tried to contact them and have heard nothing back

[dcl]

Hi
I am currently 3 years in to an IVA and I have just had my yearly review. I owe £63k and my minimum dividend was 25p/£1. The IVA total fees were estimated at £7250. However, I have just realised that I have paid over £8800 in fees so far and I am only paying £350 a month. Does this mean when I am charged fees in years 4 and five I will end up being declared bankrupt because I haven't met the minimum dividend to my creditors. I have not had any extra variation meetings or asked the ip to do any extra work. I have tried to contact them and have heard nothing back. I'm just looking for some advice as if I'm going to be made bankrupt in 2 years time I might aswell do it now.

[MelanieGiles]

Hi dcl

What is the reason for this increased fees? And what basis of remuneration has your IP agreed with creditors - time costs or fixed fees? Also was the 25p in the £ guaranteed or just estimated?

Which IP firm are you using? It does sound to me that they have agreed their fees on the basis of time spent - ie the number of hours actually worked. If this is the case, and you have guaranteed the dividend, you will need to make additional payments at the end of the IVA to cover the increased costs.

You need to nail this down with your IP now, and ask for a detailed listing of time spent on your case, and the reasons for the overcharge. Do not put up with them not answering your calls, and keep a diary log of your efforts here in case you eventually need to formalise a complaint.

What did your IP explain to you about his costs at the time you were giving him instructions?

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

[dcl]

Hi Melanie

Thanks for replying.

I have no idea for the reason for the increased costs, I have requested a breakdown of fees so far (which I imagine will cost me extra). I do not know what was agreed with the creditors my proposal just gave an estimated supervisors fee. The 25p in the £ is a guaranteed figure.

I'm using Payplan and I think the fees are also on a time spent basis but the fees for the last year was £1570 and this seems a bit high considering from my end all they had done was my 4 quarterly reviews and answered 4 of my emails.

To be honest when I started the IVA process in 2003 I was a bit naive to all of this and didn't understand about the fee process, maybe it is my fault that I have only just realised this now.

Its currently looking that if the fees continue in years 4 and 5 at this level I will be around £4k short of the 25p minimum and there is no way I will have a spare £4k at this time.

I will continue to chase my IP on this but I will definitely consider the BR option sooner rather than later if its looking like in 2 years time it will happen anyway.

[neverending]

Hi
You case sounds like its on a time costs basis and as its three years old it will more than likely be.My own IVA is the same and three years old and I was informed that mine was to be extended by 15 months to reach the original dividend [29p].I had one variation meeting and a fair amount of corrospondence but nothing to justify the extra fees.
I,m not sure what to suggest at this point other than to continue as you will not be made bankrupt,at the worst you will have to extend your IVA by approx a year.
I am offering a full and final settlement shortly and once it is agreed[fingers crossed] will be challenging the fees charged.
My fees are

total paid in £37242
total ip costs £16474
balance to creditors £20767
total debts £66075
dividend 31p
When you consider that my original input was to be £450 over 60 months totalling £27k and now its going to be £10k more
The original IP costs were £10k,now £16k even though the IVA will be two years less.
Something is very wrong

[MelanieGiles]

I keep saying this, but there is no place for this sort of fee charging in consumer debt based IVAs. I am suprised that firms were getting away with this three years ago, and that they have the neck to charge fees which they know will affect the dividend payment. Obviously they are not too bothered about their credibility!

Do check that you have guaranteed the dividend, because if you haven't then the IVA will complete at the end of 5 years, with creditors being paid a lower percentage.

No wonder the banks are fed up of IVAs and Insolvency Practitioners, and that current debtors who are now proposing their IVAs are suffering! But of course they could have modified the fee basis - and did not bother so maybe they only have themselves to blame. Read that proposal carefully for any hint of the words "guaranteed dividend".

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

[freelili]

Hello all

I am concerned about this as I am also with payplan, but it is a temp DMP, I do not know how long I will be in my present situation for. They have stopped the credotor harrassment which is what was botherring me the most. They know all my details I thought I was paying fees with my monthly payments but have not considered this time spent thing. Would anyone know if this is a company policy or just done on an individual case basis. And if I did go ahead with the F and S IVA could I ask for the non time/fee's option. I am quite worried now. I obviously want to be debt free and understand fee's are a part of any service but I do not want to throw it away, surely if anyone 'deserves' it the creditors do? I have only heard good things about payplan and thought I was safe. Any reply would be gratefully received

LILY

[MelanieGiles]

Lily

This sort of charging is not applicable to DMPs and I think that you will find that Payplan now charge their fees based upon a percentage of realisations rather than time costs. Best to check with them though if you have any concerns.

