Repaying IVA in full

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adam689

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Post by adam689 » Wed Jan 02, 2019 8:38 pm
I have been in an IVA with payplan since July 2017. My original debt was £58000 and the original dividend was calculated to be approximately £43000 (60 payments of £720).

In September I split with my ex and subsequently we sold our house. Obviously my share of the equity was payed directly to payplan. With the equity and my previous payments, I have currently paid ~£33500 into my IVA

As I now rent, I had a budget review with my IP and my new monthly payment is now £900.

I am a serving member of the military and have 14 months left of my contract before I am pensioned. At my current rate of repayment, when I leave the military I will have repaid around £46000 of the original £58000 debt.

When I leave the military I will receive a lump sum gratuity of £35000 and a £700/month pension. Am I correct in assuming the £12000 difference will be taken from my lump sum?

Can I expect any additional costs or fees when I reach the original debt of £58000. Also at that point I will only be 3 years into my IVA but I will have cleared the original debt. What will happen to the last two years of the IVA if the debt is completely paid?

Foggy

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Post by Foggy » Wed Jan 02, 2019 8:50 pm
The IVA (and regular payments) will cease early, if and when you pay back the full original debt, plus fees and possible statutory interest. On a debt of £58k, this would amount to around £69k before interest is calculated. S.I is calculated at 8% p.a on the daily reducing balance.

I believe some IP's treat military gratuities differently from civilian lump lum awards, so you would need to check with yours.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
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adam689

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Post by adam689 » Wed Jan 02, 2019 9:02 pm
Foggy,

Thank you for the speedy reply. Ultimately if the fees and costs bring the total up to £69k there would still be more than enough in my gratuity to cover it all. (£12000 difference and £11000 in fees/ costs). I have no problems with paying back what I owe to people and fully believe my creditors deserve to be repaid what they were prepared to lend me.

Would my certificate of completion be issued at that point (March 2020)
I understand that the IVA will show on my credit history until around July 2023, but I would like the whole issue to be closed before I’m only on a pension until I find new employment after military life.

Foggy

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Post by Foggy » Wed Jan 02, 2019 10:10 pm
adam689 wrote:
Foggy,

Thank you for the speedy reply. Ultimately if the fees and costs bring the total up to £69k there would still be more than enough in my gratuity to cover it all. (£12000 difference and £11000 in fees/ costs). I have no problems with paying back what I owe to people and fully believe my creditors deserve to be repaid what they were prepared to lend me.

Would my certificate of completion be issued at that point (March 2020)
I understand that the IVA will show on my credit history until around July 2023, but I would like the whole issue to be closed before I’m only on a pension until I find new employment after military life.
If the full settlement is made the IVA will end early and the certificate of completion issued after the usual formalities, which takes around 2 - 3 months in most cases (sometimes faster, sometimes slower ! ). Then, after three months you will be removed from the Insolvency Register. As you say the IVA will remain on your credit files until the 6th anniversary of the start of the arrangement, but will be marked as completed. Have a read here: https://www.iva.co.uk/what-does-an-iva- ... dit-record
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Visit my blog here : http://foggy.blogs.iva.co.uk/

Lisa Thomas

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Post by Lisa Thomas » Thu Jan 03, 2019 10:09 am
By my calculations the original debt, plus 3 years interest, plus say 15% for costs brings the total needed to c£83k.

Deduct from this say £24k of contributions (3720 x 18 + £900 x 12) will leave c£60k remaining o/s.

Unless and until such sums have been paid in full you would not finish your IVA early.

You might be able to ask creditors to waive their right to statutory interest, assuming interest is payable in accordance with your terms.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

adam689

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Post by adam689 » Thu Jan 03, 2019 10:47 am
Lisa Thomas wrote:
By my calculations the original debt, plus 3 years interest, plus say 15% for costs brings the total needed to c£83k.

Deduct from this say £24k of contributions (3720 x 18 + £900 x 12) will leave c£60k remaining o/s.

Unless and until such sums have been paid in full you would not finish your IVA early.

You might be able to ask creditors to waive their right to statutory interest, assuming interest is payable in accordance with your terms.

Hi Lisa, thankyou for the reply.

I’m unsure as to how early repayments are calculated.

When I reach my gratuity point in March 2020, this is what I will have paid towards clearing the IVA

16 payments of £720 - £11520
17 payments of £900 - £15300
Sale of house. £19000

Total paid. ~£45820

I don’t understand how it leaves a further £40000 to be be payed on an original debt of £58000. I understand interest and fees need to be added but £83000 seems extremely high

Many thanks for your help :D

Foggy

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Post by Foggy » Thu Jan 03, 2019 11:10 am
That £83 k quoted by Lisa includes statutory interest, which might be waived, or even already excluded in the agreement (it was in mine).

So my calcs would be ( and these are back of a fag packet calculations) --- to settle the whole thing:

Original debt £58,000
Fees (generally around 15%, so £8,700, plus Nominees fee and disbursements, usually around £2,000
At the three year mark, considering the reducing balance, statutory interest would come in at around £8,000

Total to settle = £76,700

At that three year mark (gratuity point) you will have paid in the best part of £45,820 (by your calcs) --- leaving £30,880 to clear.

At this point it can go one of three ways:
Either your IP will let you keep the gratuity and you carry on with the next 2 years payments --- difficult on a pension.
Or they take the gratuity and use it to hit that settlement figure and close the IVA early.
Or .... they let you keep the gratuity and you propose a Full and Final Settlement. This is a different animal to a settlement and is an offer to "pay up" the remaining agreed payments in a lump sum to close the IVA early --- in your case, at that stage, the creditors would be expecting a further 24 payments from you at £900 a month, so £21,600. This could be less if a review, based on your post service income brings the agreed payment down. But, on the £21,600, you could round it down to, say, £18k.

Clear as mud !?
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Visit my blog here : http://foggy.blogs.iva.co.uk/

Lisa Thomas

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Post by Lisa Thomas » Thu Jan 03, 2019 2:40 pm
Sorry I did not take the equity from the property into account so estimate c£40k to find to finish/settle early.
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

adam689

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Post by adam689 » Thu Jan 03, 2019 7:29 pm
Thank you very much for the replies and your advice and observations guys.

I spoke to my IVA IP and although they can’t give final figures 14 months in advice, they estimate a final figure of around 79k at my current repayment rate, so pretty much smack bang in between both of your estimates.

Many thanks for your time and your replies, I feel far more confident of the early outcome even if it will take the bulk of my severance, I would far rather be IVA free two years earlier than planned 8)
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