Potential Windfall

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boblardo
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by boblardo » Mon Sep 04, 2017 7:37 am
Hi,

I am new here although have been in an IVA for almost 5 years.

My wife and I have an interlock 6 year IVA (thanks Northern Rock), with debts totaling £56230.

Along with our agreed monthly payments I havee had the good fortune to earn some bonuses which have also been paid in as well as some PPI repayments, reclaimed via the IVA Company (wife had a repayment of £11000 and I had a repayment of £4500). This has meant that we have now repaid £50735 and assuming no further bonuses occur it is likely we will pay £57600 into our IVA which is great.

However, I have a hypothetical question. As it stands we have repaid £50000 I If i was to get a windfall of around £50000 in the next month or so what happens to it? At the start of the IVA i would expect to have paid the whole lot into my IVA but as i am now near the end what am i expected to pay. My understanding is that I would have to repay any remaining debt in full + PPI Fees + IVA Fees.

would this mean I am able to

a) finish the IVA early
b) keep some of the money
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kallis3
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by kallis3 » Mon Sep 04, 2017 7:47 am
Hi,

If you could pay it off in full plus fees etc your IVA would finish and, if any money left over I imagine you would keep it.

Let's hope you don't get one before you finish as you're nearly at the end!!!
boblardo
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by boblardo » Mon Sep 04, 2017 7:55 am
@Kallis3 - thanks for the reply.
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Foggy
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by Foggy » Mon Sep 04, 2017 8:40 am
I agree -- they will take an amount to make your payments up to cover the original debt, fees and possible statutory interest (which might be alredy excluded -- look in the paperwork). You could also request a variation at the time to exclude interest. Anything left over will be yours and the IVA will conclude.

With the 6 year term agreed at the start (as NR tends to do) be aware that you might still get a 12 month extension in lieu of equity, so don't buy the champagne yet! Again, if you hit that magic figure of debt, fees and interest before or during the extension the IVA will end early.
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Lisa Thomas
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by Lisa Thomas » Mon Sep 04, 2017 8:46 am
By my calculations, if creditors insist on the interest you will have c£90k to settle everything in full (assuming fees of say 15%), less the £50k repaid so perhaps £40k of the windfall will be required leaving you with say c£10k back.

If creditors are not entitled to, or waive their right to the interest then this will change the figures dramatically and perhaps only £15-£20k will be needed form the windfall.
boblardo
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by boblardo » Mon Sep 04, 2017 8:56 am
Thanks for the replies, about £32K of this debt had already been passed to collection agencies so not sure what interest there will be! Some were Payday lenders totalling around £4K and one credit card of around £350. The other big one was Northern Rock £20K
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kallis3
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by kallis3 » Mon Sep 04, 2017 9:03 am
Once your IVA was approved then all interest was frozen and will be written off at the end regardless of whether or not debts have been sold on. You may have statutory interest on top of fees - nothing to worry about.
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Foggy
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by Foggy » Mon Sep 04, 2017 9:08 am
As Kallis says, the contractual interest ( often in excess of 20% compound) will be frozen by the IVA. Statutory interest is only payable (unless excluded) if you manage to repay the debt and fees in full during the IVA and is at 8% p.a simple.
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Lisa Thomas
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by Lisa Thomas » Mon Sep 04, 2017 11:04 am
You have to pay 8% interest per year on your debts of c£60k
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kallis3
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by kallis3 » Mon Sep 04, 2017 11:43 am
I believe that is what Foggy said Lisa?
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