payments will total more than my original debt

[uni]

I am currently in an IVA and have realised that because of wage increases, my current monthly payments will total more than my original debt. Since the IVA company fees are not added onto this debt, surely the maximum I should pay is the total original debt. So, is the most I will pay 100% of the original debt or am I likely to continue paying my payments beyond my original debt for the full 60 months?

[Oliver]

The most that you will have to pay is 100% of your debt plus the IP fees and then potentially an amount for statutory interest.




Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[uni]

Thank you for your response. As far as I'm aware, I'm not responsible for the IP fees, that cost is paid by the creditors. Again, as far as I'm aware, my creditors froze the interest on my debts, so as far as I can see, all I need to pay is the original debt.

If someone with experience can tell me otherwise, please say. I've looked through page after page of IVA information and the only reference to the amount that should be paid refers to the minimum payment, are there any rules regarding the maximum payment?

[MelanieGiles]

Sorry uni - you are completely mistaken about the charging of IP fees and who is reponsible for paying them.

The reason you are in debt is not the creditors problem, and therefore there is a price to pay for you getting out of debt. When you are unable to repay your debts in full, then creditors suffer as a result as they only get paid AFTER IP fees are drawn. But in your case, you will be responsible for them.

I cannot forsee any circumstances where creditors would volunteer to meet the costs for recovering their debts - but accept that a lot of IP's sell their services on this basis!

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

[Skippy]

Even though the interest has been frozen you may still have to pay statutory interest (8% PA I think) if you settle your IVA early.

Onwards and upwards!!!
View my blog at: http://skippy13.blogs.iva.co.uk/

[uni]

Thank you for the replies, an expert view is what I wanted. So from what I've found in my IVA statement from last year, I am responsible for:

Original Debt: £24,000
IP Fees: £12,500 (5 x £2,500)
Interest: £11,000 (I think I worked it out right at 8%)

Total: £47,500.

Is that right?

[yewtree]

Hi Uni,

I find myself in the same position as you with original debt of £28,000 and £8880 IP fees. I expect with my annual wage increases that I will be paying back this total plus statutory interest. I don't know how to calculate this though but if it is as high as you say I find this fairly unbelievable.

I'm sorry about your position. I've been thinking that the only thing I can do is inflate my expenses to keep the monthly payments down to a level that would keep the total repayment below 100% but I don't know how much scope there is for this as my monthly expenses are already quite high.
Seems very unfair doesn't it?
Davina

[uni]

Davina,

It does seem a little unfair, but I have always said that I would repay my debts if I could, I borrowed the money, I owe the money, I should repay the money. But I feel that paying interest and the IP fees is a little unfair, I have to pay more just because I've done well and earned myself some decent wage increases? I know what you mean about inflating your expenses but I dont think my IP is an idiot, they deal with thousands of cases and would surely spot it, ask for evidence and then fail the IVA when it doesnt appear and the truth rolls out, it's not worth the risk.

One question that has just entered my head is about the "Windfall Claus". If I bought a scratch card and won £25,000, I would have to give about £12,500 to my IP, that's the rules and they seem fair. Co-incidentally, that is the amount I have left to pay, but would the IP say "thank you very much, thats out fees paid, we'll expect our payment next month as usual" or would they say "oh, that's your payments made, here's your certificate"?

I guess I'm just opening my eyes a bit and lots of questions are popping into my head, thanks in advance for any replies.

[MelanieGiles]

Are you sure about those fees? They seem very high. Can you break those down between the Nominee's fee and Supervisor's fees - I cannot see that anyone would charge you £2,500 per year - or that the creditors would accept.

You will only need to pay statutory interest if creditors actually stipulated this at the creditors meeting (by modification) or your proposal provides for this. Have a good look through the proposal and Chairman's Report for further clarity.

I think that it is unlikely that you and Davina will need to pay statutory interest.

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

[yewtree]

Hi Uni,

I totally agree with you regarding getting into debt and wishing to pay off the full 100%. I said this to my IP from the outset. I don't even mind paying the interest as I would have had to pay this outside of the IVA anyway however what I do mind paying is the £8800 for the priveledge! I also now realise that a Debt Management Plan would have been far more appropriate as my first (expected) payrise came 2 months into the IVA - surely someone could have advised me to struggle through for 2 months? I wish I had done more research but it is easy to look back in hindsight.

As for inflating expenses I do not mean artificially. All I mean is that I currently live at home with my parents. What if I were to move out (possibly paying an additional £100 a month) as there is nothing in my area for what I currently pay my parents?
Another area to consider would be to start using a car rather than public transport therefore incuring insurance premiums and road tax etc. Though I don't know whether this is permissable. Also don't know about what would happen if you had a windfall, I guess your IP would be best placed to discuss this with you.

Regards
Davina

[uni]

Melanie,

Wish I'd met you 3 years ago, and set up an IVA through you. These are the facts and figures:

Paragraph 3.4
The nominee is to receive £1,600 (plus VAT) plus reasonable expenses expected to be £130.

In my latest statement, it says Nominee fees £1,800 paid in the first year.

Paragraph 3.5
The supervisor will recieve remuneration estimated £3,000 (plus VAT).

In my latest statement, it says Supervisor fees £1445.02 for the first year and £2044.94 for the second year.

There are also Disbursements of £508 for the first year and £114 for the second.

[yewtree]

Hi Melanie,

thanks for your replies, to this and to previous queries. I think we all appreciate the time you put into this forum.

I have been through the Chairman's report and it does not have a clause for statutory interest however I'm pretty sure this was in the proposal. Does the Chairman's report supercede the proposal or only provide modificatiob to it?

Regards
Davina

[MelanieGiles]

Hi uni and Davina

Firstly to uni - it looks like your IP managed to get himself a "time costs" fee resolution, rather than fixing his fees (the latter is more common and accepted these days). This means that you or your creditors have no control over what he charges - but as he estimated charging £3,000 for 5 years, and has already incurred costs of £3,489, his final fees are obviously going to greatly exceed his estimate, and you are ultimately going to pay those. I feel that you ought to tell him you want an undertaking from now on agreeing to fix his fees at say £1,000 per year from now on. Still not sure where that overall figure of £12,500 comes from.

To Davina - I would be suprised if your proposal stated you had to pay statutory interest in the event that your increased monthly payments enabled you to pay 100p in the £. Do go through this with a fine toothcomb as this would not really be normal.

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

[MelanieGiles]

Davina - meant to add that the Chairman's report does only modify the proposal not replace it.

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

[uni]

Melanie,

yes, it is a time cost thingy, does that mean they charged me each time they send me a letter, email, phone call, text message etc? The figure of £12,500 came from looking at what I was charged last year (approx £2.500) and multiplying by 5.

I'll mention to my IP about the fees and see if it can be sorted to a fixed amount, starting to get the feeling that I wasnt given the best representation since I seem to being paying 100p in the £ and huge fees!