finding it very difficult can I opt out of an IVA

[nick]

ONCE I ENTER AN IVA CAN I OPT OUT. I AM FINDING MY RE PAYMENTS VERY DIFFICULT. I HAVE PAID OVER £3000 INTO THE IVA OVER THE THE LAST 9 MONTHS, WHAT HAPPENS TO THAT MONEY? IF I DEFAULT AND GO BC WHO PAYS? THANKS NICK

[MelanieGiles]

Hi Nick and welcome to the forum

First of all can you explain the reasons you are finding things tight? Did you originally miscalculate your budget or did creditors put forward unfair modifications which you felt you had no choice but to accept?

The money you have paid will undoubtedly be used by the IP to pay his fees - it may seem unfair to the creditors, but the IP is allowed to draw down his/her fees for acting as nominee to your proposal, before any payments are made to creditors. There will also be out-of-pocket expenses to take into account as well.

At this stage of the process, it is unlikely that your Supervisor will fund the cost of petitioning for your bankruptcy, indeed creditors may have directed him/her not to make you bankrupt in the event of a default. This is becoming more and more common, as creditors would rather the opportunity of collecting ongoing monthly payments from you again directly, rather than receive no return under bankruptcy proceedings.

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

[nick]

THANKS MELANIE FOR YOUR PROMPT REPLY TO MY QUESTION. I HAVE BEEN PAYING £307 PM FOR 9 MONTHS. MY FIRST IVA APPLICATION WAS REFUSED, I THEN HAD A LETTER ASKING THAT I PAY £487 PM. WHEN I RANG CLEAR START THEY TOLD ME THAT THIS WAS ONLY A PROVISIONAL FIGURE AND WOULD BE ADJUSTED. I T5HEN RECIEVED A LETTER SAYING MY IVA HAD BEEN ACCEPTED AND TO PAY £307PM, WHICH I HAVE BEEN DOING, BUT THERE IS NO WAY I CAN GO TO £487PM. I RANG CLEAR START AND THEY SAY I AGREED TO PAY £487PM. THEY DENY SAYING THAT THIS WAS A PROVISIONAL FIGURE. I AM WAITING TO HEAR BACK FROM THEM ON WHAT THEY INTEND TO DO NEXT. WOULD YOU RECCOMEND I GO BC. MY TOTAL DEBTS ARE £42,000,ALL UNSECURED. I AM IN FULL TIME EMPLOYMENT,AND I DO NOT OWN MY OWN HOME. THANKS AGAIN, NICK

[MelanieGiles]

Hi Nick

What does the Chairman's report say about the level of your contribtions. It appears to me that things were being agreed on your behalf on the day of the creditors meeting, that you may not have fully appreciated you were agreeing to, or there has been a breakdown in communications between your IP firm and yourself.

Can you remember the person you were dealing with at ClearStart, who I imagine was not the IP personally. Also did they ask you to sign a copy of the Chairman's report thereby agreeing the creditor modifications you are supposed to have agreed?

If you were to pay £487 per month, when was the first time they told you you were paying the wrong amount?

Let's get to the bottom of this before I advise further.

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

[nick]

HI MELANIE. NO I CANNOT RECALL WHO I SPOKE TO ALL I KNOW IT WAS A YOUNG LADY. YES I DID SIGN FOR £487 BUT AS I SAY I WAS TOLD THIS WAS A PROVISIONAL FIGURE. FOR THE FIRST 3 MONTHS I WAS PAYING £363 PM, THIS WAS EVEN BEFORE MY IVA WAS ACCEPTED. THIS THEY SAY PUT ME IN CREDIT AND THAT IS WHY I HAVE BEEN PAYING £307 UNTIL NOW. I CANNOT AND WILL NOT PAY £487PM. WHAT A MESS!! LOOKING FORWARD TO YOUR REPLY NICK.

[MelanieGiles]

Nick

You must speak to the IP personally, if not David Mond who is the head of that company to express your concerns.

I cannot understand why anyone acting for you in a professional capacity would refer to a "provisional figure". What on earth does that mean?

This appears to be yet another example of limited advice within a remote, "volume processing" environment. I am aware that Cleardebt arrange for their clients to meet local insolvency practitioners on a face to face basis, in order that they (the clients) can benefit from receiving an independent opinion of their proposals prior to signing up. Can you let me know whether this service was offered to you?

