www.iva.co.uk

Hi,

The question I'm posing is not for me but for a friend who isn't too tech savvy, so I'm asking on their behalf.

They are currently 2 years into their IVA and are paying £200 per month on a debt of just over £20,000. They are 65 and self employed. Business isn't great the moment, hence the low monthly payment and they were wondering if they offered an F+F payment would it be accepted?

The money would come from a friend and the max they could get is £7500. He's told me that the IVA company he is with have advised him to stop paying the £200 a month to "prove" to the creditors he is struggling and this would make them more inclined to take the F+F.

Personally I'm not sure stopping payments is a great idea, but I'm not an expert in the field so I wondered what people here thought to that idea? Also do you think an offer of £7500 is likely to be accepted on debts that totalled just over £20,000. I know he's been paying £200 for the past 24 months but with IVA fees taken off the creditors will have only seen a small return.

Thank you for reading and thank you for any advice, it's much appreciated. Also if it makes a difference my friend is 65.

Thank you

Hi. If the IVA runs to term on the current payments the creditors are looking t get around £7200 back ( assuming your friend doesn't own their property -- which could trigger an extra 12 months ).

So, on that basis I would expect an offer iro £6.5 - £7k to be looked at seriously.

Yes, they are already taking a hit, but collecting quarterly dividends cost more in admin than it would to deal with an early lump sum.

If you were offering much lower then stopping payments could be a useful ploy, but I see no mileage in that now, other than it could save £600, as the deal would take around three months to go through. If rejected the missed payments would be added back on the end. But do make sure any payment break now is confirmed by the IP in writing, to avoid any confusion later.

Hi,

Thank you for your reply

I did forget to mention in the original post that he does own a house with above £5000 equity.

OK -- that would increase the expected amount, so the offer of £7500 is back in play. This could still be looked at seriously, if you play on the distinct possibility that income might well fall over the next few years, as might health --- play on the bird in the hand being better than two in the bush.

Also I can't see any mention of how long he had left to pay his contributions - was it originally a 5 year plan with potential extra year for the equity? The basis of the offer would be on how much of the agreed payments he has left to pay, not on the original debt. I don't agree that it is a good idea to stop the payments, not sure why the IP has suggested this. One because it will show non-cooperation and 2 he could breach his IVA, which is not what we want.

I think ( hope) the IP was suggesting an agreed break, rather than just stopping payments.

Hi,

Thank you for your replies. The original agreement was 5 years with the one year extension.

I will confirm if the IP has suggested not paying as part of an agreed payment break.

Provide some evidence of current trading and a new income and expenditure account. This will likely show a reduced surplus income anyway so the chances of the £200 being maintained are slim. This would enhance the chances of acceptance by creditors.

By my calculations your friend has 3 years left plus assumed extra year for equity provision equating to c£9,600. On this basis £7,500 for early settlement would seem like a good offer to me.