Extra income clause

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Itsallouttherenow
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by Itsallouttherenow » Wed Mar 28, 2018 3:23 pm
Hi

I have received our engagement letter and note the clause re extra income. I have emailed our IP for clarification but wanted to ask on here too!

With reference to the below statement-
"If not already done the debtor(s) income must capture overtime, commission or bonuses
earned. The debtor(s) were made aware that if any of this additional income is greater than
10% of normal earnings then 50% will have to be paid into the arrangement within 28 days
of receipt."
I receive a quarterly bonus which is paid in Feb, may, Aug, and Nov. These are guaranteed and increase my net take home pay by £261. Usual take home is £1271.
Am I correct in saying that this would mean 50% of my take home quarterly bonus would need to be paid into the IVA? So approx £130.
Or as it is paid quarterly....and then if averaged out on a monthly basis to be an extra £87 take home a month, this would equate to less than 10% of normal earnings. Therefore the 50% wouldn't need to be paid into the IVA??
If you can clarify this then that would be great!
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Foggy
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by Foggy » Wed Mar 28, 2018 3:34 pm
Income is generally taken on a month by month basis, so, although it is for a quarter it will be deemed to be for that month.

You need to clarify the wording and the application of the clauses: Normally there is, as mentioned, a 10% disregard. But the 50/50 split is usually then applied to the balance, not the whole bonus. Yours appears to have been either written or interpreted differently -- check the wording in the actual proposal.

Usiung the usual application of the 10% 50/50 rule, on your figures, it would normally be:

Normal take home £1271 ... 10% = £127
Bonus £261 ... less the 10& above = £134 to be split 50 / 50
So you pay to the IVA £67 ...around half of the way they seem to be doing it. BUT --- if that is the way your clause is written, that is the way it should be done. I didn't get the 10% disregard at all in my arrangement as it was written as a straight 50/50 split.
Itsallouttherenow
Posts: 25
by Itsallouttherenow » Wed Mar 28, 2018 5:04 pm
Thanks for the reply foggy!
I am going to get a call from them tomorrow to confirm but as it stands the latter of the two scenarios is what has been agreed on apparently. As the bonus is quarterly, they spread over the 3 months, which then takes it below the 10%.
I guess the wording in the final proposal is what will stand.
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Foggy
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by Foggy » Wed Mar 28, 2018 5:44 pm
Itsallouttherenow wrote:
Thanks for the reply foggy!
I am going to get a call from them tomorrow to confirm but as it stands the latter of the two scenarios is what has been agreed on apparently. As the bonus is quarterly, they spread over the 3 months, which then takes it below the 10%.
I guess the wording in the final proposal is what will stand.



I am guessing that the fact that the bonus is regular and guaranteed will make a difference as to how it is treated. At least they aren't treating it as regular income and taking the lot as part of your disposable income (it has been done!) -- but we don't want to plant that particular seed !!
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Lisa Thomas
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by Lisa Thomas » Thu Mar 29, 2018 9:01 am
There is usually a clause somewhere that says if the terms of the proposal and the R3/Protocol terms contradict each other then the proposal terms with override the T&Cs.

Hopefully your IP will clarify and action the clause as it was intended...
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Lisa Thomas
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by Lisa Thomas » Thu Mar 29, 2018 9:04 am
*will
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