Suitable settlement offer?

[aaron982]

Hello.

I started an IVA in May 2018, since then I've been making consistent payments of £84 per month. Today I received confirmation from my IVA Case Officer that if I were to remain in my IVA for the full period then the amount of £7534 is still due to pay. I was advised that if I wish to make an offer to settle (as I have a third party who may be willing to pay the settlement on my behalf) then I would have to offer at least £7534 or more.

My question is, given the current climate surrounding COVID and everyones financial situation, including the creditors listed on my IVA. What would be suitable settlement offer? Would I be able to offer a lower amount of say £6000 with a likelihood that it would be accepted?

I'd like to end my IVA early so I'm no longer bound by the restraints of it, I understand it remains on my credit file for a total of 6 years although my opinion is as long as it's settled I can gradually make a start to repairing my credit score sooner rather than later, especially if I were to send a completion certificate into the major credit agencies for my credit file to be updated.

Thanks

[kallis3]

Hi,

You don't make a settlement offer as this would mean that you pay back your total debts plus fees. You have to make a full and final offer which is usually the amount of your remaining payments. Do you owe your own property? If so, you would have to factor in the (possible) extra 12 months in lieu of equity.
Are you with Creditfix by any chance? It is not up to them to tell you what to offer, it is down to you and I reckon your offer sounds a good one.

[Foggy]

This sounds like a CF ploy ! Assuming you had a 5 year arrangement, and are not a home owner, you have around 3 years to go --- so 36 payments. This means that creditors are expecting a further £3024 to be paid in.

In other words -- if, as the case officer said, you were to remain in the IVA until the end, you would pay another £3000 ....not twice that!

So .... your full and final offer (not settlement) should be based on £3000 - ish.

CF do seem to like to go for the settlement, rather that the usual F&F as, of course, it nets them more in fees as well as benefits creditors far more.

[aaron982]

Thanks for the replies so far,

Apologies but I need to add more context to my situation and answer some questions put forward:

• My payments are currently £84 per month, they then increase to £318 per month in January 2022 to pay the remaining balance of my IVA (as I have a car under finance that is due to end Jan 2022 and therefore my monthly surplus would increase allowing me to make higher payments on the IVA)
• I do not own my own home as I’m living with my parent
• In July 2020 I was advised by my IVA Case Officer that due to an increase in my income that I had apparently not declared..I would have to make a one off payment of £1596. I was then given the option to either pay the amount OR extend my IVA for 5 months. Due to my IVA payments increasing in Jan 2022 I was advised it would only take an additional 5 months to pay off the £1596 and this is therefore what was agreed on.
• I am with PayPlan

I had a 5 year arrangement, which started in May 2018, I’m currently 33 months in (if my maths is correct!) of a 60 month IVA + the additional 5 months

I have 11 months left of £84 a month payments (until Jan 2022) which then increase to £318 per month in Jan 2022 for the remainder of the IVA, with the IVA originally due to finish in May 2023 but now October 2023 to complete the 5 years

If I understand correctly, a full and final offer is based on what I believe to be an appropriate offer to settle my IVA based on my remaining amount due to be paid in..
Whereas a settlement offer would be the total amount I still owe to my creditors plus fees?

Thanks for all your help so far.

[Foggy]

Ah right -- that changes things significantly. Back of a fag packet calculations tell me that creditors are actually expecting something in the region of £7600.

Creditors do often look at reduced amounts but this depends on your record in maintaining the arrangement, the total hit they are taking from the original debt and current payment level --- at your lower payments the creditors are getting very little, so are waiting on those increased payments to see some return.

I would say -- and these are all 'gut feeling' estimates that an offer of £6500 might do it, but £7000 would be better. You might, however, be pushed to the £7500-ish.

[aaron982]

Thanks for your response!

That makes complete sense, can anyone point me in the direction of a template letter to draft my own version of a full and final offer?

I want to draft something together to eventually send to PayPlan. I was advised the meeting can take up to 3 months to organise..from anyone’s experience is this usually the case?

Also, if I wanted to increase my full and final offer by selling my vehicle would that be possible? I was able to keep my vehicle due to needing it for personal reasons with an unwell family member, taking them to and from hospital but the situation has changed. So for example, my vehicle is worth £5000, could I sell it and use that £5000 towards my full and final offer? Or would they consider that money they’re entitled to rather than money that can be put towards an offer. I’ve read other IVA stories where when providing a full and final offer they usually request evidence of where the money is coming from, how deep are the checks?

Thanks

[luluj]

Your vehicle maybe seen as an asset of the iva, so would need to consider that...

Here's my suggested full and final template ...

Dear xxx

I would like to propose a full and final offer of £xxxx to conclude my iva.

I am offering this full and final offer due to
* a change in my circumstances- STATE WHAT
* my health and wellbeing struggling under the conditions of the iva (JUST A SUGGESTION)

I will be able to fund this full and final offer through
* a family member providing me with the funds on understanding it concludes my iva, otherwise the money will not be made available to me

* the sale of my motor vehicle, which at the outset of my iva I needed to support a family member on taking them to medical appointments however this is now not required.

I have calculated my offer based on the number of payments remaining in the agreed original term by the agreed monthly payment. I will continue to pay my monthly payment as agreed until a decision has been made, which I understand will be within three months.

Please put forward my offer to creditors immediately and I hope that it is seen favourably by them.