Can I end my IVA early with a lump sum?

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Leed015
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by Leed015 » Thu Mar 08, 2018 3:39 pm
Hi,

I am currently 15 payments in to my IVA and I pay £519 per month. My Dad has found out about my situation and he is willing to help me out, but he can only afford about £20,000. Just wondering if you think this would be a reasonable offer to end my IVA early?

Thanks,

Lee
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Foggy
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by Foggy » Thu Mar 08, 2018 5:25 pm
If it was a 5 year (60 payment) IVA you have around 45 left to make @ £519 -- so £23,355. Considering the administration savings they will be making (and the bird in the hand factor) I think £20k would be seriously considered.
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Leed015
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by Leed015 » Thu Mar 08, 2018 7:19 pm
Foggy wrote:
If it was a 5 year (60 payment) IVA you have around 45 left to make @ £519 -- so £23,355. Considering the administration savings they will be making (and the bird in the hand factor) I think £20k would be seriously considered.


I'm pretty sure it's a five year that could be extended by 1 more year. Would that change the decision?
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Foggy
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by Foggy » Thu Mar 08, 2018 8:33 pm
Leed015 wrote:
Foggy wrote:
If it was a 5 year (60 payment) IVA you have around 45 left to make @ £519 -- so £23,355. Considering the administration savings they will be making (and the bird in the hand factor) I think £20k would be seriously considered.


I'm pretty sure it's a five year that could be extended by 1 more year. Would that change the decision?



If you are a homeowner and the potential extension is due to equity release, then they will be expecting that further 12 months payments to be factored in,or for you to convince them that the release clause would not be triggered (i.e less than £5 k equity available.
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Leed015
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by Leed015 » Thu Mar 08, 2018 9:58 pm
Foggy wrote:
Leed015 wrote:
Foggy wrote:
If it was a 5 year (60 payment) IVA you have around 45 left to make @ £519 -- so £23,355. Considering the administration savings they will be making (and the bird in the hand factor) I think £20k would be seriously considered.


I'm pretty sure it's a five year that could be extended by 1 more year. Would that change the decision?



If you are a homeowner and the potential extension is due to equity release, then they will be expecting that further 12 months payments to be factored in,or for you to convince them that the release clause would not be triggered (i.e less than £5 k equity available.


Ah, I see. I guess I'll have to wait a year then.

Thanks for the info.
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Lisa Thomas
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by Lisa Thomas » Fri Mar 09, 2018 9:30 am
Do you have the amount of equity required to trigger the extra year clause?

Why do you feel you will need to wait a year to make your offer?

Personally if 5 year term I would offer £15k and test the water.

If 6 years then perhaps offer the £20k.
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Leed015
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by Leed015 » Fri Mar 09, 2018 1:05 pm
Lisa Thomas wrote:
Do you have the amount of equity required to trigger the extra year clause?

Why do you feel you will need to wait a year to make your offer?

Personally if 5 year term I would offer £15k and test the water.

If 6 years then perhaps offer the £20k.


Hi Lisa,

I'm not really sure how the equity clause works, I just know it was set up as a 5 year agreement with the view to an extra year.

I thought I only had 45 payments left, but with the extra year it'd be 57, which is nearly 30k left to pay. I didn't think a 20k offer would be considered?

When you say test the water, can you make multiple offers?
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Foggy
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by Foggy » Fri Mar 09, 2018 1:29 pm
Leed015 wrote:
Lisa Thomas wrote:
Do you have the amount of equity required to trigger the extra year clause?

Why do you feel you will need to wait a year to make your offer?

Personally if 5 year term I would offer £15k and test the water.

If 6 years then perhaps offer the £20k.


Hi Lisa,

I'm not really sure how the equity clause works, I just know it was set up as a 5 year agreement with the view to an extra year.

I thought I only had 45 payments left, but with the extra year it'd be 57, which is nearly 30k left to pay. I didn't think a 20k offer would be considered?

When you say test the water, can you make multiple offers?


