Question around 50% rule

[sonny100]

Hi there,

I have a question regarding where the extra money goes to under the 50% rule.

If our original debt was £25000, and was renegotiated to be £19000 at the start of the IVA, then if we meet all of our payments, we will pay £19000 back, right?

Well, if over the course of the term, we pay an extra £3000 under the 50% rule, does this go towards the £19000, and therefore the IVA would end early, or does it go onto of that, and towards the £25000?

Hope this makes sense!

[liamjames]

Hi Sonny!

Your IVA won't end early unless you manage to pay your full original debt, plus statutory interest if applicable, and the fees of the arrangement too. Any income reviews that you are required to pay will be used to improve your creditors dividend, and paid to them in addition to your monthly contribution.

Rather than your creditors "renegotiating" your debt to £19,000, it's better to think of it as them accepting that you can only afford £19,000 during the 5 years and then agreeing to write off the rest. If you can afford more than this during the IVA, then you will be expected to pay more.

Take care!

[kallis3]

Quite agree with Liam.

You will only ever finish early if you can pay off 100p in the pound plus fees and possible statutory interest.