My wife and I have been in a joint IVA for 14 months. We owed about £78,000 and the IVA was scheduled for 72 payments at £1,147 = £82,854
I can soon retire and our plan is to pay it off with a full and final settlement at the end of 2010.
However, I have spoken to an independent financial advisor (through my employment) who was incredulous that we are paying a 100% IVA and more so when he realised that we are actually paying in more than we owe.
What is making things more of an issue for me is this; We were told at the beginning that of the IVA (only verbally) that if I earn any extra money (my wife is disabled and receives DLA) I have to give up 50% of that extra money. I was told that these extra payments would come off the overall total thus making the 72 payments less. I am now being told that my IVA is not actually a 100p/£ but a 91p/£ because of the IP fees. In other words, We are paying back more than we owe, but after fees the creditors only get 91p/£ and therefore the extra payments I am required to make from extra income do not deduct from the original total but are just extra payments so that the creditors get more.
Is this right or legal? I cannot help thinking that I am being taken for a ride here.
You will not have to pay back more than 100p in the £ plus the IPs fees. These fees should almost certainly be less than the interest and charges that would have accrued had you not entered into an IVA. All interest and charges have stopped and if you can offer a full and final in 2010 from your pension creditors may even accept a reduction in dividend since they get their money early.
Right, you have me worried now. I was expecting to have to pay about £45,000 to settle the IVA based on the starting figure (£82,584) minus what I will have paid at the relevant time (£37,394)Is it likely that they insist on 100p/£ plus fees because I get my pension? (which will be about £90,000)The £45,000 I was expecting to pay could significantly increase! I still have time to go bankrupt....My pension is protected so long as I am discharged from Bankruptcy before I receive it, and I do not take the lump sum (which is classed as a windfall)
Without seeing the proposal and the modifications it is hard to say for certain but I would find it difficult to see why creditors would not expect 100p and that would mean you would have to pay the IPs fees an top. If the retirement age and therefore pension can be deffered you could make the offer of £45k [or less] before drawing down the funds and creditors may accept this. Once drawn down however, I cannot see how you could avoid paying the full amount.
Last edited by Michael Peoples on Fri May 08, 2009 2:40 pm, edited 1 time in total.
This all sounds very odd - are you sure you fully understood the IVA before you signed up to it? Surely your IP firm took you through the figures and showed you what return would be available to creditors?
Why do you feel that you will still have to pay £90k, when you will have already paid £37k? And can you let us know which firm you are with?
It might be sensible to have a read through the IVA proposals again and the relative chairman's reports to ensure that you are fully aware of the offer you made which was accepted by creditors. And if in any doubt have a chat with your IP.
Melanie, you misunderstood. My pension (commutation) will be £90,000. I was expecting to pay about £45,000 of this as a full and final payment to settle the IVA. The rest was going to buy a caravan and car to enable my disabled wife an occasional holiday. At the moment, I am paying about £3000 more than I actually owe. Based on what Mr. Peoples has stated, I may have to pay more? (100p/£ plus all fees for 2.5 years). This was not explained to my by the IP company and I feel somewhat aggrieved. I was certainly advised that extra payments I made (50% of overtime etc.) would be deducted from the starting balance. I feel that I may have to make a formal complaint to the Financial Ombudsman Service.
Michael Peoples wrote:
Without seeing the proposal and the modifications it is hard to say for certain but I would find it difficult to see why creditors would not expect 100p and that would mean you would have to pay the IPs fees an top. If the retirement age and therefore pension can be deffered you could make the offer of £45k [or less] before drawing down the funds and creditors may accept this. Once drawn down however, I cannot see how you could avoid paying the full amount.
Do I have to declare why/where/when/how much money I have when I make the Full & Final payment offer?
The answer is yes as creditors will want that information. However, by being totally up front it is possible creditors would accept an early settlement.
If you propose to creditors that you retire and draw down your pension and give them £45k as full and final that is a good offer. The fact that your wife is disabled and the remaining monies will be used for her comfort is more than justifiable for retaining the funds. In matrimonial she would have a very good case for going after a chunk of your lump sum so keeping half should be more than fair.
I would happily put forward such a variation and fight with creditors to have it accepted.
Oops - I certainly did Bald Runner. Apologies for that, I have now put my eyeballs back in!
Personally I would make an offer of early settlement out of your pension monies, making sure that you highlight all of the issues relating to your wife's disability, and see whether creditors would be prepared to accept this. I personally feel you would have a good chance.
Hi
Just going back to your original post
Even if you do end up repaying 100p dividend and your IP fees this will still be less than the interest that would be charged over same period by your creditors.
Why is your financial advisor incredulous over this ?
You certainly have not been taken for a ride
Regards
