IVA Offer declined...

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IvaIn2018
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by IvaIn2018 » Tue Feb 13, 2018 4:03 pm
Hello all

I had an IVA proposal put together for three debts, the primary being 62k of negative equity from my previous home. The other debts were for both les than 1k for a credit card and a small bank loan.

Through my IP, I had a proposal of an IVA settlement of a 25k lump sum after NRAM, my mortgage provider, refused to deal with the debt on an informal process (which was my ideal from the outset)

Anyhow, creditors meeting was on Monday and all voted against the IVA - I say all, but they were represented by the one agency.

My IP has now come back suggesting that modifications be looked at. I can't afford much else other than a token payment of £100 a

month as a token payment. Has anyone had success with a lump sum and token payment? Ideally I dont want something subject to annual review


Thanks!
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Foggy
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by Foggy » Tue Feb 13, 2018 4:24 pm
Any IVA will be subject to an annual review I am afraid. Ongoing payments will be calculated from your income less essential living expenses. Are you currently a homeowner ?
IvaIn2018
Posts: 14
by IvaIn2018 » Tue Feb 13, 2018 4:31 pm
Not a home owner no...


My excess income apparently (!) is 570 a month. I dont really agree with this figure but thats what the IP has come up with. That over 60 months is 34,200

I offered 25k raised from family as a settlement, they declined it

I had thought of offering 100 a month as a token payment in addition to 25k might be an option. That would be 31k in total of a settlement...

I have to pay the lump sump back so its not really an alternative to a monthly payment other than its a debt with family rather than to creditors.

So, I basically need to come up with modifications now that wont bury me in debt over 60 months or have lots more grabbed off me should my financial situaton even modestly improve :(
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Foggy
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by Foggy » Tue Feb 13, 2018 5:03 pm
Ah -- OK -- you wouldn't be allowed to repay the lump sum in an arrangement with a continuing payment.

In an IVA, should you get extra income only around half of it would go to the IVA,so you would be a bit better off. Is there any reason you have rejected bankruptcy ?
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size5
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by size5 » Tue Feb 13, 2018 6:19 pm
You will never get a single premium IVA accepted when you have a surplus income as well, creditors will want both.

If the lumps um is from a 3rd party, you can withdraw that and offer a monthly payment instead, but then you will be subject to annual review, and creditors will want what is fair as a monthly payment, not what you would ideally want to pay.

Your original plan to offer a lump sum informally is still your best bet. You can approach a charity to help, National Debtline and CAB are pretty good, but you do run the risk of rejection again.

Maybe you could also consider making token payments of £1 per month for 6 months and then try again re an informal settlement but it does look very much as if your creditors have decided to play hardball with you on this one I'm afraid.

Regards.
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Lisa Thomas
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by Lisa Thomas » Wed Feb 14, 2018 9:20 am
Why have you discounted Bankruptcy as an option please?

Do you have other assets to protect?

You will only pay income contributions for 3 years in BKY.
IvaIn2018
Posts: 14
by IvaIn2018 » Wed Feb 14, 2018 11:12 am
Thanks for the replies all


Bankruptcy was put to the creditors in a comparison to what they would get from it compared to the IVA but hasn't been completed ruled out by me yet.

I guess the bankruptcy stigma is the main reason I haven't gone for it yet...

The lump sum option has been rejected now which I can do nothing about but I'm concerend about an IVA with annual reviews because I can move to a role within my job that will generate more overtime. Now, I understand that the creditors can take up to 50% of the OT but the issue is that the OT isn't guaranteed nor would I be able to work it consistently. So once P60 time comes around and my earnings are higher because OT is available and I've worked my a**e off, they will expect that my income is now always going to be substantially more. If OT dries up, which it probably will, or I burn out through fatigue, equally likely, I'm worried by IVA will fail. Is this a reasonable assumption?

