What is reasonable and efinition of a windfal

[may07]

I asked this question before, but just looking at the forum and the volume of post each day I can see how it went cold. I couldnt actually see my thread on the board. Anyway, can anyone please define for me what is a windfall? For example would a payment of backdated child related benefit be regarded as such? I need some really basic things, my home is very badly in need of some paint on the walls (Im not talking about wanting to change colour schemes here but basic maintenance) some flooring to cover hardboard in my sitting room, a replacement for my broken washing machine. Am I allowed to buy these things or am I required to live in abject poverty? Do I have to hand over any back dated award I may receive? And finally if I went ahead and purchased these things and then petitioned for bankrupcy would the OR take a dim view of this?
Thanks for any information or advice you can give.

May

[MelanieGiles]

Hi May07

A windfall is simply any money or asset which comes into your hands during the IVA which could not have been envisaged at the time you entered into the agreement.

You will need to talk to your own IP about whether your award would be treated as a windfall or not. I personally would let you keep the money to do the urgent repair work needed, but that is just my opinion.

I am sure that the OR would not take a dim view of you if you purchased essential items for your home, but surely you do not want to see your IVA falling over just because of this? I am sure that your IP will be sympathetic, so give them a ring next week.

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

[may07]

Thank you Melanie.

My budget was never very realistic and Ive been struggling to manage them I was already considering BR as a better alternative but wondered if I spent money making basic improvements to my home and then went BR that the OR would take me to task over it.
May

[MelanieGiles]

Hi May

I really don't think so. If you are genuinely finding the IVA payments a struggle, and can see no way forward even if the IVA is varied, then bankruptcy might be your best option to make a complete fresh start.

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

[may07]

From your answer Melanie it would seem that whether or not I might be allowed to keep the money (if I get it) would be up to the IP's discretion? So there are no hard and fast rules on this? If this is the case then my IP may not take the same view as you and let me keep it for basic hosehold maintenance, but ask for it to be handed over.
One more question, Im not asking for advice on this as I know professional intergrity would not allow you to, but my question is this. If I fail to tell my IP of a "windfall" what are the likely consequences for me?
Thank you for your time and trouble

May

[churchmouse]

Hi All,

This topic is a bit of a grey area for me too... what about holidays, are we "allowed" them? I am able to keep up with my monthly repayments but find my quality of life rather unsatisfactory, its making me rather depressed (

Melanic, you mentioned an IVA being "varied"... what does this mean?

Thanks all and keep smiling
x

[ivoriva]

I would think the likely consequences of not telling about the windfall would be the IP might fail your IVA. If they do insist on taking the money, then cant you ask them if you can keep it and do the work and you'll pay it back by way of increased monthly payments for the remaining term of the IVA or via extra monthly payments at the end of the agreement. Im sure you can work something out with your IP in a honest fashion if you try.

As for Holidays - you have no budget for one so technically you shouldnt be able to afford one. But if you can find someone to pay your way, then there is nothing to stop you taking up the offer.

Keep your heads up and dont let it get you down. If you can get to the finish line, you have a debt free future ahead of you. Surely thats worth a bit of hardship?

[welshman]

And herein lies a big problem with IVAs. They don't include a lot of stuff which would normally be given over to a bankrupt so a lot of people fail their IVAs because they think "well what the hell i'm not going to live like this for 5 years". Remember that once in an IVA you have no backup whatsoever and if the IP does not agree to try for a variation (or if is not accepted) then you are done for

[philip.c]

A Silly Qustion ? if you have to declare bankrupt what hapens in effect ?

[ray_a]

A windfall is simply any money or asset which comes into your hands during the IVA which could not have been envisaged at the time you entered into the agreement.

Hi Melanie but in my case then selling my home to clear my creditors and having some surplus would that be considered to be a windfall given that my creditors knew my wife and I had a house.

The variation work is being done at the moment but I am just exploring the various options and arguments.

Many Thanks

Ray

[MelanieGiles]

There is some debate as to whether increased equity could be technically referred to as a windfall. I take the view that if the asset was disclosed in the proposal, and the creditors chose to exclude it, then it cannot be a windfall. But that would be an interesting one to get into Court.

Philip - that is a big question, but basically all of your assets vest in a Trustee in bankruptcy, and your liabilities are removed. Your assets are realised and used to pay off your debts (after costs). These days most people are generally discharged from bankruptcy after 12 months. Can I suggest that you read Skippy and Scaredkez's blogs for some excellent practical expereince of the bankruptcy process. They explain it far better than I!

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

[philip.c]

Thanks Melanie , that was good reading but I have to say I dont fancy going down that road , is this the only option if an IVA is rejected?

[MelanieGiles]

No - you could also enter into a Debt Management Programme which means that you carrying on paying the debts until they are paid off in full.

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

[Destiny]

Hi Everyone
This is a question about windfalls. I have critical illness insurance which will pay out several thousand pounds if I am diagonsed with something nasty. Would 100% of this money have to be declared and paid over if paid out by the insurance company?

[Adam Davies]

Hi
A very good question.
Critical illness is designed to pay out once a serious medical condition is diagnosed and is paid instead of an amount on death.It is a useful insurance because you can get your affairs in order before[and if] you die.
Now really it is there to benefit your family[i,e pay off the mortgage and give then something to live on]and you can,when you take out the insurance,sign the benefit over to your spouse and would imagine that if you have done this then the money would be safe.Otherwise I fear that it may be classed as a windfall.
I,m sure one of the real experts will put me right.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp