IVA and inheritance

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Adam_7985
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by Adam_7985 » Thu Sep 21, 2017 3:38 pm
Hi I have recently been accepted for an IVA, I have a figure of £23k to pay back over 5 years, my actual debt is £36k so a good chunk will be written off, anyway I think I am going to come into an inheritance of about £20k over the next 6 months, how does this work, do I pay it off and carry on paying the full £36k or could I make them an offer of £20k as a lump sum settlement figure?
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Foggy
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by Foggy » Thu Sep 21, 2017 4:02 pm
The inheritance will be paid into the IVA and you will continue regualr agreed payments until such time as the original debt in full has been paid, along with fees and possible statutory interest. Debt and fees would be around £43k, so it looks like the IVA will continue to term and you will, by then, have achieved nigh on a 100% dividend.
Adam_7985
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by Adam_7985 » Thu Sep 21, 2017 4:18 pm
So me getting a £20k inheritance will end up costing me £7,000 more than I originally owed, seems really unfair
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kallis3
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by kallis3 » Thu Sep 21, 2017 4:35 pm
As Foggy says - you will be paying fees and statutory interest which is a lot less than you would have paid if you had carried on as normal. You can be pleased that you will have managed to complete your IVA and be debt free.
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chrissy12345
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by chrissy12345 » Thu Sep 21, 2017 5:32 pm
Adam_7985 wrote:
So me getting a £20k inheritance will end up costing me £7,000 more than I originally owed, seems really unfair


unfortunately you have received truly shocking advise and shouldn't be in an iva if the inheritance was known. make a complaint

You won't get much sympathy here for paying over the odds I'm afraid.
Adam_7985
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by Adam_7985 » Thu Sep 21, 2017 6:14 pm
You say it would be a lot less than if I carried on without the Iva but if I paid £20k off my original debt I would only be left with £16k and that does not add up to £7k extra worth of interest
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chrissy12345
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by chrissy12345 » Thu Sep 21, 2017 6:18 pm
Adam_7985 wrote:
You say it would be a lot less than if I carried on without the Iva but if I paid £20k off my original debt I would only be left with £16k and that does not add up to £7k extra worth of interest


You are quite right. and if you had paid off the 20k there is a good chance you wouldn't have needed the iva in the first place.
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kallis3
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by kallis3 » Thu Sep 21, 2017 6:24 pm
Unfortunately we don't always know we are going to get an inheritance and hindsight is a wonderful thing.
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Lisa Thomas
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by Lisa Thomas » Fri Sep 22, 2017 8:13 am
Did you know about the inheritance when you signed up to the IVA?

I'm afraid it will be caught under the windfall/after acquired assets clause and will have to be paid over unless the will is changed in time...
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Michael Peoples
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by Michael Peoples » Fri Sep 22, 2017 8:22 am
The windfall clauses will have been discussed with you at the beginning of the process so I can only assume this inheritance has arisen quite unexpectedly. The timing is unfortunate but really little you can do.
Adam_7985
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by Adam_7985 » Fri Sep 22, 2017 10:52 am
The person with the inheritance was sick at the time I was going through IVA but he hasn't died yet so didn't think it was appropriate to talk about inheritance with the Iva company when I had no timescales to base it on, out of interest if I would of arranged a dmp with my creditors instead of an IVA could I have used the money to make them an offer, too late now I suppose
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Foggy
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by Foggy » Fri Sep 22, 2017 11:00 am
Adam_7985 wrote:
The person with the inheritance was sick at the time I was going through IVA but he hasn't died yet so didn't think it was appropriate to talk about inheritance with the Iva company when I had no timescales to base it on, out of interest if I would of arranged a dmp with my creditors instead of an IVA could I have used the money to make them an offer, too late now I suppose


You could have used the inheritance for an offer if not in the IVA ... but, as you say, that horse has already bolted.

If the person still has the capacity the will could be changed with an addendum (codicil) inserting an insolvency clause, stipulating that any bequest to a beneficiary who is insolvent is to be held in trust until they are solvent again --- you would need the advice of a solicitor for watertight wording. In bankruptcy I believe such a trust would still be subject to the BR as an asset, but this might not be the case in an IVA as the IP's reach is not as powerful as that of the OR.
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Michael Peoples
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by Michael Peoples » Fri Sep 22, 2017 11:03 am
If the person has not died yet you could move to cancel the IVA and enter a DMP. However this is risky in itself as no guarantee that the IVA would be closed down before their death and the inheritance could be captured anyway. If the person has died you must notify the IP once you become aware of the windfall and not when you receive it so once you are officially told you must disclose this.

There is a possibility that you get nothing anyway. Some wills are written in such a way that if a beneficiary is insolvent they do not inherit and the solicitor would run an insolvency check before giving out any money. It is unfortunate as no doubt the person who was leaving the money wanted you to enjoy it and not to go to your creditors.
Adam_7985
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by Adam_7985 » Fri Sep 22, 2017 12:08 pm
Not that it is a route I particularly want to go down but is it possible to break an Iva and offer a dmp instead or would I be liable for fees from the IVA company?
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kallis3
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by kallis3 » Fri Sep 22, 2017 12:29 pm
You would need to let it fail by missing 3 payments and would then be back to square one and creditors can add on all the interest which has been frozen. Also, there is no guarantee interest would be frozen in a DMP. Your credit rating would still be shot. You remain on the Insolvency Register until the IP informs them it has failed so it could be that it makes no difference.
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