www.iva.co.uk

Hello,

So my husband has an IVA and he is now about to finish it, with just a few more months of payments. I've been tracking the payments that we've made to his IVA and the PPI claim that he have received also, and according to my spreadsheet his IVA was supposed to finish by August when he will have paid 100% of the full debt that was declared and agreed by creditors + IVA practitioner on day 1 of the start of the IVA (£21.679,00 including practitioner fees and all the other fees) but the IVA company is saying that his IVA only will finish by October and that the additional pay of £1,552.10 is moved to a separate account and won’t show in the voluntary contributions.

I would like to know why that additional pay will not be used towards his IVA payments? And if so, why they keep it? Can he get a refund of it? Is this even legal practice to be done if he is paying the IVA 100% of the initial value agreed for his debt?

We are a bit confused with this and would like to have some input from experienced practitioners as we feel we are being prejudiced.

Many Thanks,

Liana

During an IVA the debtor owes the full amount of original debt, plus fees and possible statutory interest. The IVA will continue until such time as this figure is reached or it comes to term, when anything unpaid is written off.

So, full amount of original debt, plus fees and possible statutory interest = £21.679,00 as per paperworks given to him in the start of his IVA. According the the summary given by IVA company to him today on e-mail his fees are all paid up already. He was initially set up to pay £200 per month for 5 years but because we had an increase on household income during the IVA we voluntarily started paying more to completely pay the £21.679,00 by the end of his 5 years of IVA, (Instead of £12.000,00 as predicted on the start of it) and is what we've been doing, in August it will complete £21.679,00 paid into the IVA so I wonder why they want to keep that additional payments of about £1.500,00 on a separate bank account that will not count on the voluntary payments and charge him extra 2 months of £460. It makes no sense to me at all. Should be simple, he pays, they re-pass the funds to his creditors and any extra they will not re-pass to creditors for God knows the reason why they give back to him? We've paid extra so that extra funds could be paid to our creditors and the IVA be finished on time as per original schedule with 100% compliance on the value of debt.

I'm just very confused why the bill will be bigger than what is stated on the paperwork if he've been paying more than he was supposed to pay to start with?

If £21,679 is the full original debt, plus fees and interest the IVA should stop at that point. Extra payments should not be ring fenced in a separate account.

Who are you with ?

I find it odd that this sum was specified in the original paperwork, as fees, the bulk of which are paid during the early stages of the IVA, are not usually a set amount which can be determined at the outset.

Any IP fees included in the £21,679 were also probably an estimate, which means as the IVA has gone on their fees may have increased from what was originally anticipated. The claims may have also changed form what was originally estimated. Ask your Supervisor for a written explanation as to what has changed.

Thanks for the replies, and sorry it took me long to reply back, I've been very busy lately.

My husband is with Mitchell Farrar.

The e-mail he have received is the one below:

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Your IVA is active, your IVA is due to end October 2015 (5 payments of £432.50) and paid in so far from Voluntary contributions is £18,100.00.

The PPI we received was £861.56 and from this we had to pay EIF invoice which was £324.77 leaving £536.79 to be paid into the Arrangement from your creditors. Any PPI or Bonus or Overtime payments made into the arrangement come in as additional payments and do not go towards your voluntary contributions.

Your IVA agreement was for you to pay in 60 payments of £230 total £13,800. In Feb 2012 you was increased to £300 per month, October 2013 increased to £432.50. which meant the total into the Arrangement from Voluntary contributions £20,262.50.

We have received additional pay of £1,552.10, this was explained by *ex account reviewer* on 15/03/2013 that this is moved to a separate account and won’t show in the voluntary contributions.

Out of the total £20,188.89 we have paid £15,185.55 to the creditors. I have attached the R&P which shows all the funds and where they have been paid.
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I just don't get why they only paid around £15k to creditors and are keeping the rest of the money on "separate account" and charging him until October? (63 months)

Thanks for your time

Ah -- I see what they are doing. You agreed to pay in "regular" payments the total of around £20k. Overtime and PPI has added to this, but is being accounted for separately, but will be distributed to creditors as an extra final dividend.

What they are attempting to explain is that extra payments do not get "knocked off" the contractual payments, which still have to be made in full. But will increase the dividend in due course.

So he will end up paying more than the agreed £21.679,00 when he started the IVA just because we have decided to pay a little more than the original monthly installments to get the figures up to pay 100% by the end of 60 months the same amount he owed to his creditors on the start of the IVA?

Is this even legal? Is FCA in accordance with this kind of practice? As far as I'm aware FCA is demanding creditors to wipe off interest of arrears for loans, etc so why should he pay more than his initial debt declared by creditors on the start of his IVA?

Sorry all the questions, I'm just very confused as to why we should pay more than the initial debt if we were nice enough to increase installments by ourselves to pay off the full amount of his debt by the end of his IVA terms (60 months).

It is legal and is, indeed, standard practice.

During an IVA you owe the full original debt, plus fees and possible statutory interest. The terms of the IVA are that you pay the agreed monthly payments as well as any additional funds from overtime, bonus payments and windfalls ( lottery wins, inheritances, etc).

If that total sum is reached before the contractual end of the IVA it will finish early.

The majority of people do not get near this figure and, only at the end of the IVA is anything unpaid written off.

During the IVA you are forgiven the creditors interest charges ( often at high rates), late payment charges and the threat of recovery action. In most cases these charges would easily outweigh the costs of the IVA.

If he stops paying in August or pay only £1 in September and £1 in October will this void his IVA?

Unfortunately there was no benefit paying extra voluntarily unless it brought the IVA to a close a lot earlier.

If you stop paying now you will be in breach of the IVA.

He will be in breach if he misses three payments. If he makes short payments the IVA will not close until the arrears are paid up and might fail --- which would be a waste of the last few years and all your money.

Thanks guys, the help is very appreciated