payment have been increased x10 plus interest

[p_h]

Hello,
If anyone could help me it would me much appreciated.
I took out an IVA on approx £20,000 of debt 2 1/2 years ago. I paid my first 2 years payments no bother.
I got a job overseas in Sept 07 in order (amongst other things) to pay off this debt quicker and be free of the IVA.
I have been in contact with the company I have the IVA through and they have decided that my payment have been increased x10 and that I am in a position to pay off 100% of the money owed.
All this is understandable but they are saying I have to pay off near to £30,000 in order to take into account interest (8%) on the debt.
The problem I have is that they will be charging interest on the first 2 years before my circumstances changed. I have worked this out and it is a difference of £7500.
What happened to the money I was paying in those 2 years - If I had not got the IVA the money I have been paying would have come off the original amount and I would be able to settle.
The IVA is proving to cost more than the original debt plus interest if I had not taken this out. Surely this is not what they are designed for?

Can someone please give me advice as I have trouble getting sense out of my IVA practicioner and this IVA has already cost me my marriage due to my wife not accepting the amount of credit that had crept up by stealth over the years. I did not have a problem paying my original debt but was sick of the money I was paying not amounting to anything when interest was added.

[Viki.W]

Hey p h, welcome to the forum. I'm sorry to hear about your relationship, please wait for an expert to advise you. The most you will ever pay back is the original amount of debt PLUS interest PLUS IP fees. hang in there and an expert will help. Viki X

[neil277]

Hi
Your debt should stay the same as stated in your documents you Received from your IP. Its nice to see people trying to pay off there debts you say approx £20000 and your 2 years in i find it hard to believe that you will have to pay more plus interest.

One of the experts will be along very soon.

Thanks

Neil

[Adam Davies]

Hi
If affordability allows you will have to pay the original full debts plus IP fees and possibly statutory interest[this is normally only on lump sum windfall settlements].
This will probably still be no more than you would have paid in total had you continued with the contractual payments.
You can stop your IVA at any time and revert to negotiating payments with your creditors directly,although you need to check that your IP does not have a clause in your IVA to bankrupt you if it fails
Regards

[neil277]

Hi

So its better to keep to the program which you started (ie)the full 5 years, if you start to earn more money you have to pay more!(yes) so the debt decreases in theory so 5 years could become 2 years then you are free from debt.

p_h has not offered a lump sum windfall or settlement its just more money and its good to see people taking ther debts in hand. I under p_h is working overseas i would working out my outgoings again due the high cost of living and submit another application to your IP.

Because when i took out my IVA i was told if i earn more then i pay more (no interest would be added) your IVA would finish much early.

Thanks

Neil

[MelanieGiles]

You need to ask your IP for a detailed statement of account as to how the interest has been calculated, and make sure that the money they have been holding for you has also been held on an interest bearing account in order to offset the effect of having to pay interest. Notwithstanding this, you would appear to have been correctly advised.

[p_h]

Hi everyone and thanks for taking the time to reply and advise. Can I explain the payments in more detail;
My original debt was around £20,000 against which I was paying £220 per month = £2640. The interest against the debt is 8%P.A. so the amounts (without payments) would be 1st year=£20,000+8%=£21,600. 2nd year=£21,600+8%=£23,328. 3rd year=£21,600+8%=23,328. 4th year=£23,328+8%=£25,194.24. 5th year=£25,194.24+8%=27,209.78. at the end of year 5 the amount owed would be £29,386.56.
Now,I have already made contributions of £5280 and I have to make 10x£2500 paymants and a final payment of £340 taking the full amount paid to £30,620.
If I had not got the IVA and paid the £220 per month off the credit after an 8%P.A. interest had been added each year;
1st year = £20,000+8%(=£21,600)-£2640=£18,960.
2nd year = £18,960+8%(=£20,476.80)-£2640=£17,836.80.
3rd year = £17,836.80+8%(=£19,263.74)-£2640=£16,623.74.
4th year = £16,263.74+8%(=£17,953.64)-£2640=£15,313.64.
5th Year = £15,313.64+8%(=£16,538.73)-£2640=£13,898.64.
Now, if I add the total amount paid (£13,200) to the £13,898.64 that would leave the total amount including the final settlement and monies paid =£27,098.74.
I entered the IVA to save money while paying my debt off (which is how it was sold to me) but I am ending up paying £2,000+ more than what I owed.
I know that the company wont take this payment deal on for nothing but I didnt expect to be paying this much. Being a financial company, aren't they supposed to be saving me money?

Have I got this correct or am I totally wrong?

[p_h]

Sorry all, got the working out a bit wrong there but I think the final amounts and the principle is teh same.
Thanks for the advice up to now and thanks for taking the time to reply.
Could anyone advise on what my next steps would be? I am writing to by IVA people now to get a detailed statement and advice on if the money paid up to now has been held in an nterest bearing account.
Thanks again p_h

[Viki.W]

Hey p_h, I can't help you with the calculations, I think this is one for the experts. Have you taken into account the IP fees? Viki X

[kallis3]

They're a bit beyond me as well! I think I must be suffering from this discalculia they've been on about on the news today - me and maths never did get on!

Lets hope one of the experts can help.

[neil277]

Hi p_h

Most people who i talk to are going BR because i was led to believe that my debt was being paid off then when the IVA Council told me that i have to pay my IP first i was in shock. My head was spinnig when i signed all documents but do you know who i feel sorry for is the banks because they wont see a penny of the debt.

Banks will make a stance against IP'S this i,m sure of.

Thanks.

Neil

[Adam Davies]

Hi ph
Your quote
"I entered the IVA to save money while paying my debt off (which is how it was sold to me) but I am ending up paying £2,000+ more than what I owed.
I know that the company wont take this payment deal on for nothing but I didnt expect to be paying this much. Being a financial company, aren't they supposed to be saving me money?

Have I got this correct or am I totally wrong?"

An IVA is not a tool to "save" the cost of repaying your debts.It is an excellent way for someone that is insolvent to pay as much as they can.
I fear that you have been mis-sold or mis informed regarding your debts and your IVA.
Your IP fees will be in the 5-7k mark.
What company are you with ?? Would it be a large provider ??
Regards

[emma_t]

Hi p_h - I think an expert is best placed to help with your calculations and give advice.

Neil - The IP needs to be paid as they don't work for free and the costs are factored into the iva payment which i think is very fair. If the iva fails before the IP has been paid then they do not get the full amount owed to them.
My IP and her whole team worked very hard for me and have earned every penny they are due in fees - the banks will get what they approved the iva at.

Emma

[Adam Davies]

Hi Neil
The banks/creditors will see far more under an IVA than they would with bankruptcy.
You have been given very one sided advice
Regards

[neil277]

Hi Andy

Whay i'm saying p_h is working abroad to pay his debt off but the debt has expanded with interest to the origional debt he had.

I know they get more back in an IVA but people that i'm meeting are going BR before the banks get any money is this right and i'm sure with the current situation laws will be changed because BR is not good for the Country.

I'm better off BR than in an IVA

Regards.

Neil