Is there any way of avoiding accumulated interest/charges when settling an IVA .

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by fred836 » Thu Mar 30, 2017 8:47 pm
I am about to settle an IVA early (after 4 years as my wife inherited enough money to fully clear it but the company stated that the original creditors will add back on the interest and charges that have been accumulating over the past 4 years which to us seems harsh. Is there anyway to avoid the charges atleast if not the interest as well? Thanks for any responses
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by luluj » Fri Mar 31, 2017 2:02 am
Presuming your wife is not in an iva herself or is connected to any of your debts at all - You can ask for a full and final offer be put to creditors to remove statutory interest element - your third party 'gift' should be offered on the basis it is for closure purposes only and not available to you should it be declined.
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by Foggy » Fri Mar 31, 2017 6:52 am
Hi -- as Luluj said -- if your wife does noty have an IVA then, assuming also that the inheritance is hers alone, the money is hers and the IP has no call on it.

Now ... "settlement" is the wrong term for what you need do ( and is far more expensive ). You need to offer your remaining payments (adding 12 if there is equity to be addressed) in a lump sum, gifted by a third party (the wife) in "full and final settlement".

Your advisor seems a little muddled in that the creditors will ony add back lost contractual interest and charges if you allow the IVA to fail. In a "settlement", mentioned at the start of the paragraph above, they would be expecting the balance of the full original debt, plus fees, plus statutory (not contractual) interest, currently at 8% p.a simple.
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Lisa Thomas
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by Lisa Thomas » Mon Apr 03, 2017 1:56 pm
As Foggy says you need to be clear on what you have asked your IP for.

A full and final payment will be based on a lump sum offer, usually equal to the amount of payments you have left to make. The IP won't give you this figure as it is up to you to make an offer to creditors.

Settlement means paying off the balance of your debts, interest and costs in full which tends to only apply if you receive a windfall or have sufficient income to cover this which is completely different.
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