I entered in to an IVA over a year ago with a total debt of £30k. Half of this was my student loan and at the time I was told that I had to include this. I am now thinking that ive made a mistake. My first annual review resulted in them increasing my payments from £400 to £500. I asked when it would stop increasing, as if I was to more then £500 a month into my IVA, I would end up paying more than what I actually included as debt. My IVA people told me it wont stop, and that if my salary increases, I will have to pay everything I have spare, minus my basic cost of living. I work in IT, and my salary has already increased by 10k in 2 years, at this rate I will be paying an extra 10k into my IVA....This cant be right can it?
Thanks for your comments, my motivation for entering my IVA was to pay back as much if not all of what I owe to my creditors. However I was under the impression that my payments would be capped at some point if my salary continued to increase? The impression I have got now is that for the next 4 years, all of my disposable income will be swallowed up by my IVA regardless of how much that results in me actually paying back. The next job role I am looking at will mean that I will have around £1000 disposable income left based on my current standards of living, as a result of this, they say that I will have to pay all of this towards my IVA each month. If I was to recieve no further payrises I will end up paying back around £54K, which is £26K more than the debt I actually had the the first place? At what point will they actually say, hang on a minute, your paying to much back? Will I have to wait until my IVA is completed before getting my money back? Also with regards to the fees, the cant tell me what this will amount and the impression I get here is that there are fixed fees and extras which can be claimed by the nominee and supervisor....will I have to wait until my IVA is completed before I can see these fees, or can I request each year to see what fees have been incurred?
My original personal debt was only 15k, I did not want my student loan included in my IVA as I could have paid that back in full through my wages over 25 years. I was told that I had to include this otherwise my IVA would fail
Could I settle my personal debt of 15k with the highstreet lenders and then pay back my Student loan as normal? Do I have any option other then to continue to pay into my IVA until its completion and the try and get money back which is owed to me?
craig & smedley, if you pay £1,000 a month to your IVA which is more than you currently are, if it means you have paid the balance of it off after 2 years (for example) then your IVA will end then. You would NOT have to go the whole 60months and then be refunded what you have overpaid - the IVA just ends when you have paid the balance.
I'm sure Melanie & co, will correct if i've misunderstood!
That's the way I understand it as well Wen. Craig/Smedley - if you read my post "second job" which was being posted on yesterday, I raised a point which was not too dissimilar to yours, and that explained what will happen in such a situation.
I am in a similar position and work in IT. I too have had pay rises recently, and have had to make significant extra payments over and above what was originally agreed. However, I only have to pay 50% of what I earn over the amount. I thought this was a good thing until I read your post. I wasn't aware that your IVA term could be reduced if you pay the full amount off early. If I continue only to pay 50% of the extra it will take longer to pay off and so the IP I am with will earn more (as I think they get a certain amount for each year the IVA runs). If you have the opportunity to pay it off early, do so, it will only reduce the overall amount you pay back (if you are only paying say 3 yrs fees rather than 5). Am I right Melanie?
just to recap that the maximum that you can pay into your IVA is the full original debt and IP fees,it is unlikely that you will have to pay statutory interest.
If this happens then your IVA will conclude early.
You also have the option to stop paying into your IVA and allow it to fail,then you could negotiate payments with your creditrs direct.However your IP will onlt distribute funds to your creditors once the have covered their own fees[quite rightly].Be aware that there is a danger that your creditors could petition for your bankruptcyif your IVA fails.
My advice is to stick at it,pay as much as yu can and look forward to being debt free once your IVA concludes