Hi,
I have just reached the 2 year point with my IVA and after reading various postings concearning issues people have encountered when nearing their completion, I have become slightly unnerved! I started out with a debt of £30000, my initial payment was £237 p/m which lasted for 16 months, this was then increased to £271 p/m, I have also paid a sum of £11,300 (inheritance) plus £800 in O/T. This means that I will have paid £28000 of the £30000 owed into the IVA by the 60th month, now I know I'm asking you to get your crystal ball(s) out but! has anybody got any clues as to what direction my IP would take at the end of the 5 years?
The IVA should just close at the end of the five years unless there is equity to raise and you have not already repaid the debts in full. My guess is that without any extra money being paid in other than the £271 you will have repaid the IVA, plus fees and costs by the end of five years. It may even be sooner.
Thanks for the reply, I will have equity in my property at the end of the 5 years, does this mean the IP will look to this for the £2000 that will be outstanding or is it more likely the agreement will be extended?
It would be £30k plus the fees which should be detailed in the proposal. I would estimate these to be about £6-7k as the IP is entitled to 15% of realisation plus a nominee fee.
Your IP should be able to give you a receipts and payments account and a full idea of what you will be paying.
So in my case, I will have to repay a sum of around 37000 to the IP (£30000 debt + 15% in fees) and if I'm on target to have paid £28000 by the 60th month I will still owe the remaining £2000 + fees, around £9000 in total, would I be correct in thinking the equity would then come into play?
You are absolutely right. I misread your original post and thought you had paid £28k so far which is why I thought creditors would have been repaid after 60 months. My apologies for the mistake.
Brian, if you hit 100% of debt and fees there is the further possibility of an 8% statutory interest being levied. In the past some IP's have succeeded in getting this liability removed, and some arrangements have it excluded from the outset.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I was under the impression that the "realisation" referred to the amount of money I had pay'd back, therefore, if I have pay'd back £28000 by the 60th month, the IP's cost that are deducted throughout the term would amount to 15% of the £28000, meaning the IP has already had the fees!(as stated in my terms) This has left me slightly confused, If the IP has already been paid, why are they applying the same fees at the end? does this mean, once the end has been reached they give their costs (15%) back to the creditors and then chase the individual for it or were the fees not theirs in the first place. It would sound more plausible if at the end I was told - You owed £30000, you've paid £28000, minus our 15% (£7000) means you have repaid the total sum of £21000, so you still owe the creditors £9000!
Sorry if it sounds like I'm ranting and I do appreciate you taking the time to shed some light on my IVA woes, but it all sounds a bit cloak and dagger to me! I was never told I would pay back more than I originally owed.
I have checked the modifications section on the terms of my agreement and there is no mention of interest (checked that one after reading another post I think there needs to be a lot more transparency in the industry, as I have just mentioned to Michael " I was never told I would pay back more than I originally owed"
By the 60th month I will have paid back £28k of the £30k debt and it looks like I will still have to pay a further £9000!! This means, If I hadn't received £11300 in inheritance, the IP would be after £20k!! this would be after 5 years on an IVA and on an original debt of £30k! do you think an IVA Company would put that example on their website, I certainly don't!
Hi Brian, the IP wouldn't be after the £20k (using the example without inheritance). Anything left unpaid at the end of the agreed term is written off.
To be fair it is a small minority of cases that get caught up like this, as most of those in an IVA don't get anywhere near a 100% dividend.
The question of statutory interest is the kicker, in my mind, as people are then being penalised for paying back more ! Which is surely inequitable. If it hasn't been specifically excluded it will probably be included by reference to the inclusion of standard terms and conditions.
These agreements are legal documents and are, by definition, impossible to read and understand easily.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Hi Foggy
Thanks for the heads up on the statutory interest, I will have to look into it, the more I delve the worse it gets! Regarding my case, it appears I'm being punished for paying back most of the debt, surely this is wrong, also, how can their fees, which have been paid and maintained throughout the course of the agreement suddenly become a separate entity at the end of your IVA and then get added as a separate bill - to be paid again.
I think there needs to be a lot more transparency in the industry, as I have just mentioned to Michael " I was never told I would pay back more than I originally owed"