Paying off the whole IVA debt early.

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Stevedgn68
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by Stevedgn68 » Tue Feb 20, 2018 4:45 am
I am in a "big" 6yr IVA and have paid on time for 4yrs of this so far. I have a pension pot that exceeds the amount of the original debt managed under my IVA. When I took out the IVA 4yrs ago I was told that the pension pot would be "safe" when going into the IVA and would not be included in funds to be raised for creditors.

Now that there is more freedom about releasing funds from a private pension I have decided that I want to clear the full, remaining amount of IVA by cashing in most of my personal pension. I understand the tax implications of this. This will allow us to take out some capital from the property through an a small equity release and clear our interest-only mortgages which are coming to completion date in a few years time. We have no means of rolling these over. The equity release will allow us to remain in our home.

As background, my partner is now 76 and I am 64. Jointly we will have a pension of £38k after I turn 65 in a few months time - £29k of that is my partner's pension. Our ages are the main reasons for us to do this now.

What are your thoughts about this? Will it be seen positively by the Supervisor and Creditors as they will receive all the debt owed - minus payments made over the last 4yrs I hope.
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Foggy
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by Foggy » Tue Feb 20, 2018 7:56 am
Paying all the debt is a bit of an overkill and, frankly a waste of hard saved pension. Rather than that why not offer a full and final based on the amount of remaining payments ? As home owners your 6 year IVA will probably have an extra year tacked on, so count those payments in as well.

Do not draw anything until your crteditors have agreed to a F&F --- at this stage you are only considering and offering to draw the pension if they accept. If they do not accept then you will leave the pension where it is (as far as they are concerned).

Depending, of course, on the relative amounts, this will use less of your pension funds, leaving some for your use in retirement --- you do not want to leave yourself destitute in the future.
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Lisa Thomas
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by Lisa Thomas » Tue Feb 20, 2018 9:18 am
Why pay off everything in full when you don't have to? Bear in mind you will have to pay statutory interest plus costs so the settlement figure could be very high.

You will be losing some of your pension/property.

Instead why not put forward a full and final from the pension proceeds based on the number of contributions you have left, as Foggy has suggested?

My quick F&F video is here:

https://youtu.be/h4dozq9aGak

How much was your original debt?

How much are you monthly payments?
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Stevedgn68
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by Stevedgn68 » Thu Mar 08, 2018 2:34 am
Many thanks Foggy and Lisa .

Lisa, the original amount was £77k (I said it was big!), and currently I am paying £503pm. However this goes up annually by £15 which was a stipulation that my largest creditor demanded. They also insisted on a 6 year term and I have just made the 51st month payment.

Looking forwards, the total remaining repayments are just under £18k. This is taking account of the 7th year which will have to be paid in lieu of an impossible/impractical re-mortgaging considering our ages. I need to double-check "early completion" charges too and its possible that I need to double-check the remaining months.

As an aside do I contact my Supervisor with that figure or ask them to provide me with a full and final payment figure? The latter seems risky as they may just quote as high a figure as they think that they can squeeze out of me. Do I mention that the money is coming from a pension pot when I first make contact with my Supervisor?

Sorry to be so dumb!

I was with DFD and following the takeover I am now under Aperture.

Many thanks for an additional input.

Steve
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Stevedgn68
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by Stevedgn68 » Thu Mar 08, 2018 2:43 am
Stevedgn68 wrote:
Many thanks Foggy and Lisa .

Lisa, the original amount was £77k (I said it was big!), and currently I am paying £503pm. However this goes up annually by £15 which was a stipulation that my largest creditor demanded. They also insisted on a 6 year term and I have just made the 51st month payment.

Looking forwards, the total remaining repayments are just under £18k. This is taking account of the 7th year which will have to be paid in lieu of an impossible/impractical re-mortgaging considering our ages. I need to double-check "early completion" charges too and its possible that I need to double-check the remaining months.

As an aside do I contact my Supervisor with that figure or ask them to provide me with a full and final payment figure? The latter seems risky as they may just quote as high a figure as they think that they can squeeze out of me. Do I mention that the money is coming from a pension pot when I first make contact with my Supervisor?

Sorry to be so dumb!

I was with DFD and following the takeover I am now under Aperture.

Many thanks for an additional input.

Steve




Sorry, please ignore:

""As an aside do I contact my Supervisor with that figure or ask them to provide me with a full and final payment figure? The latter seems risky as they may just quote as high a figure as they think that they can squeeze out of me".

I realise its in the YouTube clip.

Steve
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Lisa Thomas
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by Lisa Thomas » Thu Mar 08, 2018 9:31 am
How much equity do you have in the property?

If its under the minimum £5k (assuming you have 'standard' terms then it sounds as if you have c£10k left to pay, if not it sounds as if its c£16k.

Establish which is correct then you know the figure you are basing your offer on.

The more attractive your offer the more likely creditors are to accept it but bear in mind they will potentially be getting their money a lot sooner plus you are saving on 2-3 years of administration costs in the IVA so there should be room for a lower offer.

If they reject your offer you can always put forward another one and propose to increase it.

