IVA fraud??

Get expert opinion. This is the place for new questions to be posted.
9 posts Page 1 of 1
User avatar
john557
Posts: 4
by john557 » Thu Sep 13, 2018 6:44 pm
Hi there,

I have been in an IVA since August last year my finances were very bad at the time and was struggling to pay my Debts, but times have started looking good and since May this year I have been able to pay myself an increased wage. I have however failed to notify the IVA of this increase as I didn't think it was a sustainable income (Self Employed). Since then this income has become a regular amount every month and this morning I phoned my IVA company to cancel it. I am going to go back to my creditors and pay off 5 of my 6 debts and the 6th offer a considerable increase on what I was originally paying them (double).

My Question is that I have seen a horror story about a woman that was jailed for IVA fraud for not declaring her correct income on starting the IVA, obviously when I started the IVA all the details were correct but since then things are good and I can now afford to pay the debts and start again. Would there be any risk of myself being charged as I was not honest with them in the last 3/4 months?

Thanks in advance
John
User avatar
Foggy
Forum Expert
Posts: 26893
Contact
by Foggy » Thu Sep 13, 2018 6:54 pm
john557 wrote:
Hi there,

I have been in an IVA since August last year my finances were very bad at the time and was struggling to pay my Debts, but times have started looking good and since May this year I have been able to pay myself an increased wage. I have however failed to notify the IVA of this increase as I didn't think it was a sustainable income (Self Employed). Since then this income has become a regular amount every month and this morning I phoned my IVA company to cancel it. I am going to go back to my creditors and pay off 5 of my 6 debts and the 6th offer a considerable increase on what I was originally paying them (double).

My Question is that I have seen a horror story about a woman that was jailed for IVA fraud for not declaring her correct income on starting the IVA, obviously when I started the IVA all the details were correct but since then things are good and I can now afford to pay the debts and start again. Would there be any risk of myself being charged as I was not honest with them in the last 3/4 months?

Thanks in advance
John


A lot would depend on the amounts involved and the opinion of your IP. Dealing with the self employed is not quite so black and white as with those on PAYE and standard practice is often modified to reflect individual circumstances.
User avatar
john557
Posts: 4
by john557 » Thu Sep 13, 2018 7:06 pm
Foggy wrote:
A lot would depend on the amounts involved and the opinion of your IP. Dealing with the self employed is not quite so black and white as with those on PAYE and standard practice is often modified to reflect individual circumstances.


Thanks for your reply. I am not sure I follow? So are you saying that I could be in trouble and face prosecution?

Apologies I didn't really explain myself properly I am PAYE (though my own LTD company) but I have paid the income as a dividend. Surely now that I am paying the debts back in full I shouldn't have any issues right?

Thanks in advance
John
User avatar
Foggy
Forum Expert
Posts: 26893
Contact
by Foggy » Thu Sep 13, 2018 7:35 pm
OK -- standard practice (assuming you have the standard clauses) is that a pay rise (as opposed to overtime / bonus payments) is to be reported to the IP when it happens, but that the increase is only taken into consideration following the next annual review. If this is the case, the only thing you are "guilty" of is neglecting to inform them of the rise for the purposes of information only.
User avatar
john557
Posts: 4
by john557 » Thu Sep 13, 2018 7:55 pm
Foggy wrote:
OK -- standard practice (assuming you have the standard clauses) is that a pay rise (as opposed to overtime / bonus payments) is to be reported to the IP when it happens, but that the increase is only taken into consideration following the next annual review. If this is the case, the only thing you are "guilty" of is neglecting to inform them of the rise for the purposes of information only.


Thanks Foggy, just reading the IVA agreement and it does state pretty much what you have said.
User avatar
luluj
Forum Expert
Posts: 10218
Contact
by luluj » Fri Sep 14, 2018 6:01 am
Its great you now are in a position to pay your debts however would it not be better to work with your IP and suggest a full and final offer to your creditors offering them 100% of the original debt.
You may want to consider seeking approval to "remove" the statutory interest that creditors may seek from your via the full and final.

Your credit file will still continue to show the iva until the 6th anniversary of your start date of the iva.
User avatar
Lisa Thomas
Industry Expert
Posts: 6869
Contact
by Lisa Thomas » Fri Sep 14, 2018 8:19 am
It is a risk failing the IVA - you need to ensure all creditors will accept your payment terms before failing it otherwise you will be back to square one - with the full amount of debt, plus contractual interest, plus any shortfall due for the IVA costs. Creditors will be able to take recovery action against you, which could include Bankruptcy.

Over what period are you planning on paying the debts off (outside of the IVA)?
User avatar
john557
Posts: 4
by john557 » Sat Sep 15, 2018 8:04 am
Lisa Thomas wrote:
It is a risk failing the IVA - you need to ensure all creditors will accept your payment terms before failing it otherwise you will be back to square one - with the full amount of debt, plus contractual interest, plus any shortfall due for the IVA costs. Creditors will be able to take recovery action against you, which could include Bankruptcy.

Over what period are you planning on paying the debts off (outside of the IVA)?


Thanks for you response. 5 of the 6 debts will be paid in 1 payment in full. The bigger one which is about 16k I will make an offer of £1,000 a month, my original payment was £450 p/m on the loan. Is this not reasonable?

From what I understand the IVA payments in the first 2 years only goto the IP to cover there fees and that my creditors haven't received any payments from myself yet?

I did speak to my IP and offered them £1,500 p/m but they said that I would still be paying it for 3 years... Which would take the payments to £54,000 and considering I only owe around 24k I thought it was a little excessive?

Thanks for your reply(s) in advance.
John
User avatar
Foggy
Forum Expert
Posts: 26893
Contact
by Foggy » Sat Sep 15, 2018 8:18 am
£54k to settle a debt of £24k, fees and statutory interest over 3 years is excessive. I would have thought something in the region of £35k more reasonable. However ... that boat is sailing.

You are correct in that some of the fees are taken out in the first few months (depending on the agreement between IP and creditors in this regard). This usually covers the Nominees fees and is often limited in time or amount by the creditors. The balance of the fees, usually (but not always) time or, more often, percentage based are taken as they accrue along the way.
9 posts Page 1 of 1
Return to “Ask IVA Forum and Industry experts”

Who is online

Users browsing this forum: No registered users and 21 guests