IVA turns into nightmare

ianclark99

Please bear with me on this, my story is fairly long but has an important message for anyone considering an IVA

Back in late 2006, I got myself into financial trouble. Getting desperate, and with no idea of the help available, I set up an IVA with Debtmatters, paying a set amount of £332 per month, meaning that out of an original overall debt of just over £24k, I would pay off £20k. Last year, my case was handed over (or should that be sold on?) to Payplan, still at £332 per month. Being stupid, I was so relieved when the IVA was set up (thinking all my troubles were over), I did not read the small print (or rather the modifications) to my IVA. One of these states that my IVA is subject to 2 types of regular review. 1) An annual income and expenditure review and 2) a Quarterly review of my salary.

Looking back, the first one seems fine, although I have recently moved in with my girlfriend and her little boy and despite her low income, and substantially increased costs since the IVA was originally set up, my monthly payment has not changed.

It is the 2nd of these reviews that is proving to be the killer. Each quarter, my last 3 months salary is compared to my salary back in 2006. Obviously, my salary has increased in that time (due to a promotion it has gone up by about £200 per month). The review however, does not take into account the increased costs since 2006, purely the difference in net salary.

This means now that every quarter I am getting an additional charge of between £300 and £400, even though my increased salary just about covers all the increased costs for food, utilities etc.

I have calculated that by the time the IVA is complete, this "modification" will mean I have to pay an extra £8k on top of the original agreement, meaning I will pay £3k more than the original debt.

I cannot believe this is legal or fair, but whenever I contact Payplan they just offer false sympathy and little else, except to tell me about the latest charge!

So, I say to anyone considering and IVA, beware of the hidden costs!!

Any advice on my situation would be appreciated.....

MIVAA

Hi Ian,

Your improved income does not automatically mean you need to increase your IVA payment.

Your change in circumstances should be taken into account, and therefore you really need to discuss this issue with your IVA supervisor.

If your IVA supervisor isn't willing to reduce your contribution back to where it should be, then you could suggest putting forward a variation meeting,

The details of what a variation meeting is are outlined in this article.

What is a Variation Meeting


This is not due to hidden costs by the way, and it wrong to consider the increase as such. This is more accurately described a mistaken belief that you have benefited from an increase in your ability to afford higher payments.

The IVA sets out your obligation to your creditors - which is to repay as much of the debt as possible, through an affordable monthly contribution, once your essential living costs have been taken into account. It is up to you to fight your corner, and you should set-out in a letter your full financial circumstances, highlighting exactly you new income & expenditure in detail, especially the changes not just to income but also the extra costs you face each month.

This should help clarify the real position to your IVA supervisor.

I hope this helps.

MIVAA

ianclark99

Thanks for the information, very useful. A further update as of today. I have explained that I cannot continue to pay the regular amount and the extra amounts every quarter and Payplan have offered to reduce the monthly payment by £50 per month (or the maximum 15%). There has been no mention of extending the IVA but I am pretty sure that will be the "hidden cost" behind this offer! Also, they are suggesting spreading out the latest quarterly review payment in additional monthly installments until November. Also, the case officer made no mention of the previous 2 quarterly review adjustments which I have still to pay. When asked what I owed, she stated £486. It all seems a bit too good to be true, but I'm sure that come the next quarter, I will be asked for more cash!

Anyway, I have asked them to send all the relevant paperwork through (as well as details of previous decisions/reviews and I will go from there.

MIVAA

Hi Ian

Good luck with it.

You shouldn't be asked to extend the IVA term though. You agreed to repay what you could afford over the 5 year term of your IVA.

End of.

They can't just instruct you to increase the term. It is agreed at 5 years and that's that.

And again, these are not "Hidden Costs"

This is you repaying your outstanding debt, just as you agreed you would !!

MIVAA

ianclark99

Okay, I take back the comment about "hidden costs".

I just don't understand that how for 2 and a half years as part of a regular income and expenditure review, the amount I can afford to pay is calculated at £332 per month, yet every quarter I can be asked for an additional £200 - £400! How am I supposed to find that additional money if it is agreed I can only afford £332, even with my increased salary, due to increased costs over the last 2 and a half years?

I'm not trying to avoid what I owe, but I can only pay what I can afford!

fnc6810

IVA's Are legal but can be unfair of course i assume you knew everything about an iva before entering into one. Please don't tell me about hidden things you must have read the leaflet about these IVA's and not had a face to face conversation with an IP.
I am a mechanic and i also operate my business over the phone people say their clutch has gone, i send them a leaflet of whats involved and then charge them a huge sum.
Sorry about the sarcasm but like a lot of people you were vulnerable because of your debt situation and at the time did not understand the complexity of an IVA as i didn't until it is to late.
Although this is not a help site you will get good advice some from people just starting, half way or completed. But don't asume the advice given is the correct advice. Because your IVA could be totaly different and unique to you it is governed by Terms and Conditions which you should have a copy of your proposal and posibbly a modified proposal and any confliclt between these documents it is the modified proposal that wins.
Anyway a question how are you paying your IP fees 5 years at £332 per month =£19920 ?

fnc6810