Part-time work & Settling before IVA?

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chrissy7
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by chrissy7 » Tue Jan 02, 2018 7:41 pm
I am in financial difficulty following a restructure at work where the only position I was offered had fewer hours. I haven't yet missed a payment but may have to soon.

I've already learnt a lot from reading this forum and understand that if I start an IVA working part-time then there is a reduced incentive to go full-time in future because you only keep the half the extra.

(1) If I did an IVA would it be in my interest to maintain my part-time hours? Can creditors look at my SOA and insist upon me finding a full-time job elsewhere?



An IVA would likely write off 75% of money owed. This is appealing because I would be able to afford the repayments. The amount owed is around £32,000 and the likely amount creditors would receive in an IVA is £8,000 (£133 x 60).

Upon finding out that an IVA for me would pay back a quarter of the money owed, a family member has very kindly offered a lump sum of £8,000 conditional upon it being used to offer to creditors as a full and final settlement.

(2) Can this be done before starting an IVA? Would you have to write to each creditor separately showing balances of all other creditors to explain what percentage they would get?

(3) Is it legally binding if on a "without prejudice" letter with this wording? https://www.iva.co.uk/letter5-offer-of-full-and-final-settlement So they can't chase you, default you, or apply for a CCJ/bankruptcy in future?

(4) Would it work offering the total of all IVA payments (£8,000), and would it even work with a lower amount as creditors would receive the settlement immediately rather than over 5 years?
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Foggy
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by Foggy » Tue Jan 02, 2018 7:54 pm
1) Depending on your offer and other circumstances the creditors might ask that you seek full time work.
2) You could do this by writing to each creditor offering a pro-rata amount -- but they might not all agree.
3) An offer outside of an IVA is not legally binding on those creditors who decide not to accept --- so you might need to do an IVA afterwards anyway ! You can, however, do a lump sum IVA, which is an IVA of one payment --- this will bind in all creditors if accepted by a 75% majority (by debt value).
4) Whether it works will depend on the make up (and mood to some extent) of your creditors at the time of the offer, as well as all your other circumstances.
chrissy7
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by chrissy7 » Tue Jan 02, 2018 9:28 pm
Foggy wrote:
You can, however, do a lump sum IVA, which is an IVA of one payment --- this will bind in all creditors if accepted by a 75% majority (by debt value).

Hi Foggy,
Thanks for your detailed answers.

If you do this as a full and final IVA rather than individual settlements,
(3a) Do you you get a completion certificate soon after the meeting to agree the settlement?
(3b) Does this mean you are only affected by the windfall clause up to the certificate date (if soon after the meeting) or up to the full term of a normal IVA?
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Foggy
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by Foggy » Tue Jan 02, 2018 9:33 pm
chrissy7 wrote:
Foggy wrote:
You can, however, do a lump sum IVA, which is an IVA of one payment --- this will bind in all creditors if accepted by a 75% majority (by debt value).

Hi Foggy,
Thanks for your detailed answers.

If you do this as a full and final IVA rather than individual settlements,
(3a) Do you you get a completion certificate soon after the meeting to agree the settlement?
(3b) Does this mean you are only affected by the windfall clause up to the certificate date (if soon after the meeting) or up to the full term of a normal IVA?


A lump sum IVA generally runs for 6 months ( admin time, not extra payments). You will get the completion certificate after the admin has been completed.
You are only affected by the windfall clause up until the issue of the certificate.

Also - The IVA will still trash your credit records for the full 6 years
chrissy7
Posts: 6
by chrissy7 » Wed Jan 03, 2018 1:23 am
Thanks Foggy. Will creditors agree to an IVA / F&F IVA if you haven't first contacted them about financial difficulties, asking to freeze interest and paying back by arrangement? Should I do this across the board first?

I've discussed my situation with a few places. Stepchange looked at my I&E and suggested that £200/month + 3 months clear statements (no new loans, no gambling transactions) would be accepted by my majority creditors. Whereas Vincent Bond and McCambridge Duffy suggested £150/month + 1 month clear statements and a clause that the IVA will be terminated if those transactions are shown on my statements during the IVA period.

I'm not sure though - I've read that Stepchange lean more to creditors because of how they are financed and that smaller private firms may want a bigger percentage which will affect voting. Would you say VB/MCD tend to quote low or that Stepchange tend to quote high?

I've also read elsewhere that the bigger the debt the bigger the expected payment. In practice it seems this depends on what your surplus is - you can't pay more if you don't have it, right?
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Foggy
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by Foggy » Wed Jan 03, 2018 9:57 am
chrissy7 wrote:
Thanks Foggy. Will creditors agree to an IVA / F&F IVA if you haven't first contacted them about financial difficulties, asking to freeze interest and paying back by arrangement? Should I do this across the board first?

I've discussed my situation with a few places. Stepchange looked at my I&E and suggested that £200/month + 3 months clear statements (no new loans, no gambling transactions) would be accepted by my majority creditors. Whereas Vincent Bond and McCambridge Duffy suggested £150/month + 1 month clear statements and a clause that the IVA will be terminated if those transactions are shown on my statements during the IVA period.

I'm not sure though - I've read that Stepchange lean more to creditors because of how they are financed and that smaller private firms may want a bigger percentage which will affect voting. Would you say VB/MCD tend to quote low or that Stepchange tend to quote high?

I've also read elsewhere that the bigger the debt the bigger the expected payment. In practice it seems this depends on what your surplus is - you can't pay more if you don't have it, right?



No, you do not have to have negotiated with creditors before an IVA is sought.

When I went looking at IVA's for mine I went through the Stepchange I&E and they did come in higher than the others. mainly because they did not allow things like newspapers or bus fares and I did not know enough to ask. Stepchange and most other firms get paid the same amount, in the same way, as agreed by the creditors. There are a few firms, these days who are trying (with mxed results) to get more, but the creditors usually put a cap on it.
The expected payment is what you can reasonably afford whilst still being able to live. Obviously creditors would look more kindly on a higher return in relation to the debt amount but they will look at it in terms of "would they get more by pursuing other solutions / enforcement?", which is often, surprisingly, not the case.
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