The bankruptcy option over 3 years alleviates this problem a bit and I have no assets to protect... Just the embarssment reporting to work (Public Sector employee) and also huge difficulties in obtaining credit in the future
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Lisa Thomas
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by Lisa Thomas » Wed Feb 14, 2018 11:14 am
The damage to your credit rating for 6 years will be the same in Bankruptcy and IVA.

It seems BKY is the best route for you and will not only shave off a couple of years worth of contributions but also save the third party their lump sum.

There is a possibility their lump sum funds could be used to potential do a deal with the Trustee in Bankruptcy to pay the 3 years contributions up front.
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Foggy
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by Foggy » Wed Feb 14, 2018 11:25 am
As a Public Sector employee BR might be ruled out -- check with HR anonymously. But, if they are happy with it, seems the best route.

Regarding IVA and overtime --- this is treated as "Extra Income" and not rolled into your regualr contracted salary. It is accounted for each month and paid in to the IVA each month. If you have the usual clauses -- we refer to them as "10% 50/ 50 clauses" (mine was straight 50/50 !) on made up monthly figures:

Usual monthly pay £2500 (baseline contractual pay as agreed with the IP at the start of each year)
Overtime this month £300

10% disregard ( this is 10% of usual pay) £250 -- you keep this.
50/50 split of the remaining £50 --- you keep £25 and pay in £25

So, you see that you actually get to keep most of the overtime in this example.
IvaIn2018
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by IvaIn2018 » Wed Feb 14, 2018 12:48 pm
Lisa Thomas wrote:
The damage to your credit rating for 6 years will be the same in Bankruptcy and IVA.

It seems BKY is the best route for you and will not only shave off a couple of years worth of contributions but also save the third party their lump sum.

There is a possibility their lump sum funds could be used to potential do a deal with the Trustee in Bankruptcy to pay the 3 years contributions up front.



Thats interesting that there may be a possibility of a deal with the Trustee to pay the 3 year contributions up front - this could be done...

With that in mind, is that then treated as a full and final settlement?
IvaIn2018
Posts: 14
by IvaIn2018 » Wed Feb 14, 2018 12:52 pm
Foggy wrote:
As a Public Sector employee BR might be ruled out -- check with HR anonymously. But, if they are happy with it, seems the best route.

Regarding IVA and overtime --- this is treated as "Extra Income" and not rolled into your regualr contracted salary. It is accounted for each month and paid in to the IVA each month. If you have the usual clauses -- we refer to them as "10% 50/ 50 clauses" (mine was straight 50/50 !) on made up monthly figures:

Usual monthly pay £2500 (baseline contractual pay as agreed with the IP at the start of each year)
Overtime this month £300

10% disregard ( this is 10% of usual pay) £250 -- you keep this.
50/50 split of the remaining £50 --- you keep £25 and pay in £25

So, you see that you actually get to keep most of the overtime in this example.



I didnt realise there was a calculation like that to be applied. So each month would be treated individually...I have to check with HR about BKY, the IVA option was fine when I checked with them as it was a managed debt problem. I expecgt bankruptcy could be the same
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Lisa Thomas
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by Lisa Thomas » Wed Feb 14, 2018 1:32 pm
IvaIn2018 wrote:
Lisa Thomas wrote:
The damage to your credit rating for 6 years will be the same in Bankruptcy and IVA.

It seems BKY is the best route for you and will not only shave off a couple of years worth of contributions but also save the third party their lump sum.

There is a possibility their lump sum funds could be used to potential do a deal with the Trustee in Bankruptcy to pay the 3 years contributions up front.



Thats interesting that there may be a possibility of a deal with the Trustee to pay the 3 year contributions up front - this could be done...

With that in mind, is that then treated as a full and final settlement?


Any offer should be worded that way, yes but only in respect of the Income Payments Agreement, not other assets.
IvaIn2018
Posts: 14
by IvaIn2018 » Wed Feb 14, 2018 1:33 pm
That sounds ideal...I dont have any other assets at all so no risk of forfeiture. Just wanting a speedy conclusion, it's been 2 years to get me to this point after mortgage mediation failed
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