Hi,
we are coming to the end of our 60 month IVA payment in a couple of weeks (100 pence in the pound) and have still a sizeable amount of debt outstanding to reach 100 pence in the pound. We had been advised to remortgage in the last 6 months before the IVA is finishing so as to raise the outstanding funds but were not aware until we attempted that this is more or less impossible to do. We have now been threatened with bankruptcy having paid 60 months into the IVA as agreed because of the remaining outstanding debt. A relative has now offered to lend us money but we had to ask for an extension in order for our relative getting hold of those funds. The Inland Revenue has now agreed to an extension but we were told that we would have to pay Statutory interest on the whole sum for the last 60 months plus the additional 11 months granted. I nearly had a shock when I read this (this is as much as at the amount we had been paying off over the last 5 years!!!!!) and wondered
1. whether this has happened to anybody else?
2. how can interest be charged on the whole amount as obviously every year this sum has been reduced and payment has been made to the creditors?
3. Do we have any chance to argue this with the Inland Revenue?
I would seek an urgent meeting with your IP (not caseworker) to discuss this and ask them to explain where in your documentation is it mentioned.
Were you always intending a 100p in £ return ?
If equity cannot be raised to fund this amount then a further 12 months of payments is normally accepted. What does your proposal document state around this situation?
It is in no ones interest to make you bankrupt at this late stage. Your IP needs to be involved to get this resolved.
Sharing from experiences of dealing with debt
There is a solution for everyone .... Just need to stay positive !
I think HMRC are the only creditor that can insist on this and guessing that they are the majority creditor I think you will be hard pressed to get them to change their mind
Michael Peoples is more knowledgeable than me on this are so await his valued response
HMRC can insist on this as a variation was called. However if the variation is rejected the proposal goes back to the original documents and if there is no mention of statutory interest in the original IVA it may be better to do this and find the money to close the case down.
We use a system that calculates statutory interest and I believe you do get credit for reductions in the balance and it is not just calculated on the original amount.
