Reach settlement with Individual Creditors

[Hookdex]

Hi all, im new here and will be posting a couple of topics, im not getting much help or advice from my IP at the moment!

I am around 18 months into a 6 year IVA which was extended apparently due to the level of debt I had.

I recently recieved my first annual report, and im trying to tidy things up where I can. I have a couple of very small debts (£100-200) which I realise now I should have cleared before I entered the IVA. My main debt is with HSBC which is around 85% of my arrangement. Am I able to make payments to individual creditors now to settle my debt with them? And would there be advantages to doing this?
My aim would be to clear my other creditors than HSBC in roughly 12 months.

I would appreciate any advice anyone can offer.

Ben

[kallis3]

Your small debts should have been included in your IVA.

You should not be making payments to individuals to pay off your debts as you will be treating them preferentially to the others and they will be getting paid in full.

By aiming to clear your other creditors, do you mean that your payments into your IVA will be such that you can clear it in 12 months, or will you be introducing a sum of money to offer as a full and final.

You won't be able to come to any arrangements outside of the IVA unless you let if fail first.

[Hookdex]

Thanks for your quick reply.

My aim would be to introduce a sum of money from my disposable income to clear the smaller creditors in full.

The main purpose of this being I feel it would be easier to come to an arrangement in early settlement with just HSBC in a couple of years time. Alongside the psychological benefits of reducing but the amount and number of creditors.

[kallis3]

I am pretty sure that you would not be able to do that, once again you are being preferential to some creditors. If you can introduce money from your disposable income, then you should be paying that across now.

Your IVA is designed to be fair to all your creditors so that they get the same dividend at the end of the IVA.

If you wish to come to any arrangements with creditors, then your IVA will have to fail.

Your IVA is a legally binding arrangement between you and your creditors.

[MelanieGiles]

Why should those creditors get paid in full, when others are probably having to accept a shortfall? This missing claims are probably bound under the terms of your arrangement, and unless you have a minimum dividend requirement to achieve I do not see why the IVA needed to be extended. Was this via formal variation, or has the IP simply decided of his/her back to extend your arrangement?

[Hookdex]

Thanks for your responses. My aim (As im sure is most peoples) is to settle all of my creditors in full. Im hoping to qualify as an ACCA accountant next year and increase my payments significantly. I just wanted to try and make a small but noticeable difference now. That said, I fully understand both of your comments in relation to preferential treatment.

Melanie, I was told the reason that my IVA was extended as HSBC had a minimum requirement of around 40p in the £ to accept an IVA and with the level of disposable income I had at the time, I could not meet that requirement over 5 years.

[MelanieGiles]

OK - they do still have that criteria for a number of IP firms so I understand.

Good luck with your studies - I know only too well how hard that is. With two people studying for ACCA and two for AAT in my office at the moment, they always seem to be either at work or study - but it will be worth it in the long run and the rewards will be there for you long into the future.

[David Mond]

Your IP firm are on the list where the threshold of 40p has been removed - but was not there when your IVA was originally approved.

My suggestion is to go back to your IP and suggest a variation which will encompass all of your small debts you missed and make payments over a total of 5 years. The small debts you missed are caught within your existing IVA by the way.

Good luck with your studies - I am both a Chartered Accountant and a Chartered Certified Accountant and my Insolvency License is issued by the ACCA (cheaper than the ICAEW)- good luck with your exams the rewards are good and it is worth the slog.

[MelanieGiles]

How do you know which firm this poster is with David?

[Hookdex]

Thank you for your responses and wishing me luck.

Melanie - I have another thread running concurently where I have said I am with Wilson Phillips.

David - I am confused by your second paragraph. I didnt know that the threshold only applied to some IPs at the time, and was unaware that it had been removed now. Are you suggesting that I may be able to to decrease my arrangement by a year making it a total of 5 years from start to finish?

[David Mond]

Hookdex - that is my considered opinion and it will have to be addressed by your IP and see if it will fly. Good luck.

Melanie - picked it up somewhere from a previous thread.

[Hookdex]

David, I have spoken to Wilson Phillips this morning and they advised that as my debt was transferred from HSBC to the Insolvency Exchange that a variation is likely to be refused. This isnt helped by the fact that my debt has not reduced during the first year due to the supervisory fees etc (Which I now understand to be reasonbable).

Have you any further advice on whether I should pursue this case? Or perhaps wait until next year when I have repaid some of the debt and my repayments have increased?

[David Mond]

TIX (the Insolvency Exchange) only act as Agents for HSBC and whoever you spoke to is giving you the wrong information.

I will try and get their IP to respond asap - I do think a current variation is appropriate. Watch this space.

[Hookdex]

Thanks so much for your help David that would be great. I think I will send a letter this time as the woman I spoke to on the phone pretty much brushed me off to be honest. Look forward to hearing from the IP.

[David Mond]

The IP responded to me as follows:

It may be possible to propose a variation to reduce the term of the arrangement to 5 years. Any small debts that were not originally included should be advised and brought into the arrangement, they will automatically be bound by the terms. It may then depend on how much the overall dividend is affected as to what is possible, but if the variation is put forward together with the prospect of some increase in contributions, there is every chance it could be acceptable to creditors. However, if we are just asking creditors to reduce the term of the arrangement by 12 months without any specific reason or benefit to them then it is likely they will not accept such a variation. If there is a real prospect of a settlement offer in the next year or two then if the details are advised there may be a good chance of it being accepted. There is certainly no benefit in settling smaller creditors and just leaving HSBC and the comments regarding preferential payments are correct.

Good luck - write and see what response you get.