Early settlement/Full and Final

[JustPlainStupid]

I've just contacted my IVA co to ask about an early settlement based on my ex offering to buy my share of the house for the purposes of early settlement.

I'm 4 years in with the original debt being around the 55k mark. Due to changes in circumstances, I'm on track to hit 100p in the £ including all fees. At the moment I'm paying about £1800 a month back. This would see me hit 100% in about December 2020 as I missed a couple of payments early on.

So, I'm assuming my £1800 includes fees to the IVA co. Are these ongoing fees? i.e. If I've got 27k left to pay if it goes full term, would this reduce by an amount equivalent to the fees for the next 15 months?

I'm just trying to work out what might be a good starting point to make an offer.

Cheers
A

[Foggy]

Fees are generally a percentage of the money you pay in and, so will not diminish by early payment.

Settlement, is not the same as a full and final offer- In a settlement you pay oiffthe balance of the original debt,plus fees and statutory interest. In a F&F you pay the remaining agreed payments (plus 12 in lieu of equity).

On a £55k original debt settlement would be roughly £80k,less what you have paid so far.

[JustPlainStupid]

Yep in terms of figures, you've pretty much hit the nail on the head. I just dug out a letter. Lots of numbers that I'm not 100% sure of. Maybe you can help throw some light, please.

This is from a "variation proposal" when they increased my payments.

Payments to date: £54468
Total claims: £66980 (There were 2 that came in after the IVA started, hence the increase from £55k)
Total Fees: £15233
Total debt: £82213

Which leaves £27745

Is that right? So, to "settle", I have to pay £27745? or about 15 more payments. This would put me at 5 years and 3 months to hit 100p/£. If I was going to be less than 100% then I'd be looking at a 6th year anyway so this is no surprise.

As a rough guess, what do you think this could look like as a full and final?

I'm going to struggle to get the ex to help me by putting anything in writing to say that her buying me out is for the sole purpose of a full and final. If it's going to knock £500 off then I'd rather not jump through the flaming hoops she'll set up. If it's going to be significant then I'll prostrate myself at her feet and beg

Thanks in advance!

[Foggy]

If you wanted to "settle" on those figures, unless this has been specifically excluded, you might have to add statutory interest at 8% per annum, simple, on the reducing balance.

You have around 12 months to term, but a full and final would need to address equity anyway and add 12 months payments. It is too close to call which option would be better, considering the statutory interest question and how the house was dealt with in your proposal at the start. You really need to sit down with your IP to get to the nitty gritty.

[JustPlainStupid]

Cheers again, Foggy.

I e-mailed FJ and they just came back to say that to "settle" is going to be £27,132.

You say "it's too close to call which option would be better"

Does this mean - wet finger in the air type estimate - that it is unlikely to make a massive difference if I jumped through hoops and tried to go for F&F? The ex's mortgage has been agreed. She has until 3rd Dec to sort this or she has to apply again. It's probably in my interest to just get on with it!

My feeling at the moment is that I'm probably going to make another 2 payments which will bring it to £23,500 ish. At that point, I'm £1,768 per month better off. If I draw on all the self discipline I can muster then I'll get that back in 13 months if I can pay it into a separate account and forget about it. I'd be stuck paying it anyway so it shouldn't make any difference.

So, what will happen? She gets the money for the mortgage and her solicitor does what with it?

A. Sends £27,132 to Freeman Jones and gives me the balance?

B. Gives it to me and my responsibility is to give it to FJ?

C. Gives it all to FJ and I have to trust them to give me back what I owe?

[Foggy]

I am neither qualified nor comfortable making this call --- it has to be yours to make.

As for the questions you pose regarding the mechanics -- Has a restriction been placed on the property by yout IP ? If so, the selling solicitors would need to liase with the IP to get it removed. In this case the IP will require an undertaking (sort of binding professional promise) to forward the funds agreed direct from solicitor to IP. I imagine the balance of your share would then be passed on to you afterwards. In any event your IP should be directly involved.

[JustPlainStupid]

I think I'm just going to go with it. With the way my payments have been, the risk for them is small, I think. Just over a year and they'll have the lot so why would they accept a F&F now? I'd rather not have to deal with the stress of trying to negotiate.

Restriction on the sale of the property... I'm not sure that it has. I know they sent my ex a form to fill in right at the start. She didn't/wouldn't do it. I think they chased it up once when it was Harrington Brooks but I'm pretty sure she still didn't fill it in. Is that the only way they could place such a restriction?

You've raised an interesting point about "selling solicitors". The way it's gone so far is that my ex said "I want to buy you out. I can afford 'x'". I said "Yep, sounds fine to me". Our original mortgage co agreed to lend her the money. He solicitor - only acting for the financial bit of the divorce, not the legal bit - asked me for some stuff like payslips and P60s, which I have provided. And that's how it's been. I haven't even bothered getting a solicitor. I just assumed that when she got the money from the mortgage company, I'd give them my bank details and that would be it.

[Foggy]

As it is basically a transfer of title from joint to sole I suppose that you don't really need a solicitor, if you are 'happy' with the agreement and arrangements.

If I were you I would probably be taking the same line and just get everything done and dusted to be able to draw that line in the sand.

Best of luck with it --- I hope everything goes as smoothly as it can.

[kallis3]

If a restriction was placed on your property it cannot be sold without your IP's permission.

[JustPlainStupid]

Thanks, Foggy. Fingers crossed!

@kallis - I'm in contact with Freeman Jones about this. I don't know if there is a restriction. I know they sent the ex a form (RX1?) but she never signed it as far as I know. As the figure they have given me is to complete the IVA including the original debt and all fees, I can't imagine the IP complaining! And the house isn't technically being sold. I guess it could be said that it is being sold by me and my ex to just my ex but I don't know how it's looked at. But I think that's all academic if I'm going to end up paying 100p/£ plus fees anyway.