Ending an IVA, and increase in Salary

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dannygee22
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by dannygee22 » Wed Mar 01, 2017 10:59 am
I have recently got a significant pay increase, over 17%, and I foolishly did not think or inform my IVA. I am now coming up to review time, and at the same time my Father has offered to pay me a lump sum in order to try and settle my IVA. However, I am very concerned that this will not be accepted due to my change in circumstances. The payments prior to my salary increase were £53.20, but I am now looking at a disposable income of around £500, this would lead to me overpaying the debt, so I would imagine they won't accept that, but they will expect a significant increase.

My Father has offered to pay me a lump sum of £6000 to settle £20,909, but only if this is full and final settlement. The original payments would have worked out to £3683 so there is an increase there. I have not yet discussed this with my IVA organisers, as to be honest, I am afraid to.

I have a wife and 2 kids, and it was great news and very welcome to get this promotion, but it now feels like the only benefit would be to my creditors, and it is very difficult to get motivated to achieve more if this is the case. I have been struggling with this debt since I was 25, and I am now 39. I got in a debt management plan at 29, and only finally entered an IVA last year. I was hoping that this would be the end to my problems, but they just keep on mounting. My wife and kids are suffering for a debt that had nothing to do with them, and it is getting incredibly hard. I fully accept that the debt issue is my responsibility, but I have paid a considerable amount over the time of my DMP and IVA.

I just need to see a way out of this, and be able to get on with my life and my career. If anyone could offer me advice, I would be eternally grateful.
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Foggy
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by Foggy » Wed Mar 01, 2017 1:05 pm
First -- read your paperwork. Most say that a permanent pay rise during the year will only be taken into account at the following annual review and the increased payment due from the month following. Some IP's, even with that agreement, do try it on and will need to be challenged. However, not all agreements are the same -- so do check!

Regarding lump sum payments ... ignore debt amount -- a full and final is based upon the number of payments remaining ( plus 12 if equity has to be addressed) multiplied by the the monthly payment, i.e. what the creditors are expecting under the agreement. It bears no relationship to the debt owing.
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Michael Peoples
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by Michael Peoples » Wed Mar 01, 2017 2:15 pm
Salary increases are usually dealt with at the annual review so you may have done nothing wrong. The increase can be offset against any additional expenses and if your IVA payments were so low there is a possibility that you have not received all your allowances. In addition, any tax credits for example will reduce as a result of the extra income and your IVA payments can only increase by half the additional money. I suggest you do a new up to date I&E before you do anything.
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Andy.75
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by Andy.75 » Wed Mar 01, 2017 2:34 pm
Check your paperwork. They usually stipulate that you can keep the first 10 percent of any bonus, overtime etc then anything above that you have to split 50/50
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kallis3
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by kallis3 » Wed Mar 01, 2017 2:42 pm
Payrises are different to bonuses and overtime.
dannygee22
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by dannygee22 » Wed Mar 01, 2017 3:18 pm
Many thanks all. Some good tips there, and I will check my paperwork tonight.

I never knew getting a promotion could be so stressful, but thanks again!
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Foggy
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by Foggy » Wed Mar 01, 2017 3:48 pm
Andy.75 wrote:
Check your paperwork. They usually stipulate that you can keep the first 10 percent of any bonus, overtime etc then anything above that you have to split 50/50


Andy -- that relates to overtime and bonus payments, not salary increases.
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Foggy
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by Foggy » Wed Mar 01, 2017 3:49 pm
dannygee22 wrote:
Many thanks all. Some good tips there, and I will check my paperwork tonight.

I never knew getting a promotion could be so stressful, but thanks again!



At least the promotion will outlive the IVA and you will see the benefits going forward.
dannygee22
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by dannygee22 » Tue Mar 21, 2017 12:01 pm
Hi all,

There have been some developments here, and would really appreciate some further advice.

I forwarded the last 3 months payslips to my IVA company and they immediately responded with a letter demanding I make a payment of £990.15. This is money I do not have. I spoke to the company and they state that in a letter they sent me when I signed up for my IVA I must immediately inform them of any change in circumstances, and that as I did not this money is due. I have checked my paperwork, and I have no record of receiving that letter, the only one I do have is confirming that I submit to a yearly review, which I did.

To put this in context, when I initially signed up for the IVA, I had a complaint upheld after 2 months in, as Student Loan was included in my initial IVA agreement, as a creditor who could be cleared at the end of this IVA. It has since been made clear to me that this was not the case, and I am now making a small contribution to my Student Loan, and my payments to the IVA company have slightly reduced to reflect this. The point I am making, is I feel I was not given the correct information when signing up for this IVA, and the stress it is causing me, and has caused me since I began it is phenomenal. It is putting a huge strain on my family, and I feel like I am getting nowhere. I have been in a debt management plan since 2007, so in total have been trying to get this debt paid off for 12 years, and by the time it is completed it will be 18 years, that is very close to half my life!

