IVA - possible F&F

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Shelly30
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by Shelly30 » Fri Mar 03, 2017 11:48 am
Hello,
I'm in a joint IVA with my husband which started in November 2014 so we are just into our third year of a 6, possibly 7 year term. The original debt was just over £31k with just over £21k remaining (this incudes their fees I'm led to believe). Our original installments were £298pm, increasing to £403pm and now they are asking for £531 per month, which I am in the process of trying to get reduced as we will struggle to pay this.
I'm really struggling with the IVA and to be honest wished we hadn't ventured into this process and instead continued with the DMP even if it would have taken a lot longer, however I'm considering asking my mom to help us so we can try to finish this process early - as mentally I don't think I can take another 3, possibly 4 years of this process.
I know its said that no one can put a figure together to offer F&F settlement but I was wondering what the advice would be if we offered £6500 to end this. I know its low compared to what's left but if we offer what we pay per month with the amount of months left then we're looking at over what the debt stands at.
Any advise would be appreciated as this is getting me quite depressed and I'm contemplating bankruptcy which I really don't want to do (as I have a home) and this would not benefit my creditors either as we have a secured loan on the property which takes 1st charge once the mortgage is paid......if that makes sense?
Thank you
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Foggy
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by Foggy » Fri Mar 03, 2017 12:14 pm
Hi -- taking the payment at £531 and with 36 months remaining, the creditors would be looking at around £19k coming in. So I think £6.5k would be a little light.

First you need to establish a lower monthly payment -- you IP has a lot of discretion here, if you have the usual clauses. He can reduce to 15% below your original payment. However, you have to convince him why you are struggling --- presumably, the previous increases have been due to increases in income which should have left you better off by at least 50% of such increases. Anyway ... if you can get payments reduced, any F&F offer would them be based on the reduced amount.

Then you need to look at the equity situation .... is there going to be more than £10k ( £5k each -- though some IP's will argue that it is £5 only in interlocking IVA's. Myself and some other experts disagree and believe this should be £5k EACH ) ? If so then an extension will likely apply -- so you need to add in a further 12 months payments.

Yes, that total will look like you have paid over the odds, but, during an IVA you actually always owe the full original debt, plus fees as well as possible statutory interest at 8% per annum.

So -- you want to get that projected dividend down as much as you can before contemplating an offer -- then, you can but try. I have seen very low offers accepted ( as well as high ones refused).
Shelly30
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by Shelly30 » Fri Mar 03, 2017 12:28 pm
Hi Foggy,

Thank you for responding. The increases have been due to income increases but I'm struggling to understand why they are now requesting a further £128pm as my salary only increased last April by 1.75% and due to tax on my company car I actually picked up £10 less per month. My husbands salary is slightly down (year on year) too so I would have presumed my increase would have been countered against his reduced pay - my husbands pay isn't the same every week.

I wouldn't be able to reduce the payments below the original payment due to increases and no longer paying nursery fees (stopped in August 2015).

We are planning for another child though which will obviously reduce payments down due to maternity and then nursery fees but I find the whole process depressing and would like to get rid of it - I know I'm wishing but I need a little hope :)

What would happen if I put an offer forward? Would the fees of this then be added to the outstanding debt? And from your experience, is it worth putting an offer in with how things stand?

Thank you
Shelly30
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by Shelly30 » Fri Mar 03, 2017 12:31 pm
Also, in terms of equity, I don't see how this can be released due to the secured loan - can you explain how this would work please.
My IVA paperwork indicates nothing would be due based on two sets of calculations they (the IVA company) have provided.
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Foggy
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by Foggy » Fri Mar 03, 2017 12:53 pm
If there is little or no equity then the property should be ignored and no extension will apply. The equity figure is, basically, the house value, less the secured lending (including any secured loans). Most arrangements take 85% of the value, others 85% of the resulting equity. Obviously things might change in the next few years with house prices, but, for now, no extension. So you are offering roughly a third of what they expect to get in the long term. The fee for the variation meetings would be absorbed into the IVA estate and you will only need worry about them when and if your payments equal the full debt, fees and statutory interest.

You are free to make any offer you feel possible and your IP is bound to put it to the creditors. It is better if he is "on side" because he will include his recommendations in the offer letter, but he might "bluff and bluster" a little .... depending on who you are with.

Make sure the offer is worded correctly --- you want it to basically say "Accept this lump sum to bring the IVA to a successful conclusion or, failing that, the arrangement will continue on its current terms". Because you are claiming hardship some firms like to pop in a mention of bankruptcy (usually as a device to make you think twice) and there is no need to poke a sleeping bear with a sharp stick!
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Michael Peoples
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by Michael Peoples » Fri Mar 03, 2017 12:53 pm
If you are struggling then you should request a full review to see what you can afford. If your mother is then offering a settlement because you want to have a child I believe that creditors would be supportive of this. You have paid quite a bit so far so do a new I&E and then look at the full and final option.

It is possible that you are not getting your full allowances so if you want a set of the guidelines feel free to email me directly and check these out.
Shelly30
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by Shelly30 » Fri Mar 03, 2017 1:25 pm
Thank you both for the advice.
We're with Knightsbridge and to be honest I wished I'd done more research before I opted with them as I've had numerous problems - mainly their keenness to breach, which stresses me out no end. I've was with Vincent Bond for 2 years with a DMP and wished they offered IVAs as they were really helpful.....but they referred me to KB and I trusted the referral, something I now regret immensely.
Fingers crossed the information I have submitted since the very recent I&E review will hopefully reduce the monthly payment down from £531pm and I may consider putting in a F&F based on the wording Foggy provided (thanks Foggy).
In regards to bankruptcy, this maybe threatened but (rightly or wrongly) this doesn't concern me as they wouldn't get anything due to the mortgage and secured loan so I would guess its unlikely such threat would be put forward to us. Although it is something I am considering and will research more as I don't think I can go through another 3-4 years of this sadly :cry:
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Michael Peoples
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by Michael Peoples » Fri Mar 03, 2017 2:07 pm
If there is little or no equity in your property bankruptcy may be an option but having come so far a full and final may be preferable. If your surplus is well down then the offer seems fine so make sure the current I&E takes into account all your expenditure as the lower the surplus the more likely the settlement is to be accepted.
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Jacko.z
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by Jacko.z » Fri Mar 03, 2017 6:24 pm
I need some advise please.
I'm in a joint IVA and we are just into our third year of a 6-7 year term.
The original debt was just over £31K with just over £21k remaining. Our initial payments were £298pm, increasing to £403 and now they want to increase to £531pm which we're going to struggle. I'm in the process of trying to get this reduced so hopefully this amount with decrease.
My question is, if I can get £6500 gifted, is it likely to be accepted as F&F settlement?
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Foggy
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by Foggy » Fri Mar 03, 2017 6:46 pm
Husband and wife merged :-)
Shelly30
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by Shelly30 » Fri Mar 03, 2017 6:57 pm
Sorry, I posted this earlier but sent a question instead of using the forum....my mistake
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Foggy
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by Foggy » Fri Mar 03, 2017 7:08 pm
Shelly30 wrote:
Sorry, I posted this earlier but sent a question instead of using the forum....my mistake


No problem :-)
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