If you get speaking to the IP or David Mond, it would be helpful to them if you could recall the name of the person who was handling your case. If her advice has therefore persuaded you to accept unworkable creditor modifications, then they will no doubt wish to fully investigate the matter on your behalf.

Let us know how you get on.

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

[neverending]

Melanie
Yet another case of someone agreeng to an unrealistic proposal when they are at their most vulnerable.I wonder how this can be safeguarded against ??
When people apply for mortgages they are limited to the amount they can borrow by income multiples.I wonder if a formula can be found in the IVA proposal to ensure people do not agree to unrealistic figures.Maybe a monthly figure that can be no more than a certain percentage of their net income.
Just a thought

[MelanieGiles]

Neverending

Simple, good IP practice is the answer to this, but the more involved I get with this forum, the more despondent I get about some of my fellow professionals.

All we can do is encourage people to complain where they feel they have had bad service. Too many complaints to the regulatory bodies will ultimately produce results.

Main problem is the mass IVA processing market, where the IP is remote from the day to day operation of cases, which is in the hands of largely unqualified administrators. It will be interesting to see what happens in this particular case.

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

[doodoo]

Hi,
Im interested in the topic as we were accepted for an IVA on 11/08/06. For a total amount of £42,000 we are having to pay a monthly repayment of £713.00. This is not far off what our repayments were before we sought help, we hadn't got into arrears etc we just couldn't see ourselves carrying on.
We are finding it increasingly difficult to keep up with these payments. Where do we stand with asking for lowering our monthly payments. Our IP supposedly put forward a request for payments at 560 which we were happy with, but apparently the accountant dealing with it was responsible for over a certain percentage of the creditors so demanded 713.00.
Would it not be beneficial to lower our monthly payments and keep receiving them for the full term or us risk bankruptcy and receive nothing.

[neverending]

Hi
Can you give more details regarding your property status and who is your IP firm ?
You are returning approx 85% to creditors and if your debts were 42k then you could have paid this back via a DMP over 5 years,so I am amazed that your creditors accepted an IVA.

[MelanieGiles]

Hi doodoo and welcome to the forum

You may well be able to go back to creditors and offer reduced payments, and you do have the perfect excuse as it appears that creditors unfairly increased your contributions on the day of the creditors meeting. Did you feel that you had no choice but to accept these, or were you persuaded to do so by your IP?

Do make sure that you are able to propose a variation at such an early stage of the IVA, as a lot of creditors are currently modifying to prevent this happening within the first two years. And seek your IPs specific advice on the way forward.

Your sentiments in the last sentence of your post are sensible and commercial, but regrettably a lot of creditors don't see things in the same light as we might!

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

[doodoo]

On the day of the creditor meeting we were contacted and told if we did not accept the 713 then they would not agree to IVA and the options available to us would be either the DMP or Bankruptcy. We were so worked up with it all at the time, thinking that the IVA was the only option, that we didn't think to look into the IVA's etc, I think we would have done things a lot different if we had investigated further. Looking at our repayments I wish we had contacted the creditors direct, but as they say its no point looking at what could have been.
In addition to the £713, they have requested 50% of overtime and full amount of any monies received over £500. We are finding it really difficult and feel at a loss as to what to do next!!

Hi doodoo and welcome to the forum

You may well be able to go back to creditors and offer reduced payments, and you do have the perfect excuse as it appears that creditors unfairly increased your contributions on the day of the creditors meeting. Did you feel that you had no choice but to accept these, or were you persuaded to do so by your IP?

Do make sure that you are able to propose a variation at such an early stage of the IVA, as a lot of creditors are currently modifying to prevent this happening within the first two years. And seek your IPs specific advice on the way forward.

Your sentiments in the last sentence of your post are sensible and commercial, but regrettably a lot of creditors don't see things in the same light as we might!

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

[MelanieGiles]

Hi again Doodoo

What you need to do is reassess your income and expenditure to come to a figure that you feel that you can comfortably afford. Then put this to your IP, and see if they are prepared to support your proposing a variation to the terms.

When assessing your expenditure, don't forget to provide for contingencies such as house and car maintenance; medical, dental and optical expenses, sundries, school costs - trips, classes etc. These things will crop up regularly over the next five years, and you need to save some money on a monthly basis towards them.

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