what will happen if I pay the cheque in?

[tonka]

I am in the process of getting an IVA (letters of authority ready to be sent to IP and creditors). This morning I had a letter from Abbey regarding miss-sold PPI, I took them to the Financial Ombudsman and they have offered me £4,400 which will be sent as a cheque. My bank are a major creditor so what will happen if I pay the cheque in?

[MelanieGiles]

You should not pay the cheque into a bank account which is held with a creditor. If the cheque is made payable to you, and the claim presumably is going to be shared amongst the creditors via an IVA, then your IP can probably lodge it straight away into a client account pending the outcome of the creditors meeting.

[tonka]

Thanks for the quick reply Melanie. A couple of questions:
1. The cheque is coming from Cahoot who are a creditor, could the cheque be made out to a family member and paid into their account (Cahoot would obviously know)? I'm assuming this would jeopardise the IVA.
2. What is a client account?
Thanks

[MelanieGiles]

There is no need for the cheque to be made payable to a family member, it merely needs to be lodged into an account with a bank to whom yo do not owe any money - so that it is make available for all creditors and not just one.

A client account is a special account held for you by your IP which will safeguard your money until the creditors meeting when it can be handed over to your Supervisor assuming that the IVA is actually accepted. If not accepted, the money will be returned back to you.

[tonka]

thanks again. It's much clearer now.