www.iva.co.uk

Hi all,

I have a theoretical query that I was hoping someone could help me with.

If I entered an IVA with 10 separate creditor debts and completed my IVA, can I then dispute one of the debts if I believe it was not mine, or are the debts somehow "locked" by the IVA process?

It would appear to me to be unfair, as the other 9 creditors would have received lower dividends than they should have received, and any refund under the disputed debt should have been used to pay off the other 9 creditors. If it possible to do this, then it would seem to be a way to cheat your creditors - e.g. add a bogus creditor onto your list, make payments pro rata to all, and then complete the IVA and claim back all that you paid to the bogus creditor.

Any help would be appreciated...

I am no expert but one would assume that the "Bogus Creditor" would be identified by the IP when the debts were being verified prior to the initial proposal etc. being finalised.

Also - any debtor who invents a "Bogus Creditor" would - I imagine - be committing an offence as the IVA is a legal process and they would be making false statements on papers that were put before the court.

Does this go on??? I hope not - IVAs are a great solution for many and I for one would have no sympathy for anyone who seeks to abuse them in any way.

Thanks for your advice...

Bogus creditor may be the wrong description - what about a debt such as a current account overdraft or credit card, and then after completing the IVA, you dispute the debt under bank charges or someone else opened it in your name?

Theoretically you could although you would probably have bought yourself more trouble than it's worth.

You raise 2 points: Disputed debts and bogus debts. They are different.

Disputed debts should be identified as such and subject to rules which are a bit too complex for me to discuss at length here, the entitlement to vote and rank for dividend is a matter for the IP to determine in accordance with case law and established principles in the light of the specific circumstances.

Bogus debts - that's a false proposal and an offence. If it's discovered, whether or not The IVA is approved, Section 262A provides the following penalties:

Summary conviction - 6 months in jail or £5k penalty or both
Indictment - 7 years in jail or a fine or both.

Also, if within 12 months of the creditors meeting the proposer goes bankrupt, and is held to have made any false statements in an attempt to get the creditors agreement, the penalties are identical to those above.

As you will see, it would clearly involve an element of deception, hence the severity of the penalty.

Ian

To pick up on your second post - it's a 2 way street.

The IVA proposal provides a "statutory binding" between debtor and creditor. Just as it provides a defence to the debtor against the creditors, so the debtor is equally bound.

Ian

Hi,

Not all debts are locked by an IVA as we recently discovered!

We’re in a situation where my wife is being pursued by debt collectors (AIC) in relation to an overdraft (for a joint account) that was included in my IVA back in Nov 06 – I posted about this a month ago.

I’ve informed AIC of the IVA & await their response (if any! last year Moorcroft gave up at this point). However, if they continue to pursue my wife, she is going to request “true & certified” documentary proof of liability. Then if AIC manage to do this, she is then going to vigorously dispute the debt and reclaim any fees or charges on the account deemed as unfair. Any charges successfully reclaimed will be paid back into the IVA at 100%.

Then we’ll pass the whole thing on to my IP to sort out as it’s was an error on their part in the initial stages of the IVA process that has led to the problem [:o)]

Hi Tigger

I remember our correspondence on this point.

So far as you are concerned, the debt (NatWest IIRC) is definitely bound, but because your good lady did not enter an IVA and there was nothing in your proposal to release her from her joint and several liability it offered her no protection.

I wish you all the best with what you are trying to do but frankly I would have thought the easiest way to have dealt with this would have been for your Supervisor to investigate variation of your IVA. Has this been tried and discounted?

Ian

Sorry, but what is meant by statutory binding?

That the debtor has a defence to the creditor chasing the debt after the IVA, and the creditor has a defence to the debtor questioning the debt after the IVA?

Yes - all sides are bound, not just by contract, but to all intents and purposes by Court Order, as that's what the legal effect of an IVA is.

Hence the fairly draconian penalties for false statements, as the proposer has also lied to the Court!

Hi Ian,

We're justing waiting to see how AIC react to the IVA information. As mentioned, we've been down exactly the same path with Moorcroft who were a lot more aggressive in their pusuit of the debt from my wife. It's taken AIC over 4 weeks to actually state what account no. the debt is related to !!

However, if matters escalate I'll be bringing my IP into the fray as per your suggestion. Mrs Tigger has got quite a huff on with AIC. She gave the AIC rep a particularly torrid time when they rang her the other day! [:D]

HI Tigger

I'd keep your IP in the loop. From what I recall the Natwest debt is joint and several. The legal effect of that is that both of you owe the debt in full so even if you went bankrupt they would simply come after your wife for the whole balance which I think is what is happening now? Many people assume that joint debts are 50/50 but where they are joint and several it's 100/100.

My worry for you here is that if your wife goes into battle with NatWest and loses, she may well then be between a rock and a hard place, as Natwest may well feel alienated and as a result be far less receptive at that stage to her liability being included in your IVA than they would if it was approached now on the basis of rectifying a mistake i.e low key.

Have you taken professional advice on this issue?

Ian

Hi Ian,

Will try & calm Mrs Tigger down and adopt the low key approach [:)] Many thanks for the further advice. I'd presume that NatWest would not want to rock the IVA boat as also included & being paid from within the IVA is a NatWest loan for £18k (in my name only so no liabilty issues there!)

David

Hi David

It can't affect your position under the IVA, so you are safe there, but what you are asking NatWest to do is look at the wider picture and acknowledge the reality of the situation i.e that her income is taken into account in your IVA and the stone has run out of blood. If they accept that straight away then no variation would be necessary as there won't be an increase in the debts anyway. However, it may be that you have to slightly reshape your IVA (maybe extend it by a month or two to make the symbolic gesture) but you will need to be guided by your IP as to exactly what you need to do.

HTH

Ian

Thanks Ian!

Hi Ian

I will have a similar thing, with First Direct, which is currently with Moorcroft. If my IVA is approved today at 22% return. This joint o/d debt of £1200 would my husband be liable for the remainder or the whole £1200?

We wanted to come to an agreement with them over the next 6 years to repay the debt but have calculated it on the remainder being due?
Your advice would be appreciated. thanks.