I am looking for a way to get more certainty, stability, and be able to move on with my life. So, I have asked a family member if there is any way that I could get a loan to make a full and final offer to the Creditors. The issue is, I have no idea what amount is realistic to offer, and I find it very difficult to get that information. Does anyone know of a general rule of thumb that may be accepted? (I know this varies greatly but to get some idea would be great)

If anyone could offer any info it would be very much appreciated. I am close to breaking point with this, and need some good news.

Many thanks

Dan
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Foggy
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by Foggy » Tue Mar 21, 2017 1:39 pm
A Full and Final offer is based upon the number of payments remaining multiplied by the current payment amount. This can sometimes be rounded down a little to reflect the admin savings the creditors will be making.

I repeat my reply to your intitial enquiry, above.
dannygee22
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by dannygee22 » Tue Mar 21, 2017 2:58 pm
Many apologies, I missed that response. Many thanks
FormerlyST1100
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by FormerlyST1100 » Wed Mar 22, 2017 8:10 am
dannygee22 wrote:
Hi all,

I forwarded the last 3 months payslips to my IVA company and they immediately responded with a letter demanding I make a payment of £990.15. This is money I do not have. I spoke to the company and they state that in a letter they sent me when I signed up for my IVA I must immediately inform them of any change in circumstances, and that as I did not this money is due. I have checked my paperwork, and I have no record of receiving that letter, the only one I do have is confirming that I submit to a yearly review, which I did.

Dan


One thing you should check is the IVA you signed up most likely has a clause in it that says if your income increases then you need to pay over a percentage of that extra amount.
A lot of them, like mine, was a 10% 50/50 clause, so if my income was more than 10% of the normal I had to pay 50 of the extra above the 10% with 14 days, which I did on 3 occasions.
If you have a pay rise under that 10% it was just ignored until the next annual review.
Your IVA company could be right in that amount being owed to them regarding the extra salary because of the large increase.
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Foggy
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by Foggy » Wed Mar 22, 2017 11:59 am
FormerlyST1100 wrote:
dannygee22 wrote:
Hi all,

I forwarded the last 3 months payslips to my IVA company and they immediately responded with a letter demanding I make a payment of £990.15. This is money I do not have. I spoke to the company and they state that in a letter they sent me when I signed up for my IVA I must immediately inform them of any change in circumstances, and that as I did not this money is due. I have checked my paperwork, and I have no record of receiving that letter, the only one I do have is confirming that I submit to a yearly review, which I did.

Dan


One thing you should check is the IVA you signed up most likely has a clause in it that says if your income increases then you need to pay over a percentage of that extra amount.
A lot of them, like mine, was a 10% 50/50 clause, so if my income was more than 10% of the normal I had to pay 50 of the extra above the 10% with 14 days, which I did on 3 occasions.
If you have a pay rise under that 10% it was just ignored until the next annual review.
Your IVA company could be right in that amount being owed to them regarding the extra salary because of the large increase.



ST .... the 10% 50/50 rule only applies to overtime and bonus payments. The surplus here is payable within 14 days. A permanent pay rise is dealt with differently and is usually only taken into account at review and 50% of the increase added to the IVA payment from the month following the review. If the OP has the usual clauses ( which is by no means certain) then his IP might be trying it on, depending upon the actual timing of events.
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Michael Peoples
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by Michael Peoples » Wed Mar 22, 2017 12:38 pm
You should take this up with your IP. It is your obligation to inform of any changes in circumstances but this is unlikely to mean payrises as your requirement for these will be addressed within the proposal. The changes that do matter are getting married, moving address, moving job, time off work, marital break-up etc.

Check your proposal as there is a distinct possibility that this money is not owed. Ask for the IP to justify why they are demanding money that is not owed or if it is owed you want to see exactly where in the proposal it addresses payrises. A letter sent afterwards is not binding on you as the proposal and modifications are what you signed up to and agreed and that is the nature of your contract.
dannygee22
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by dannygee22 » Wed Mar 22, 2017 8:10 pm
Hi,

Thanks, I have checked the paperwork thoroughly, and whilst there is a contingency for bonus', overtime, etc, it makes no mention of pay rises here. There is another clause that says quite clearly that change in circumstances are dealt with at review, so I will go back at them with that.

However, it is making more determined to find a way to end this early, as I feel this company absolutely does not have my interests at heart, and have misled me throughout the whole period.

So my final question to a full & final settlement offer is what happens if an offer is not accepted. I believe a family member can get me the money needed to make the offer, but I am concerned as to what happens if they do not accept it. Will they come back with a counter offer, reject it outright, file for bankruptcy?

If anyone could give me the benefit of their experience, I would be very grateful.

Thanks
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