full and final settlement...help!

[southern rain]

Hello!

I have had an IVA since July 2007 and have been paying £340 a month. My total debt was £40k. The estimated dividend to creditors is 30%.

My wife is pregnant with our second child and therefore our household income will decrease by around £400. My parents have offered to pay off my iva, however they are not wealthy and they don't realise the full extent of my debt so realistically can ill afford it.

My IVA supplier has suggested a payment holiday when my wife is off work and this might be a good option but only prolongs the life of the IVA.

My question is: How much would you consider a good offer as a full and final settlement? I want an idea before I decide whether to take my parents up on their offer.

Thanks for your help.

[size5]

Hello and welcome.

It is good that your provider has suggested a payment break, but the question should be more along the lines of what can your parents bring to the table as a full and final settlement? Once we know more about that we can advise you further.

Regards.

[Michael Peoples]

You would need about £10-12k to achieve the original dividend. This takes into account the reduction in fees as the IVA term would be shortened and also allows for the variation costs. However,as Size5 says it depends on what your parents can afford as creditors may accept a lower amount if that is the best offer available. If your IVA is in jeopardy creditors do look favourably on early settlements.

[southern rain]

Thank you for your replies. My parents could potentially give me £8000...but i'm worried that won't be enough. Any thoughts about chances of success?

Thanks again.

[Michael Peoples]

It seems reasonable and worth offering to creditors. It would be a slight reduction in the dividend but guaranteed money and early closure.

[southern rain]

Thanks for your advice...now to talk it through with my parents...

[southern rain]

My parents can't lend me £8000, they think they can stretch to £5000.

Is this a waste of time, and would it be frowned upon to make an offer like this?

As well as my wife being pregnant, my employers have been cutting hours/jobs/wages. Although I haven't been affected yet, I fear it is only a matter of time. This is all a bit worrying.

If I was to make this offer and it was refused would it mean i couldn't make another offer in the future if the opportunity arised.

Thanks for your advice.

[David Mond]

I am not sure whether 5k would be sufficient - it would depend on how eloquently the variation could be put by your IP to the creditors.

It does not prevent you leaving the status quo currently and if circumstances change in the future to go back and propose another F&F

[southern rain]

Thanks for your advice...I am doubting that 5k would be enough but think I might try...nothing to loose...

[MelanieGiles]

If your disposable income is going to disappear as you suggest - currently paying £340 but facing reduction of £400, I personally think that an offer of £5k in full and final settlement could be rather a good one.

Best to take specific advice from your own IP in this regard - they have full details of your case and will be able to advise more appropriately.

[southern rain]

Thank you Melanie, you have given me some hope. As my circumstances change I don't want the result to be a failure to complete my IVA and possible bankruptcy.

[David Mond]

I think you should decide whether to wait or try one now. Personally I would wait until your circumstances change. Good luck.

[southern rain]

Thanks for your advice. My employers are going to cut my working week by one day a week. This will make a considerable difference to my wage and coupled with my wife being pregnant with our second child could make ou situation very difficult.

I spoke to my iva company today and fully explained the situation, they suggested that £5000 wouldn't be acceptable.

My agreement allowed for a minimum of 30% to my creditors. The total minimum to be paid was £20400, of which I have so far paid £6800, meaning that if I continued to pay at the same rate I would have another £13600 to pay.

My IVA company has told me that they think the minimum acceptble offer would be £7000. Obviously they said that this isn't guaranteed to be accepted.

This is more than I have been offered but I am considering asking my parents if they could afford more (i'm not sure that they will be able to)

Could someone advise if this information from my IVA company is reasonable and what people here might consider a reasonable offer to make.

Thanks again.

[MelanieGiles]

At the end of the day it is down to your creditors to confirm whether that offer is reasonable or not, but in line with the change of circumstances you describe I would have thought that has a fair chance of being viewed seriously.

[southern rain]

Thankyou for that super-fast reply!

It's all so confusing but I guess I should just make the offer.