IVA extended, I might pay more than i owed. Is this normal?

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Altoy83
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by Altoy83 » Fri Sep 15, 2017 1:38 pm
I have just been sent a letter from McCambridge Duffy stating that my iva will be extended by 12 months due to being unable to release equity from my home.

At the start the total debt was £23,750, with the agreed payback claim being £22,315.61.

In the letter I received 29th March 2017 it states I have repaid £17,136.50 plus £3,455.15 through the 'overtime, bonus, commission clause'

This gives a total of £20,591.65

Add on top of this the remaining payments up to may 2018 @ £401 per month, gives a total of £26,205.65 (more than the initial debt!)

If there was a further 12 months of payments it would equate to a total of £31,017.65.

This is £7,267.65 more than the initial debt

Is this correct, as it doesn't seem fair at all

Thanks in advance
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Foggy
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by Foggy » Fri Sep 15, 2017 2:44 pm
During an IVA you owe the full original debt, plus fees as well as possible statutory interest, so, yes, you can end up "paying more than the original debt" --- however, this is probably a lot less than you would have paid to clear the debts had the creditors been adding statutory interest (assuming you would have been able to make the payments --- the chances are that you would have merely paid the interest in the last 5 or 6 years and still owed the original amount.
Altoy83
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by Altoy83 » Fri Sep 15, 2017 2:58 pm
Thanks for the reply...

Surely £7000 plus, is a lot of 'fees' to pay a company to get out of debt?

Also, what do you mean by statutory interest? I was under the impression all interest was frozen on the debt?

Thanks
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kallis3
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by kallis3 » Fri Sep 15, 2017 3:02 pm
Statutory interest is different to the interest charged by creditors.

Your fees would have been agreed by your creditors at the meeting and are not excessive.
Altoy83
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by Altoy83 » Fri Sep 15, 2017 3:30 pm
kallis3 wrote:
Statutory interest is different to the interest charged by creditors.

Your fees would have been agreed by your creditors at the meeting and are not excessive.


So if the fees were agreed and accepted by the creditors, why I am required to pay the extra £7000, I don't understand that at all.
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Foggy
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by Foggy » Fri Sep 15, 2017 3:35 pm
Altoy83 wrote:
Thanks for the reply...

Surely £7000 plus, is a lot of 'fees' to pay a company to get out of debt?

Also, what do you mean by statutory interest? I was under the impression all interest was frozen on the debt?

Thanks



Fees are agreed with the creditors and are typically 15% of realisations (though sometimes on a time spent basis). This will be detailed in your Chairman's Report. Additionally there are about £1500 nominees fees (setting up the IVA).
Statutory interest is sometimes excluded .. but, if not, is 8% per annum simple, calculated on the reducing debt balance. What is frozen is contractual interst ( that you agreed to pay when you took out the loan). You only pay statutory interest when you manage to repay the full original debt, so, in most cases, the question never arises.
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Foggy
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by Foggy » Fri Sep 15, 2017 3:37 pm
Altoy83 wrote:
kallis3 wrote:
Statutory interest is different to the interest charged by creditors.

Your fees would have been agreed by your creditors at the meeting and are not excessive.


So if the fees were agreed and accepted by the creditors, why I am required to pay the extra £7000, I don't understand that at all.



Fees come out of your payments -- the fees are agreed (and often set ) by the creditors at the initial meeting. They only effect those who, like you, have managed to repay the whole debt.
Altoy83
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by Altoy83 » Fri Sep 15, 2017 3:42 pm
Foggy wrote:
Altoy83 wrote:
kallis3 wrote:
Statutory interest is different to the interest charged by creditors.

Your fees would have been agreed by your creditors at the meeting and are not excessive.


So if the fees were agreed and accepted by the creditors, why I am required to pay the extra £7000, I don't understand that at all.



Fees come out of your payments -- the fees are agreed (and often set ) by the creditors at the initial meeting. They only effect those who, like you, have managed to repay the whole debt.


So I'm worse off for repaying the whole debt?
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kallis3
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by kallis3 » Fri Sep 15, 2017 3:47 pm
No - just think how much you would still have been paying if you had not done an IVA
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Foggy
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by Foggy » Fri Sep 15, 2017 4:15 pm
Not really worse off -- just had no debt written off. Everyone pays whatever they can afford over the term, but, at the end of the da, we are all better of than we would have been without the IVA.

By my back of a fag packet calculations, if no statutory interest is applied, you could well end the IVA early.
Altoy83
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by Altoy83 » Sat Sep 16, 2017 8:41 am
Well thanks for the info, it means a lot that people will take time out of their busy schedules to offer other people advice!!

Do you think it is a reasonable request for me to ask for a breakdown of all fees, interest etc.. from them?

Also, how would I know if I could complete the iva early?

Again, thanks a tonne!!
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Foggy
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by Foggy » Sat Sep 16, 2017 9:13 am
Altoy83 wrote:
Well thanks for the info, it means a lot that people will take time out of their busy schedules to offer other people advice!!

Do you think it is a reasonable request for me to ask for a breakdown of all fees, interest etc.. from them?

Also, how would I know if I could complete the iva early?

Again, thanks a tonne!!


A breakdown is a reasonable request -- after all it is your IVA. There wouldn't be any interest applied as yet (if they are going to apply any anyway ).Once and if you hit the "magic figure" your IP will tell you to stop payments.
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Michael Peoples
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by Michael Peoples » Mon Sep 18, 2017 10:05 am
We will provide a breakdown of all receipts and payments and it is possible that your IVA will complete before the end of the extension period. If you speak to someone in supervision they should be able to advise what has been paid to date and what is left to repay in full. We should be able to give an idea of when the IVA will close which of course will be subject to change if there are overtime payments etc.

I hope this helps.
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