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

[freelili]

Thank you very much for your reply.

I was worried that I might see a huge bill at the end of the DMP.

I have frantically looked at the paperwork and as far as I can work out, the fee is coming out in the monthly payment. They have done everything to help me and have worked with the creditors on my behalf and ended the harrassment for the time being.
I understand that I do not have legal protection and will be so very relieved when its all over and done with.

I really do appreciate your prompt reply

LILY

[dcl]

Thanks for all the advice on my problem. If I'd have known more when I originally looked in to the IVA I would have chosen BR I think as I would have been completely clear by now and not still worrying day after day that something could go wrong and force me in to BR anyway.

The last thing I have to ask is should my IP be pointing out the fact that I'm not going to meet my dividend on current payments (I have checked and it is a guaranteed 25p in the £ minimum dividend) as they have not said a word I only picked it up because after 3 years they have still not made a single payment to my creditors and they usually mix the fees and creditors payments together in the annual review.

[neverending]

Melanie
Just a question regarding my variation meeting.9th March.
On the voting form there are two resolutions.One for the arrangement to conclude early at a dividend of 31p and the second to authorise the supervisor to draw fees based on time costs.
If the creditors accept the early conclusion but not the fees where do I stand ?

[MelanieGiles]

To dcl - even more reason to find out what Payplan have been doing. It is appalling that no monies have yet been paid to your creditors after three years.

To Neverending - Why does the Supervisor need a time costs resolution, when he got one on day 1. Are you sure that fees were agreed on this basis, or are they just seeking to ratify what they have already charged? Something doesn't feel quite right there - can you actually reproduce the wording of that modification for me please. And those fees you have been charged are incredibly high (I know you know that already!). If for some reason creditors object to the fees, your Supervisor will have to agree to charges which creditors do agree to. As these are likely to be lower that the time costs, your creditors will gain a higher dividend.

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

[neverending]

Hi Melanie
The actual documents submitted to the court under rule 5.14 show that there is to be an estimated dividend of 28p and also that the supervisor will be entitled to receive remuneration on time spent.
At the last variation meeting they also had the same question regarding the authority for the supervisor to draw fees based on time costs.I did not receive a letter confirming if this was agreed or not.
Once [if] my proposal for a full and final settlement is agreed and paid then I will take them to task regarding the fees,I will also involve the IPA but do not expect to get much help after reading Kerri,s response from them.
PS Where were you three years ago Melanie !!!

[MelanieGiles]

Hi Neverending

I still don't understand the need for this resolution now! Fees are agreed at the time of the original creditors meeting, so I do not understand the need for a further modification. And they should have given you a Chairman's Report for the earlier variation meeting confirming the resolutions passed at that time.

I am certain that you will enjoy success on Friday - I will be away skiing for a few days, but am taking my Blackberry to ensure I hear the news first hand! You are taking the right approach here - get the thing agreed and varied first and then address the fee issue. Like you, I would not hold out much hope of a result, but if these posts help other people along the way then there may be some benefit (unfortunately not to your pocket).

These fees would not be agreed by creditors in today's climate, but I am afraid that is no consolation for you.

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

[dcl]

hi melanie

, i have finally managed to talk to my ip and i was fec the same line that all fees had now been paid. i pointed out that my iva is a time spent cost basis ane then they said fees will be in the region of 1500 for next 2 years. Then i pointed out that my arrangement will fail because i won't meet the minimum dividend and they suddenly realised this was going to happen and have gone away to look at it. Surely i shouldn't be the one telling them this. Also they won't provide a breakdown of costs are they allowed to refuse this?

[dcl]

and a further update....... I've just spoken to them again and they very rude to me this time and basically said that i shouldn't be complaining about the fees because ivas aren't free and that it would be my fault if the iva fails. It has left me feeling upset and confused as i wasn't complaining i was just airing my concerns as i want the arrangement to succeed. I also feel that due to their attitude it looks like i'm going to end up BR after 5 yrs