You are within your rights to make several offers, bearing in mind that each is supposed to be the best you can make ... so a period of regrouping should be left between each. Often the creditors are as anxious to get shot of you as you are to be shot of them, so it is always worth a try ---- they don't really want to be in an IVA either!
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Lisa Thomas
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by Lisa Thomas » Fri Mar 09, 2018 2:33 pm
I think my video will answer you question about the standard equity clause:

https://youtu.be/PHfc85n39U4
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Leed015
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by Leed015 » Fri Mar 09, 2018 5:24 pm
Lisa Thomas wrote:
I think my video will answer you question about the standard equity clause:

https://youtu.be/PHfc85n39U4


After watching your video, it is likely I will have to opt for a year extension, thus making it a 6 year IVA. I'm going to contact my IP and discuss the 20k offer.

Excuse me for being a little bit stupid, but I don't get how you can make an offer for a 5 year IVA, as they all appear to be 6 years unless you release equity. I don't get how 15k would be considered if the creditors know I will have to extend for another year. Surely they want an offer that includes the possible equity release and the remaining payments if a 5 year term.
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Foggy
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by Foggy » Fri Mar 09, 2018 5:42 pm
Leed015 wrote:
Lisa Thomas wrote:
I think my video will answer you question about the standard equity clause:

https://youtu.be/PHfc85n39U4


After watching your video, it is likely I will have to opt for a year extension, thus making it a 6 year IVA. I'm going to contact my IP and discuss the 20k offer.

Excuse me for being a little bit stupid, but I don't get how you can make an offer for a 5 year IVA, as they all appear to be 6 years unless you release equity. I don't get how 15k would be considered if the creditors know I will have to extend for another year. Surely they want an offer that includes the possible equity release and the remaining payments if a 5 year term.


The "basic" term is usually 5 years --- the extension for equity will ony kick in if a) you are a home owner and b) have more than £5k equity. As for reduced sum offers -- put yourself in the place of a creditor --- you can accept pennies in dividend payments over the years ( much of which will disappear in administration costs) whilst your books are burdened with toxic debt (not good from a business angle), you can sell the debt on for, maybe, 10 p in the pound or less and cut your losses, or you can accept an offer from the debtor. Whichever makes the best businesss sense is the one to go for. Hanging out for 5 years to get a few pennies more is a gamble -- the debt is on the books all that time, at any time the debtor could throw the towel in or have circumstances overtake them so that they never get as far as equity release and al the time it is costing you money.
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Lisa Thomas
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by Lisa Thomas » Mon Mar 12, 2018 9:38 am
It depends on which terms you have used.

As Foggy says the 'standard' protocol terms are 5 years - not everyone will have a property, or sufficient equity in one, for the year extension to kick in.

I presume you are confident your share of equity is over £5k?

Remember it is not your IP that makes the decision. Also don't let them know the total your Dad can afford as they may advise you to offer the total available.
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Leed015
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by Leed015 » Mon May 14, 2018 8:03 pm
Hi Lisa,

I have spoken to my IP and they said they can't advise on whether they think my offer will be accepted and that I just have to put it forward.

They also said I need to write a letter stating why I want to and my IVA early, but they didn't really elaborate. Are some reasons more favourable than others to the creditors? I just want dine with it basically, but I don't want to seem to blunt.

Also, my dad doesn't actually have the funds available right away, but they said they need a bank statement showing the funds. Is this normal?

Thanks,

Lee

Lisa Thomas wrote:
It depends on which terms you have used.

As Foggy says the 'standard' protocol terms are 5 years - not everyone will have a property, or sufficient equity in one, for the year extension to kick in.

I presume you are confident your share of equity is over £5k?

Remember it is not your IP that makes the decision. Also don't let them know the total your Dad can afford as they may advise you to offer the total available.
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Foggy
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by Foggy » Tue May 15, 2018 6:43 am
It is standard practice to need to verify the source and the existence of the funds under money laundering regulations, although some IP's are more meticulous than others.

As for reasons, the more compelling the better, but just wanting to get on with life is a valid one.
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Lisa Thomas
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by Lisa Thomas » Tue May 15, 2018 8:20 am
There are some standard letter templates on this site you could use as a starting point - see 5 & 6.

https://www.iva.co.uk/download-letter-templates-summary

I would add that any monthly contributions made whilst the variation is decided upon by creditors, will be deducted form the lump sum etc.

Best of luck.
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