We are considering an IVA, we are at the moment doing a debt management plan. There are two issues that we are concerned about. First of all my husband may be made to retire before the 5 year period is up. Secondly if we were to acquire any extra money from pay rises etc. what happens then. We are expecting a payment in a few years time but not enough to cover the debts. We sold our house on a buy to let scheme, so we will get approx. £12,000. Would we be obliged to pay this money to our creditors?
The first point is that if there is uncertainty in your ability to make a payment for 5 years then an IVA may not be an appropriate solution as the IP must be sure that the IVA has a reasonable chance of completing as proposed.
With respect to income every year the IVA will be reviewed and will look at your income but also any rises in expenses. If you get a cost of living increase then you would probably not ne asked to increase your payment but if any increase in income was greater than any increases in expenses then it is likely that the IP would seek an increase in the payment.
With respect to any cash payment this would need to be disclosed in the IVA and explained how it was to be dealt with. Creditors would expect that it be paid into the IVA but if there was a valid reason that this was to be excluded then this would need to be explained in the proposals and then it would be for the creditors to decide whether they were willing to agree to this.
Hi Chris and welcome.
I am guessing that you sold your property and are renting it back with the £12,000 to be paid at a later stage by your new landlord provided you remain in the property apying the rent. If not could you explain a little bit more.
As to an IVA these funds would be captured but if your husband is to retire before five years are up an IVA could run until this time. IVAs do not have to run for five and are individually structured to cater for each client. Speak to an IP because although your current DMP may be working, it could be difficult to continue the payments after retirement.
Michael is right - I have a number of IVAs ongoing for people approaching retirement age, which have been set over three or four years, and the process may well suit your circumstances.
I have spoken to my husband about this and we want to clarify some points.
My husband will probably have to retire in June 2011, when he is 65.
The £12000 I mentioned earlier is our half of the "suspended sum" which is curently held by our landlord. It is not due to be paid to us until March 2012, when our 5 year tenancy agreement runs out, which is after the IVA would finish, if set up for 2 and a half or 3 years. Would it still have to be paid to our creditors?
Is it true that interest payments would be frozen under and IVA as currently a couple of our creditors are adding more charges than we are paying them.
How much doe it cost to set up an IVA, and how is this money paid?
How much do you actually owe to creditors, and how much do you feel that you could afford to pay into an IVA on a monthly basis if one were to be an option for you?
Some of this guesswork, as I have not got the figures in front of me, but I believe our total debt to be about £85,000. Until May next year we could afford abot £650, from May onward around £1350. The reason for the jump is that until then we are also settling a tax bill with HMRC, paying this at £700 per month.
The debt to HMRC would need to be included in the IVA, so that leaves you £1,350 per month available, and debts of £90,000 - assuming that the difference equates to the HMRC debt or thereabouts.
If you were to offer an IVA over the next three years, based upon 2 1/2 years of contributions at that level, plus the potential for the receipt of £12,000 when that money is available, then this makes a pretty good offer. I do not think you ought to propose something which ignores the £12,000, but others will no doubt be along later with alternative views on this point. And a shortened IVA will only be acceptable to creditors if you can demonstrate that you will be left with no disposable income available for creditors once your husband has retired.
If you no longer have any assets, have you also considered whether bankruptcy is an option to consider - however this may also capture the £12,000 if that is deemed to be a debt due to you but payable at a future time.
Would need all the facts detailing what you owe to all creditors and a proper breakdown of your income and expenditure. The best advice I can give you is to discuss matters with an IP. Most if not all will give initial free advice. Visit www.iva.com and select someone who you feel is appropriate to your circumstances. Speak to one or two - you will receive the most appropriate advice to you and your husbands circumstances. Good luck and merry xmas.
Last edited by David Mond on Thu Dec 25, 2008 2:13 am, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
