Pay back more than you owed?

[e.h]

Hi,

Can somebody answer this question in plain English terms. When in an IVA, is it possible to pay your creditors back more than you actually owed them in the first place? I keep seeing this crop up on this forum and get very confused. How does this work and how is it justified?

Many thanks

Liz

[aguise]

I will try and will be corrected if wrong. You will only ever pay back the amount you owed, plus the Ip fees and sometimes interest at 8% I think this depends on your proposal. Therefore if you paid loads of overtime in, or had a windfall, you would finish the iva early, you would only pay the amount owed back plus fees.
Hope that is right.

Ang

[e.h]

Hi Ang

Thank you for this. It is very confusing. I have absolutely no problem with paying back as much as possible, including interest, after that is what the creditors would have got had we not become insolvent, but I do balk at them having more than they would have got in the first place, if we had just been able to pay everything off ourselves!

Thanks again

Liz

[aguise]

Thats ok Liz, I hope I got it right but I am sure that is how it is. The only extra really you would pay would be the IP fees, but no more than the original debt.

Ang

[ianmillington]

If you pay back 100p in the £, you will have paid more into the pot than you owed, as you will have paid the 100p after fees. However, you have to weigh that against the amount of interest the creditors have written off. Interest wont normally be charged in an IVA (unless the creditors get fully paid due to a windfall) although there are always exceptions that prove the rule.

The moral is that if your proposal shows 100p after costs you need to ask yourself whether a DMP or informal scheme would be better as potentially the IVA and the ensuing fees could be viewed as overkill.

ian

[e.h]

Thanks Ian - its a moot point now as we are in year 2 of our IVA but having seen a couple of previous posts on this, I was a little concerned/confused.

Thank you very much to you and Ang for taking the time to reply.

Regards

Liz

[MelanieGiles]

Statutory interest is only generally payable in IVA proceedings if there is a windfall sufficient to cover this sum.