Surely my outgoings increase too?

Get expert opinion. This is the place for new questions to be posted.
17 posts Page 1 of 2

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Mon Oct 26, 2020 10:06 pm
Hi we are 20 months into a joint IVA and have equity in our house. We both work and find our payments get reviewed at ever possible opportunity which is always a one sided affair. I just notified them of a 2.5% annual inflationary pay rise to be told my payment would now be increasing and that I owe them some money. I tried to explain that an inflationary rise of this amount should not be seen an increase but apparently it does? I then said well what about my expenditure and suggested that my monthly household shopping and toiletries allowance should also be increased by 2.5% to be told their was a block on any increases throughout the whole term of the IVA. Basically I'm not allowed any increases in these. Is this right? My IVA company is one of the big two. So my modest inflationary pay increase is being grabbed but living cost allowances for food etc for the next 4.5 years are to remain static. So I'm set to get squeezed year on year which is unsustainable. Is this right? I was unaware of this and feel my IVA was mis-sold

kallis3

User avatar
Forum Expert
Posts: 76061
Joined: Mon Mar 17, 2008 4:02 pm
Location: United Kingdom

Post by kallis3 » Tue Oct 27, 2020 8:25 am
You should submit a new I&E at your review and they cannot expect you to stick at the same amount for your entire IVA. I'm afraid your payrise will be taken into account as it is income. Email your IP an explain your concerns and, if necessary, escalate this to a complaint.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley.
http://kallis3.blogs.iva.co.uk

Foggy

User avatar
Forum Expert
Posts: 31555
Joined: Fri Dec 17, 2010 11:14 am
Location: United Kingdom

Post by Foggy » Tue Oct 27, 2020 9:22 am
An increase of your monthly payment is based on net increase (so, after deductions and expense increases have been taken into account).

At review, the calculation of the IVA payment is based on 'disposable income' --- that is the amount left after expenses have been deducted from net income. By definition, if expenses increase, D.I.
reduces.

Additionally, Protocol IVA's have a clause built in whereby an IP has the discretion to reduce monthly payments by up to 15% without reference to creditors and anything over that must be put to creditors to consider --- this flies in the face of the false assertion that reductions are absolutely barred.

They are correct in that there is no automatic, index linked, increase in expenses, but, at review an fresh I&E should build these in (within the guideline figures (which increase sporadically and usually under inflation)).
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Tue Oct 27, 2020 1:41 pm
Thanks for the replies we are now having to consider all of our options and the future of this IVA. I did ask about failing the IVA and going into a DMP but they would give me no assurances on the risk of either the I.P or creditors petitioning for bankruptcy.

Foggy

User avatar
Forum Expert
Posts: 31555
Joined: Fri Dec 17, 2010 11:14 am
Location: United Kingdom

Post by Foggy » Tue Oct 27, 2020 2:37 pm
Tue Oct 27, 2020 1:41 pmnigel710 wrote:
Thanks for the replies we are now having to consider all of our options and the future of this IVA. I did ask about failing the IVA and going into a DMP but they would give me no assurances on the risk of either the I.P or creditors petitioning for bankruptcy.
It is rarely a good idea to move from and IVA as there is no guarantee that creditors will co-operate with any alternative plan you might attempt to get them to agree to. Additionally you will find that your debt to them will have increased, somewhat, by the addition of lost interest and charges. Most of your payments thus far will have gone towards fees, and so the original debt will not have been reduced by much.
The IP is unlikely to petition for bankruptcy, unless you have the clause, which is sometimes inserted, requiring them to do so on the failure of the arrangement --- this will be self evident from examining your paperwork.
Creditors could petition if there is sufficient equity to tempt them ... no-one could guess the likelyhood of what they might or might not do.
If you consider the gamble on creditors accepting the DMP as worthwhile I would suggest approaching Stepchange for this as they do not charge fees on these and, hence, the DMP will be 'juicier' from them for creditors.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Tue Oct 27, 2020 8:42 pm
Thanks again for the advice. A new development has now come about as we have explained the problem to relatives and someone is prepared to put up money for a full and final offer.
The prospect of ending the IVA early is beyond belief and we are looking at a third party offer of 15k. Our current payments are £536 pm and as we have equity in house and a remainder of 54 months. Given the current economic situation and that the offer is from a third party how likely is this to be accepted or even put forward as a proposal? At present we have paid approx £11500 and if all payments were made the debt forgiveness would be about 3k. Do we stand any chance of getting this accepted?

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Tue Oct 27, 2020 8:56 pm
Just realised it is 51 months remaining not 54 sorry

Foggy

User avatar
Forum Expert
Posts: 31555
Joined: Fri Dec 17, 2010 11:14 am
Location: United Kingdom

Post by Foggy » Tue Oct 27, 2020 9:06 pm
I take it from the figures quoted that your original debt was around £30k .... so to settle all the debt, fees and statutory interest would currently take about £42k, so the creditors are taking a bigger loss than you have calculated.

