www.iva.co.uk

Hi,
Just wondering if you can advise me. I entered into an IVA about 5 months ago which is going very well and was the best option for me.
I was wondering after joining Money Saving Expert and reading different articles, whether I will be able to try and reclaim the charges I obtained over the last 6 years. Obviously, the money would not be for my own personal spends but to put back into my IVA. I have looked through my contract and there is nothing in there which says I can't but I want to check before I send any letters out. Can you please advise me on this matter.
Thank you for your time.

I can't see any legal reason why you cannot claim them back, but if the companies you are claiming them from are your creditors in the IVA is there much point in going throught the hassle?

Hi Gimmewine,
Thanks for your reply. To be honest I don't mind going through the hassle if it helps me pay off my IVA.

Hi Nicky

Any monies you are entitled to reclaim will have to be paid into the IVA and will thus enhance the dividend available for your other creditors. I suspect the monies will be set-off against the bank's claim in the first instance, but if the claim is large enough to wipe out the debt, the remaining monies will be treated in the same way as a windfall.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi

I have considered this (being in an IVA) but I agree with gimmewine. You gain nothing from it as it is unlikely that the bank charges alone triggered an IVA to being with.

I'll take my personal scenario as an example, which I think is quite typical.

IVA for £50k, paying back £30k (60%)
I reckon I could claim back maybe £2-4K. Not sure, but let's say I succeed with £3k.

The IP should reduce the debt by £3k to £47k and take the £3k towards paying your creditors. All this means is that you now going to pay £33k of £47k making a 70% return. It does not reduce your payments or the term of the IVA.

Now morally the argument goes that you have done the right thing by increasing your dividend but do you really want to have to go back to those same banks that hounded you for months on end with letters and phone calls and try to get money out of them for absolutely no gain for yourself. I certainly won't be.

Now in 56 months time when I have received by letter staing by IVA is full and paid I might investigate if they can still be reclaimed but that's another story....

Hi,

Thanks for your replies. You may feel I am a little nieve but I believed the money I would get from the charges would go towards paying off the amount agreed by the bank. I didn't realise that this would cause my IVA to go up. I thought that as that was the amount agreed, that's the way it stood? I'm sorry if I've got the wrong idea as no explained to me when I took the IVA out that it would increase just my payments.
Can you please clairify this for me, as I believe I wasn't told everything!
Thanks!

I am sure the experts will correct me if I am wrong but as I understand it and IVA is agreed based on the disposable income you have at the time of the agreement. You will then have an annual review to assess if the payment is still correct ie they take account of any increases in income and expenditure and then assess if the payment is still correct. As I understand it, most agreements will include a clause whereby any windfall during the period of the IVA will have to be declared and will then be added to the IVA thus giving the creditors a higher dividend, but not giving you anything extra. That clause may have a percentage attached ie you may only have to surrender 50% of the windfall, but you will be able to find out by reading through your individual agreement.

If you only have to surrender a percentage of the windfall and not the whole amount it may be worth claiming charges back, if it is 100% it really is not worth the cost of a stamp as it will not help you personally in any way shape or form.

Hi

Nicky c
Just to clarify my point, your payments will not go up but you percentage return to you creditors would if you received a payback of charges. Not quite the same thing.

gimmewine
I have the usual 50% windfall clause but not sure how this would be viewed by the banks if I was counterclaiming.

This leads me onto a point that I didn't make earlier.

An IVA (as a rule) is for 5 years. During that period of time circumstances change and you may find yourself going back to your creditors to approve a change to ensure the completion of your IVA. Is it really worth the possibility of turning creditors who voted for you (you needed 75% remember) to creditors that vote against your because you started counter claims against them if you find you need a variation of terms.

I think this could be financial suicide for someone in an IVA unless those charges are a massive percentage of their debt.

Guys

If you receive a windfall you have to pay over all of the money and not just 50%. The 50% provisiom relates to earned income - ie overtime, commissions bonuses etc. You would not be allowed to retain 50% of any bank charges reclaim for your own enjoyment!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk