IVA Completion & reclaiming credit card charges

MIVAA

As I understand it, if you make a claim to reclaim unfair bank charges during your IVA, and your claim is successful, you will be required to notify the IP who, as James says, will distribute this 'windfall' amongst all the creditors pro rata. This is normal, and happens often.

However, I'm not so sure you'll be successful in receiving a refund of bank charges after the IVA has been concluded though.

Approaching this logically - the bank charges you have been overcharged would be owed as part of the debt that your bank claimed in the IVA. Any reduction in the debt in the IVA will be reflected in a reduction of the size of the claim the bank can make in the IVA whilst the IVA is in progress, therefore reducing the share of the dividend the IVA will payout to that creditor, and increasing the share of the dividend the other creditors will receive.

Once the IVA completes, the opportunity to reduce the debt in the IVA dies, as it is considered settled.

You would not receive a refund of the charges as you never actually paid them, you actual still owed them as part of the debt you entered, and the creditor claimed in the IVA which, chances are, you didn't repay in full anyway.

It's the other creditors who lost out, not you.

MIVAA

trudij

but the worst that can happen is that you get knocked back, so you ownt be any worse off than you are at the moment. Have a go ang good luck!!

PaulinWeston

While I understand the argument that I would not receive a refund of the charges as you never actually paid them - The terms and conditions on the loan/credit card agreements state that payments made reduce the balance on the account in the following order: Default charges and interest on default charges, promotional balances (including interest) and fees, other interest fees and charges, standard rate purchases and balance transfers, cash balance.

Therefore – where the bank/credit card companies have received a dividend under the IVA, or sold on the debt to a third party, their default charges and fees HAVE been paid.

As such, I should be able to claim them back.

Moreover, if their charges hadn’t been so unfair in the first place, it is most likely that I would never have been in the position of needing an IVA. Indeed, surely one could argue that I require compensating for having been put in the position of needing to make an IVA and all the associated distress and alarm that it caused!

PaulinWeston

Just to update - I have now successfully recovered over £1,000 (in cash) from three former creditors for charges that were applied before I went into an IVA.

The argument I used was this:

"If the IVA is in progress, I am advised that if the creditors include unfair charges in their claim then these should be reflected by a reduction in the size of the claim the bank/credit card companies can make in the IVA, therefore reducing the share of the dividend the IVA will payout to that creditor and increasing the share of the dividend the other creditors will receive.

This is because the creditors would otherwise receive an unfair share of the dividend.

[Moreover, I am aware of some people in this position, where they were able to reclaim the charges, which they were then obliged to declare as “windfall payments” and as such, pay into their IVA.]

However, once the IVA completes, the opportunity to reduce the debt in the IVA dies, as it is considered settled.

The creditors may argue that I should not receive a refund of the charges as I never actually paid them, or, I still owe them as part of the debt I entered and the creditor claimed in the IVA which, I didn't repay in full anyway.

However, I am advised that the credit card companies and banks chose to unlawfully and unfairly claim the charges as part of their claim (thereby denying other creditors of their share of the dividend), furthermore, they state in their terms and conditions on the loan/credit card agreements that repayments are made reduce the balance on a customer’s account in the following order:

1. Default charges and interest on default charges
2. Promotional balances (including interest) and fees
3. Other interest fees and charges
4. Standard rate purchases and balance transfers
5. Cash balance.

Therefore – where they have received a dividend under the IVA, their default charges and fees would have been the first element of the debt to have been paid. Therefore it is fair that I am able to request them back, in full, including interest at the statutory rate."

cinders13

very well done Paul. i am just about to try the same thing so you have given me some encouragement.