www.iva.co.uk

I have been in an IVA since Oct 2014.
The anticipated income contributions for the term of the IVA (including £13k of shares that are no longer worth anything and £10k equity release from home) was £45,449.
I have paid £14,032 back so far. So still owe £31,417.
I am going to be getting an inheritance of £18k and also am now self-employed so can cash in dividends in my business.
Do you think the creditors would be willing to accept a full & final offer of £28k to bring my IVA to an end? Or would I need to offer the full amount?

I am keen to draw a line under this as I am wanting to start a family and unable to do this with this debt hanging over me.

Any advice you can give would be gratefully received.
Thanks

A full and final offer needs to be based o the number of payments you have left ( plus 12 if there is going to be more than £5k equity ) multiplied by the current monthly payment. What you have paid in is of little relevance.

Regarding the inheritance, this is payable, in full to the IVA estate anyway and would not be accepted as part of a full and final. The creditors will not want to bargain with what is theirs anyway.

Thanks for your quick reply Foggy.

In that case, I am currently paying £621.78 per month. If we assume I can make the F&F payment from November then I would have been making payments for 24 months.

48 mths left (inc the additional 12 months) means that this would be £29,845.44.

So I would need to pay the £18k from my inheritance - PLUS the offer on the £29k left.

But that then means I've paid more than my IVA was for in the first place??

Thanks for your help !

Hi,

You will always owe the full amount of your original debt plus fees and statutory interest until the IVA is completed.

Thanks Kallis3.

I don't think I was aware of that. I thought that if you pay back the full amount owed during the course of your IVA then it automatically ends.
So my re-payments have doubled during the course of my IVA - so I will be able to pay it off quicker.

What your saying is that no amount of payments made will reduce the amount owed, unless an acceptable offer is made to clear it?

Just as a quick (and rough) idea, take your full original debt, add on fees of 15% plus £2,000. Then add on 8% of the original debt figure per annum. This will give you an idea of the amount required to cover the full settlement figure ---- if you hit that the IVA will end early.

Basically, at the start of the IVA, the creditors settled for an amount -- the dividend. So they expect to get that over the term. If you offer that during the IVA they are likely to agree to end early.

If, during the IVA they get extra payments: PPI, inheritances, lottery wins, overtime etc. they regard this as a "bonus", and will still expect to get the rest of the agreed payments on top.

My original debt was £44,107.

By doing your calc means I'll need to pay back nearly £67k for it to end early..

So they're not going to accept £28k from me then to finalise it are they..

Although my contract ends in December and the industry has taken a dive so I can't necessarily continue my payments at the same rate next year anyway.

Just looked again at the detail on my IVA - creditors estimated to get £32,159 after the fees etc have been deducted..

So £28k not such a bad offer after all?

The inheritance is theirs anyway --THEN they are expecting another 48 payments to get what they signed up for --- the estimate was just that: an estimate. They expect to get that plus any extra income!

However, if you can demonstrate hardship they will consider early settlement for a lesster amount and will give you "credit" for the extras that have been paid in.

I hit my estimated dividend halfway through my IVA, then, on becoming a single parent, I could no longer afford the payments at all. With the help of my IP the creditors agreed to "call it quits", even though they could have had more. So, it can be done.

Thanks for all your help.

Will speak with my IVA company and see what the amount looks like to pay it all off.
If I'm able to do so, would much rather pay it and be done with it..

Hi

I'm sorry but you can't use the inheritance as a settlement offer.

All of it will have to go into the IVA unless and until ALL debt PLUS interest PLUS costs have been paid in full.

Only then would your IVA be able to end early. Unless you can get them to waive the interest but even then I don't think that will help on your figures.

Thanks Lisa.

I have just spoken with my IVA company and they advised it may be possible to include the inheritance if I am able to make the full (or as close to full) payment to complete the IVA.

It's around £47k in total, so I'll have to see if I can ask a family member to help me out.

I think the main issue here is that your earnings will drop so the IVA cannot run its course anyway. The inheritance is an asset of the IVA but also improves things but any new offer should be based on your affordability.

Point out that you will not have a surplus of £621 per month pretty soon and because of that you are looking to make an offer. If accepted this will allow you to take on lower paid but more stable work and in my mind that should be acceptable.

Thanks Michael..

Very helpful