Anyway -- at the current payment rate, creditors are expecting a further £28944, or thereabouts, in payments ( including 12 months for equity release). So, I feel £15k might be a little light. That said, on your payments, they stand to get an above average dividend back on the IVA, so there is more than usual wiggle room.

I have seen low offers accepted before -- after all the creditors don't want to be in the IVA either !
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Foggy

User avatar
Forum Expert
Posts: 31555
Joined: Fri Dec 17, 2010 11:14 am
Location: United Kingdom

Post by Foggy » Tue Oct 27, 2020 9:07 pm
Ah -- those 3 months will close the gap a bit then :-)
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Tue Oct 27, 2020 9:16 pm
Thanks again for your much valued advice, yes after the next payment in a couple of says it will be 51 payments left (sorry about original error). Original debt was 43k. Should I try to up the offer to say 18k or try the 15k as going back asking for more is rather awkward but still possible?

luluj

User avatar
Forum Expert
Posts: 10948
Joined: Sun Dec 09, 2007 6:54 am
Location: United Kingdom

Post by luluj » Wed Oct 28, 2020 3:38 am
Personally if £18k is available then I would offer that. The nearer you can get to what creditors would receive if the iva ran its term the more likely it will be accepted.

Just make sure when offering it, you make it clear, your access to this money us solely to offer a full and final and if not accepted your relative will not give you access to it.
Sharing from experiences of dealing with debt

There is a solution for everyone .... Just need to stay positive !

Look at my blog "All I wanted was a baby"

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Wed Oct 28, 2020 6:25 am
Thanks for the reply, 15k has been offered and without taking too much advantage of this person I might just have to try for 16.5k as the 18k is a big ask but I'm aware the F&F offer process doesn't lend itself to upping the offer it seems to be a yes or no scenario. How does it work regarding ongoing payments? Do you make the offer just after a payment and state offer is for remaining after last payment dated ??/??/?? And hope it gets accepted before the next payment is due?

Foggy

User avatar
Forum Expert
Posts: 31555
Joined: Fri Dec 17, 2010 11:14 am
Location: United Kingdom

Post by Foggy » Wed Oct 28, 2020 11:00 am
It usually takes a few months for an offer to get through the system. The easiest way to deal with the lag is to agree a payment break with your IP, so, effectively, everything freezes while the offer is in play --- keep these payments to one side, so you can catch up if the offer is rejected. Alternatively, you can state in your offer that payments after a given date (usually a couple of months hence) will be deducted from the lump sum.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Wed Oct 28, 2020 1:58 pm
Thank you so much for all of the great help and advice it is really appreciated and hopefully will answer the same questions for others.
As we are still able to pay our payments I will add the clause that any additional payments from the date or e.g after the November 2020 payment are to be deducted from the stated settlement offer.
As this person is elderly and a bit wary of bank transfers and such would it be possible for them to pay by cheque I wonder? She did ask. If anyone has done this recently please let me know. So if it was accepted and in the meantime two payments had been made the I.P would give us an updated amount to pay minus the excess payments. So although this person is putting an offer of 18k the money they pay after two more payments of say £500 would only require 17k of the 18k on offer. This is correct?

nigel710

User avatar
Posts: 9
Joined: Mon Oct 26, 2020 10:06 pm

Post by nigel710 » Sat Nov 07, 2020 6:34 pm
We have submitted a full and final offer on our joint IVA and before I submitted the offer I rang to check the procedure and was told by a staff member who wasn't my case worker that a letter making the offer as a gift with the actual signed letter as an attachment would be fine. I asked about adding a note that any future payments made after the offer was put in be deducted from the final sum but was told they can't do this. A payment suspension was offered to be put on straight away but I said I'd better wait and we agreed it made more sense when we knew the offer was available.
Having now put the offer to them via email my usual caseworker has replied:
Thank you for your email.
The offer from the third party also has to be a separate offer for each of you from the £xxxxxxx.
The request for the meeting with the offer would need to be a separate offer for each of you and needs to outline clearly the funds each.

Once we know how the funds are to be divided in terms of what the offer is for each of you are we may take the next steps. We may need the Supervisors permission to approach creditors with your request.

On the run up to a creditors meeting creditors would expect the payments to be maintained. However, if you felt that you are not in a position to do this we would need to discuss options e.g payment holidays. Please note can take approximately three months to hold a creditors meeting of this nature
Is this correct? I have never heard of having to make two seperate offers on a joint IVA? Most of the debts are joint but there are some individual ones. If we do have to put in seperate offers how would we work the teo amounts out and would this then mean two creditors meetings? Two smaller sums of money are unlikely to look as tempting as on e larger sum.
Also am I entitled to a payment break for this or will they then say if you can afford to pay you have to keep making the payments? We are paying nearly 550 per month so I would not want to pay this in addition to the offer? Can anyone help please as I have never read about this scenario in my research? If I need to do a new thread let me know but it does follow on from my previous post. :?: :roll:
17 posts Page 1 of 2
Return to “Ask IVA Forum and Industry experts”