Windfall and IVA shortening?

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IvaIn2018
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by IvaIn2018 » Tue Nov 06, 2018 2:36 pm
Hello all

Looking a little bit of help. I have had my IVA for 6 months now and paying in variable additional overtime payments as agreed in the proposal. For clarity, my situation is as follows:

63k of debts (99% negative equity on a mortgage - house is now gone obviously)
Circa £450 p/month
Average £200 p/month of overtime - it varies wildly
5.5 years in the IVA left to go!!

So, rough calculations on payback is £46,800. I have no doubt the actual figure will be higher than this.

I understand the IVA isn't a consolidation loan of sorts and that that 63k is plus interest and fees etc. Saying that, it is fixed at 6 year agreement and I'm wondering if a potential Court payout in relation to my employment will actually help me...

So, my employer has to pay back unpaid holiday overtime that should have been factored into pay over the past 20 years as set out by the Employment Appeal Tribunal. The amount to be awarded is yet to be decided, as is how it will be paid e.g. backpay in a lump sum, extra monies every month going forward etc. Assuming it will be paid as a lump sum ,and for example it was a figure of £10k net, I will of course let my IP know and they will decide if I'm entitled to any of it (100% windfall, 50/50 rule on overtime etc)

My question is given that is 10k into the pot, will this assist in completing my IVA quicker? I had asked my IP about overtime and if that I had the luxury to work a lot of it, if it would speed up the process of payback. Needless to say, the answer was less than clear.

I've read that you won't pay back more that 100p in the £ for the debt but I'm keen and industrious enough that if I could work towards paying it off sooner then I absolutely would

Any help?

Thanks
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Foggy
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by Foggy » Tue Nov 06, 2018 2:46 pm
It will not shorten the IVA until such time as the amount you pay in covers the full debt, fees and possible statutory interest (unless this has been excluded). This overall total would be around £75k plus a possible £5k p.a stat interest.
IvaIn2018
Posts: 21
by IvaIn2018 » Tue Nov 06, 2018 3:01 pm
Thank you and even though it is probably a best guess, getting an idea of what would be paid back over the course of the IVA if my income remained topped by overtime and the claim on top, is great. Thank you
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Lisa Thomas
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by Lisa Thomas » Tue Nov 06, 2018 3:32 pm
Unfortunately not, unless as Foggy states you ever get to the stage where you have paid the total debt and interest (8% per year) and interest back.
IvaIn2018
Posts: 21
by IvaIn2018 » Tue Nov 06, 2018 4:13 pm
8%!! Thats a crazy amount! Would a F&F offer half through the agreement - 3 years - mean that there are 3 years of interest payments to be made good as well as the outstanding amount? Or would there be an adjustment?
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Foggy
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by Foggy » Tue Nov 06, 2018 4:50 pm
IvaIn2018 wrote:
8%!! Thats a crazy amount! Would a F&F offer half through the agreement - 3 years - mean that there are 3 years of interest payments to be made good as well as the outstanding amount? Or would there be an adjustment?


A F&F offer takes no heed of interest --- that only kicks in if you are "settling", i.e paying the full debt, fees and interest. A full and final is based purely on the amount the creditors woudl be expecting to see if the arrangemenbt ran to term (monthly payment multiplied by the number of months remaining).
IvaIn2018
Posts: 21
by IvaIn2018 » Wed Nov 07, 2018 2:16 pm
Understood thanks...

One final question which I realise is premature but will ask anyway.

If for example in 1 year's time, I will have completed 18 months payments with 54 months left to run and I DID win that payout claim, then would this be an unreasonable proposition...

Monies paid in to then would be:

Monthlies: 450 x 18 - 8100

OT contribution (average) 200 x 18 - 3600

Claim payout - 10000

Would amount to 21700.

If family provided, say 25k as a F&F settlement at that stage (this is all hypothetical), then that would be 46,700 in total.

Given that the total debt was 63k, this would be a 74.6p return in the pound (before fees, interest etc). That is the same than what they would have achieved if the IVA ran it's course.

I'm basing the calculation of the total payment of the IVA being 450 x 72 and then the OT contribution if 200 x 72 = 46,800

Does that sound like a good proposal? Assuming the payout is 10k etc...

Thanks
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Lisa Thomas
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by Lisa Thomas » Wed Nov 07, 2018 2:29 pm
If you had 54 months left to run with an average of monthly contributions totaling £650, your remaining contributions would need to be based on the total left to pay which by my calculations is c£35k.

An offer of £25k may be considered attractive enough for creditors to accept it.

The closer you are to £35k the more likely creditors are to accept it.
IvaIn2018
Posts: 21
by IvaIn2018 » Wed Nov 07, 2018 3:00 pm
Ah I get you. So the lump sum payment is really just a bonus to them and doesn't serve as any leverage to make an offer if they received 100% of it.

Best case scenario then is that I receive 50% of it, as it is overtime based ( fingers crossed!!) and the other is paid into the IVA. That way I can put it into savings

Thanks for the reply
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Foggy
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by Foggy » Wed Nov 07, 2018 3:59 pm
I would differ from Lisa slightly, in that the amount the creditors are expecting would be payments of £450 -- the overtime is the bonus and is not guaranteed -- so they can expect over that last 54 months 54 x 450 = £24,300. Taking into account savings they will make over those months in admin, I would offer, say, £20k at that stage.
IvaIn2018
Posts: 21
by IvaIn2018 » Wed Nov 07, 2018 4:02 pm
Thanks Foggy, appreciate it.

As with everyone, I am just so desperate to put everything behind me and whilst I'm thankful of the structure of the IVA, it is still very constraining.
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