IVA and inheritance

[JonRaz]

Hello.

I am about 2.5years into my IVA and am about to receive an inheritance. A rough estimate from my last annual statement and what I have paid in since would seem like there is ~41k left to pay.

The inheritance is very likely to be in excess of 60k or greater. I consider this enough to clear the IVA however there is much conflicting advice online.
The most common things I see are that the IP will take the entire payment and then possibly return any excess?
Another I see is that they would calculate the ~41k left and add 8% interest on it for every year remaining?

The only bit I can find in my agreement relating to inheritance is this:

"Windfall / Asset / Inheritance provision
19 Should I receive or become entitled to any windfall or inheritance payment with a value of more
than £500, during the course of the arrangement which would be deemed after acquired assets
within the meaning of Section 307 of the Insolvency Act 1986, I propose that it must be paid or
transferred to the Supervisor for the benefit of creditors in the arrangement. The maximum
payable will be 100p in £. Any provision for statutory interest under the R3 Standard Conditions
for Individual Voluntary Arrangements shall not apply. "

This sounds to me that I would only have to pay in the ~41k to then end the IVA? Contradictory to what I am reading on most sites.

Thanks for any help.

[MrMole]

Hi, it's what's in your specific IVA proposal that counts, not what other people are saying. It sounds like you have to pay the debts, the fees, but no interest.

[Breezy]

Conflicting stories will arise partly due to the fact that your IVA is under R3 terms and conditions, whilst many are under Protocol Terms and conditions --- they are broadly similar, but have slight variations. Also every IP has a great deal of discretion built in to the terms and how each deals with certain situations will, within the broader framework, differ slightly.
In the case of an inheritance, some will hold the entire inheritance to order --- calculate what is to be paid into the IVA and then return any surplus whilst others will work with the executor / administrator of the estate, give them the figure and be paid direct, with the executor then passing the remainder to you.
As to what they will take --- during the IVA you always owe the balance of the full original debt, plus fees. Some also owe (but this appears to have been excluded in your case) statutory interest, which is calculated at 8% p.a on the daily reducing balance.
As your IP doesn't have to worry about the interest element, it should be fairly simple for them to give you a settlement figure ( the amount required to pay off and close the IVA).

[JonRaz]

Thankyou for your replies.

It does seem to be that way. The fees look to be 35%! So they would be taking ~61k!?!
The IVA is 100p£ so the creditors were always getting fully repaid anyway. If every payment was followed as planned I would pay ~46.5k. This seems incredibly unfair that they can grab so much extra money for doing 2.5 years less work!

[Breezy]

Fees are typically around £1750 nominees fees (for setting up the proposal) and then on a percentage of realisations for supervisors fees ( ongoing admin), typically around 15 - 20%. Then there will be £500 - £1000 for disbursements (some of which appear to be plucked out of thin air ! ). Some firms still work on a time spent basis, charging by the hour. The fee structure should be laid out in your paperwork, often being the subject of discussion at the creditors meeting, so is usually finalized in the Chairman's report.

[JonRaz]

Ah, yes.

The Nominee fee says "will not exceed £1500" but this appears to have been taken already from payments in the first years statement.

The lines that concern me are:

"The supervisors remuneration will be the aggregate of:
- The balance of any "blended Fee" payable to the supervisor and
- A realisation fee of 15% on any other asset realised for the benefit of creditors "other asset fee"

After payment of the Nominees fee and any disbursement, the blance of the blended fee is to be drawn by the supervisor over the remaining term of the arrangement, subject to a minimum total fee of £3,100.

The blended fee is defined as a realisation fee of 35% of gross income based contributions, or any lump sum in lueu thereof, to include a nominee fee of £1,500 and any category 1 disbursements incurred by the nominee and and category 1 costs incurred by the supervisor."

[jamifids]

After payment of the Nominees fee and any disbursement, the blance of the blended fee is to be drawn by the supervisor over the remaining term of the arrangement, subject to a minimum total fee of £3,100.

The blended fee is defined as a realisation fee of 35% of gross income based contributions, or any lump sum in lueu thereof, to include a nominee fee of £1,500 and any category 1 disbursements incurred by the nominee and and category 1 costs incurred by the supervisor."

The remuneration will be paid separately as the tax is less than £3,100 sterling.