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I am considering an IVA due to business having to close, loans, cards etc.
If the business lease sells and i receive some money from this sale (maybe £6,000) i want to use it to pay back my parents as they have loaned me a lot of money, in effect i am in debt to them.
Once i have paid them back can i apply for an IVA to help me clear all my other debts and overdrafts. Will i be penalised for the £6,000 that i used to pay my parents or is it not counted as i would apply for an IVA after this moment?

Hi devon and welcome.

I'm not sure about you paying your parents back before an iva, this probably wouldn't go down well with your other creditors.

Desk advice from a professional via we.iva.com - the advice is free.

I have deleted your other topics as they are duplicates of this.

i will probably have to take at least £1,000 out for overdue nursery fees, would that be acceptable to the creditors?
If its paid before applying for an IVA and then i realise i need an IVA surely that would be ok?

Speak to an Ip. They are the best ones to advise on that. The nursery fees may be ok but an ip will tell you for definite.

I made a couple of large payments from a windfall before going into my IVA. But it was actually that being swallowed up and making no impression on the problem that actually made me consider the IVA.

Anyway, I was not asked to explain it at all, and no mention was made of it.

Hi Devon80

If you use this £6000 to repay your parents and then immediately propose an IVA with your remaining creditors, it could well be viewed as a preferential payment which would be at risk of being clawed back by your IP. Really the £6k should be used as an initial lump sum payment into your IVA. You can then pay your parents in full after the IVA is finished. You could probably justify paying the nursery fees but not such a significant sum to your parents.

This is all presuming the parents can afford to wait the length of the IVA and are able to financially cope without any repayment !
Could the parents not be included as creditors to the IVA and receive a dividend during the life of the IVA rather than receiving nothing for a five year period?

Hi Devon80 - welcome to the forum.

If you had gone and paid your parents before approaching anyone for advice about your debts not a lot could have been done about it however, as James rightly says, the creditors may view it as preferrential treatment and not be happy. Seeing as in order to get an IVA accepted your creditors need to be happy with what you are proposing and an overall picture of your circumstances you could open yourself up to risk of them rejecting it and be left with the debts. This is not to say they definitely would but you need to think carefully and minimise risk.

Would it be possible to arrange with your parents that you pay them after the IVA or periodically from your approved share of any additional income during its term?

Don't think that you should have done it before asking - the risk would have still been there so at least now you have more info on which to base a decision. Best thing is to talk it all through with a couple of professionals.

Regards,

You are absolutely right luluj, not paying the parents debt until after the IVA is finished does depend on them not needing the money. However so does including them in the IVA as the dividends they are likely to get will be low. However these payments would be better than nothing. Trying to continue to pay them out of other agreed living expenditure budgets is possible but a dangerous path to tread if the payments are significant.

I would imagine, if they were included as creditors, that it would be very likely that the other creditors will ask them to step aside.

Hi Devon80 we sold are house jan this year , the money we received went on debt and £5,000 went to my parents. June this year we look into an iva because we were still in debt and sept we got accepted.

It all comes down to what feels right after considering all the options and their potential outcomes and risks. I manage to make repayments to a connected creditor out of my allowances, but they are pretty small fry.

To answer shrews post - you weren't making payments knowing that immediately after you'd paid your parents you were going to be looking into an IVA, you presumably thought that by selling the house you would be ok.

The OP may well be going straight into an IVA after selling the business and paying the parents back and this is probably what the creditors won't like.

I paid my Mother In Law back the £8k I owed her out of my redundancy payment. I then struggled on for a few month before discovering about IVA's. I sucessfully arrange one 2 years ago. There were no questions asked about what I had spent my money on, just a list of the creditors I owed. They are there to help you set up an IVA not to judge you.

Pay your parents back first, they deserve it most I should imagine. The credit card companies and banks come second as far as I am concerned, they are an institution not individual people - they are the ones who tripled my interest rates once they realised I no longer had a job - therefor making it impossible to pay them anyway!! The bank manager will still get his salary so your parents should still get their money.

It will all be down the decision of the creditors and the OP should take advice from some companies via www.iva.com - they will advise as to the best way to go.