john146 wrote:Hi Foggy, Thanks for your reply. My friend said there was no mention of how much the fees would be to the IVA providers, in terms of a stated amount, i.e, total fees £3,000 for running the debt, for example. It said something about a % on the first review, but gave no indication it would amount to near 90% value to the debt itself. I think by what you say, my friend has probably been a bit naïve, in as much, that because he is struggling to make ends meet with mortgage, bills and general living costs, he started working at week-ends to earn extra, and of course, IVA saw the raise in income, and raised monthly payments., although his actual basic wage has not increased much over the 4 years. Looking at some comments on this subject on his behalf, I have seen, that if someone works overtime, they are entitled to keep 10% of the extra and only pay half of the remaining amount towards the IVA, yet they haven't explained none of that to my friend. Not having a clue about these issues, I must say that it sounds very similar to the PPI situation, in as much, it wasn't explained clearly the costs, at the time of sign up'
PPI wouldn't have been explained specifically, being a new beast at the time, but captured as an after acquired asset, which is laid out in the body of the agreement. Yes, overtime is treated under the 10% 50/50 rule, as you describe (sometimes it is a straight 50/50, as it was in my case). This, again will be detailed in the body of the agreement. The fees form part of the agreement and would have been laid out in full ... I fear your friend simply did not fully understand what they were signing up for before doing so. Usually fees are a set amount for the nominees fee (setting up the IVA) and then a percentage of the monthly payment going forward (typically 15%, although some charge in excess of 20%).
Do you know which company this is ?
I think your right, my friend certainly did not understand. This was all done by phone, and online, so they never spoke face to face with anyone. The company is Harrington Brooks. When he phoned, he gets mixed answers, depending who he speaks too. One said that the amount he is paying, does not sound right, and another says it's a complicated procedure. He filled in the latest review form yesterday, so if they base the payments on his income as it stands, then they are not considering the overtime as a separate amount, and just looking at the whole amount as normal income. The 5 years are up in May, and at the present rate, they will be taking another £6,000 off him, making £19,000 paid on a £10,000 debt, which must mean, the company are taking as much as the actual debt, and I feel that they mislead when they talked about fee's when my friend originally thought he would only be paying £100 p/m for 5 years, and thought they would just take a small percentage of the £100 each month for their fee. Without seeing his paperwork, and trying to at least form an opinion on what I would do, my instinct is to tell him to cancel payments, and seek legal advise, but although on the phone, he was told the actual debt is now cleared, I fear that because it's still within the 5 years, it might null and void the whole agreement, and plunge him back to where he started. I understand you only give an opinion, based on your own experiences, but what do you think as to that course of action? Do you think he should just continue paying until May, or challenge something he feels uncomfortable with, and trust that the company are within their rights? It seems there IVA companies, gain custom by convincing people, that they would not even pay their full debt, and after the 5 year period, all remaining debt would be wiped clean, but far from leaving any unpaid debt, he is paying near double his debt.