of this figure be in the right ballpark or am I kite flying?

The other side to this being if we can clear hers more money can go to mine, which at the end of the day is the larger debt and the same creditors and her income is not likely to come back on stream for a good few years yet.

Even if they accept an F&F I will still need to go for a variation on mine as we do not have anywhere near the same amount of income. If the creditors will not accept a lower payment on mine (currently around £640 a month) I will have no choice but to go bankrupt, which seeing as I work in Financial Services means I immediately become unemployed, then they really will get nothing!

Surely something is better than nothing?

For the record we live in rented so do not have any equity release clauses, estimated divi for my wife is 33% (I assume that is 33p in the pound) and 38% for me. Her monthly payments are £228.55, mine are £642.45 and based on our current income I will only be able to offer £350 - £400 a month towards both IVA's (or one if we can clear my wifes). As my wages only cover our rent, food and utility bills the extra money will come from a 2nd job.

Any thoughts or advice appreciated.

[catullus]

Hello hoario

Before we get too deep in to the detail here, are you absolutely sure that the two IVA's are independent of each other (and are not interlocking) because it would affect the options that you have.

The preamble to the IVA, probably on the first page, will set out whether they are separate or joined together.

[h.o]

Edited to add:

OK I have both of the Chairman's Reports in front of me and neither say anything about interlocking.

The only query I would have is mine has a modification saying "The release of the debtor from liability to creditors by the terms of the IVA shall not operate as a release of any co-debtor for the same debt".

There are no modifications on my wifes' and I cannot find anything in either original proposal that infers an "inter locking".

[catullus]

The reason why it is important is that if they are interlocking and/or where you have joint debts it will be difficult to persuade the creditors to accept the full and final settlement offer only against her IVA.

One other way to identify whether they were interlocking is can you remember whether only one Income and Expenditure account was prepared for the two of you or were two prepared?

There is a good chance that they are interlocking I think, in which case, it may be difficult to extract your wife from the IVA but a variation down to an affordable amount coupled with an additional amount from your wife's parents may well be acceptable to the creditors, but of course that would still mean that your wife was in an IVA, which her parents may not be happy about.

[catullus]

The Chairman's report wouldn't normally refer to this issue. You'll only find it in the proposal itself and a strong clue is also whether only one I and E was prepared for the household or whether two quite separate I and E's were prepared

[h.o]

We did complete one I & E but I have double checked all of the paperwork and nowhere does it mention interlocking or a similar phrase.

[MelanieGiles]

From reading your earlier posts, it does seem to me that your IVAs are interlocking, but check with your IP to be sure.

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

[catullus]

Hmmm

It sounds like an interlocking IVA. The proposal may not use these words exactly but you would be looking for a small paragraph at the beginning of the proposal that explained that your financial affairs were being merged and were conditional upon each other.

If they are interlocked, which I'm almost certain they are, the situation is much as I have explained it above.

But perhaps Melanie will come to my rescue on this one with some other ideas !!

[h.o]

I will ask our IP to confirm in the morning.

I assume if they are interlocking that the only way to offer a F & F would be if we had funds to do both?

[MelanieGiles]

They would need to be separated as part of the variation process, and separate dividends offered to each one. This is easy in your wife's case, as her dividend will be based upon the offer being made. In your case, you will need to be left with sufficient income to at least offer the original dividend, or else your IVA will need to be varied as well.

I have successfully separated interlocking IVAs in the past, but we would usually prefer not to if we could help it! As Catullus says it is messy, and you have to be sure that one case is not benefitting unduly to the detriment of the other. Are there any joint creditors as a matter of interest?

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

[h.o]

...you would be looking for a small paragraph at the beginning of the proposal that explained that your financial affairs were being merged and were conditional upon each other.

Thanks for your feedback, I have read and reread both Summary's of Proposal and there is nothing that is a condition, or clearly states that one IVA is depended on the other.

The only time the other IVA is mentioned (and vice versa) is there is an asterix right at the end of the schedule of creditors that says after it "This represents the debts for which the debtor is joint and severally liable with her spouse. These creditors could therefore expect to receive 71p in the £ over the two arrangements."

Nowhere is that replicated in the Terms & Conditions, Summary Sheet, Proposal etc.

[h.o]

Are there any joint creditors as a matter of interest?

Only as indicated by this asterix at the end of each schedule of creditors, Nationwide & HSBC.

[MelanieGiles]

Do you pay one contribution or two separate ones. If you only pay one, then the proposals will be interlocking.

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

[h.o]

We both pay separately.

[MelanieGiles]

OK - I have changed my mind! I no longer think that they are interlocking - do you have any joint debts?

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