I would probably offer c£6k or c£10k (depending on which figure is right) to test the water.
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Stevedgn68
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by Stevedgn68 » Mon Apr 30, 2018 9:28 pm
Hi Foggy, Lisa, others
You 2 kindly helped provide some insight when I posted a message about F&F a few months ago and thanks for all the very useful advice already provided
I will be clearing my final payment of c.£15k under F&F (95% of full payments due over balance of period of IVA). The full amount of my IVA was £77k and I am 4.5 years into a 6yr agreement and have paid all the payments on time.
I am 65 and my partner is 76. Even though we have a fair amount of equity in our property (£50k) there will be no chance of re-mortgaging our property so there will be a 7th year of payments due and the above £15k takes account of that.
Picking up on a recent thread about providing Bank statements of the people assisting in the F&F payment, I am concerned about this. I will be specifying in my F&F letter that my sister will be providing the funds but in practice this will be paid out of my private pension pot (which is outside the IVA) once the F&F is agreed. I was advised not to mention that the Pension Pot would be the source as the creditors may seek to take the whole pot to pay into the initial IVA obligations. In reality, asking my sister to show in Bank Statement that she has £15k freely available for the payment will not be possible. She helped prior to the IVA by a smaller amount and that caused a massive problem with the relationship with her husband!
Any thoughts?
One final practical question. When sending in an F&F letter, should it be a physical document or is an email attachment normal these days?
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Foggy
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by Foggy » Tue May 01, 2018 6:55 am
Stevedgn68 wrote:
Hi Foggy, Lisa, others
You 2 kindly helped provide some insight when I posted a message about F&F a few months ago and thanks for all the very useful advice already provided
I will be clearing my final payment of c.£15k under F&F (95% of full payments due over balance of period of IVA). The full amount of my IVA was £77k and I am 4.5 years into a 6yr agreement and have paid all the payments on time.
I am 65 and my partner is 76. Even though we have a fair amount of equity in our property (£50k) there will be no chance of re-mortgaging our property so there will be a 7th year of payments due and the above £15k takes account of that.
Picking up on a recent thread about providing Bank statements of the people assisting in the F&F payment, I am concerned about this. I will be specifying in my F&F letter that my sister will be providing the funds but in practice this will be paid out of my private pension pot (which is outside the IVA) once the F&F is agreed. I was advised not to mention that the Pension Pot would be the source as the creditors may seek to take the whole pot to pay into the initial IVA obligations. In reality, asking my sister to show in Bank Statement that she has £15k freely available for the payment will not be possible. She helped prior to the IVA by a smaller amount and that caused a massive problem with the relationship with her husband!
Any thoughts?
One final practical question. When sending in an F&F letter, should it be a physical document or is an email attachment normal these days?



Hmmm -- it will depend on what your IP asks for -- some are more conscientious than others. A few years ago all they required was a letter confirming the source of the funds ... so fingers crossed.

I imagine an email would suffice to present the offer ---- mine was done verbally.
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Stevedgn68
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by Stevedgn68 » Mon Jun 11, 2018 12:56 am
Hi Foggy, Lisa,

One (hopefully) final question about the wording of the letter offering a Full and Final letter mid-IVA.

I have done the arithmetic again for the total due to be paid. This assumes there will be a 7th year as we definitely won't be able to re-mortgage at 65 and 76). . I am currently 59 months into what will therefore be a 84 month IVA plan The amount due from the remaining payments comes to c£14,500, and I was thinking of offering £12,500. Do you think that is "in the ballpark"? Just a very informal opinion would help..

Also, my objective in doing this now is the health of my partner We are in a Civil Partnership and my partner is 76 and has a number of chronic ailments including Diabetes, Fibromyalgia, heart issues and major skeletal lower back problems. I want to clear the IVA so we don't have it still hanging over my head as he gets older. Would you suggest I mention this in the letter?

As before, any advice is very much appreciated, and thanks in advance.

Steve
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Foggy
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by Foggy » Mon Jun 11, 2018 6:40 am
Stevedgn68 wrote:
Hi Foggy, Lisa,

One (hopefully) final question about the wording of the letter offering a Full and Final letter mid-IVA.

I have done the arithmetic again for the total due to be paid. This assumes there will be a 7th year as we definitely won't be able to re-mortgage at 65 and 76). . I am currently 59 months into what will therefore be a 84 month IVA plan The amount due from the remaining payments comes to c£14,500, and I was thinking of offering £12,500. Do you think that is "in the ballpark"? Just a very informal opinion would help..

Also, my objective in doing this now is the health of my partner We are in a Civil Partnership and my partner is 76 and has a number of chronic ailments including Diabetes, Fibromyalgia, heart issues and major skeletal lower back problems. I want to clear the IVA so we don't have it still hanging over my head as he gets older. Would you suggest I mention this in the letter?

As before, any advice is very much appreciated, and thanks in advance.

Steve


Hi Steve,

In shaving two years administrations costs for both IP and creditors I would think £12.5 k would be looked at seriously (as you know, it is impossible to say for definite. I have seen an offer higher than the outstanding amount refused as well as very low offers accepted). If I was making the offer I would mention the health issues as every bit of ammunition will help. To be blunt, they also reinforce the "bird in the hand" element .... i.e. Get a cash lump sum now, while it is offered, rather than risk getting nothing more if the IVA fails due to ill health.
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Lisa Thomas
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by Lisa Thomas » Mon Jun 11, 2018 8:15 am
I would offer £10k.
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Lisa Thomas
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by Lisa Thomas » Mon Jun 11, 2018 8:15 am
As it gives you some wriggle room but don't disclose you can afford more.
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