IVA Settlement

Luce74

Hi

I've had an IVA with Blair Endersby since November 2006 and am currently paying £25k for £24k of debts.

I have repaid £13k so far with a further £12k to go. I wrote to them in early November asking for them to present a settlement to my creditors as I no longer want to continue with my IVA as I feel that it is a weight around my shoulders that I no longer want. I have deep regrets entering into this in the first place but at the time felt there was no other option.

My current partner has good credit and has offered to loan me approx £5k to pay this off. I have offered £3k as a starting point but since sending the letter, I have had no response.

I spoke to BE at the weekend and was told someone tried to contact me a few days after they received my letter (which is true but my son had to be at school in 5 minutes so I could not speak and asked her to call me back after an hour which she didn't). The person I spoke to said she would get someone to call me back (nothing so far) but my creditors would probably not accept this as the settlement was too low and BE would need to assess my potential future earnings to establish if I could pay the whole amount owing.

My problem with all this is I was in a bad way financially and emotionally at the time and did not realise that I was going to be paying more into the IVA than I owed in the first place - I owed £24k, paying £25k. Most of the money will go to my IP with 63p/£ going to my creditors.

The person I spoke to at the weekend also said that I would have to provided justifiable reasons as to why I wanted to settle at a lower amount. It seems like they are just doing this so that they get more money for the arrangement if I continue this. They haven't asked my creditors if they will accept the £3k settlement and my letter has just been filed. When I asked why, they said that the settlement was probably too low and they may reject it. I asked if that was not the creditors decision to make and this is when she said she would get someone to call me back to assess my income and expenditure.

Any advice would be most welcome. What is normally a reasonable settlement figure or % and does my IP have a right to prevent my creditors from deciding on a settlement or not by not requesting this as per my letter?

Many thanks

Charco_2

Any advice would be most welcome. What is normally a reasonable settlement figure or % and does my IP have a right to prevent my creditors from deciding on a settlement or not by not requesting this as per my letter?

Your IP does NOT have the authority to refuse to give your offer, it is YOUR IVA, but your offer should be realisitic - for instance would you expect your IP to put forward an offer of £1?

There have been posts asking about this in the past and they are worth a read (in case anything gets missed out now!) BUT there is no hard and fast rule regarding how much the creditors are likely to accept...
It sounds silly but as important as the figure you offer you'll need to supply a reason!

"I'm bored" or "i no-longer want this albatross on my neck" is not going to win friends and influence people at the creditors meeting!
"I've just started a family and would like a fresh start on my finances too to provide a better home" is more likely to curry favour!

WHY are you looking to offer and HOW COME you are now in a position to offer a lump sum are both important!

My bofriend has offered to buy me out is ok. MY great auntie Flo died and left me a small fortune is not (because you'd have to introduce your inheritance to your IVA anyway!)

Finally, consider how much you still owe...
You say you owe £12k - are your creditors likely to accept £3k instead of £12k simply because you feel an IVA "is a weight around my shoulders that I no longer want"? Unlikely i'd say, even £5k is unlikely! BUT if you dress that up in a better reason... "my payments have become unaffordable, because... x,y,z and i feel my IVA may be about to fail and leave me facing bankruptcy. I am making one last effort to settle the debts amicably..." in this light £5k would be quite a good offer!

Sorry, i'm NOT suggesting you lie about it. But it's not always simpy a case of offering cash, offer them a package (the sob story, the concerns for the future and the cash! Better the story the more likely they are to accept a reduced payment)

Luce74

Thanks Charco

Although I owe £12k into my IVA, only £7.5k will go to my creditors (I am paying 63p/£) the rest going to BE.

I offered £3k as this was approx half of what they would be getting. I'll look at the other boards again but had a look before this post to see if I could find a solution on there.

I'll write to them again with a bit more detail. I know I shouldn't really, but do you think I should write directly to my creditors if BE carry this on.

I've even thought of stopping paying into the IVA to force it to fail so that I can take control and deal with my creditors myself but cannot risk bankruptcy as I'm an accountant and would get struck off.

Charco_2

Although I owe £12k into my IVA, only £7.5k will go to my creditors (I am paying 63p/£) the rest going to BE.
I'm aware that BE won't be expecting to be paid for a full five years work if you are ending the IVA early, but there will still be some kind of fee - a variation for example! But in reality there are only 23 months left of your IVA, BE will already be collecting the fees for this year and by the time your F&F is put forward, they will only be due one more annual fee... probably around £500. (The big fees of an IVA are collected early, not on a pro-rata type basis. Nominees Fees in the first year - £1500 maybe - and then Supervisors fees annually £500/600... actually, if you're paying back £25k and your creds are getting 63% then BEs fees are a lot bigger than that... £9,000 over the 5 years! It's still quite front loaded though!)

I offered £3k as this was approx half of what they would be getting. I'll look at the other boards again but had a look before this post to see if I could find a solution on there.
£3k might be an acceptable offer, no-one can tell you otherwise but your creditors and sure even if they knock it back you can still keep paying your current contributions on your IVA. It still makes sense to get your reason in order though! "Job not quite so secure this weather, company looking at redundancies, would like to sort this out before the !!!! hits the fan!"

I'll write to them again with a bit more detail. I know I shouldn't really, but do you think I should write directly to my creditors if BE carry this on.
NO. BE MUST DO THIS. You're paying them for this! Remind BE that it is YOUR proposal, they're just the referee so to speak!

I've even thought of stopping paying into the IVA to force it to fail so that I can take control and deal with my creditors myself but cannot risk bankruptcy as I'm an accountant and would get struck off
It's a crazy idea anyway because your creditors will just go back to add the interst on tht you haven't been paying, you'd almost be back at square one!

Luce74

Noted!! Thanks for your advice

Luce74

Hello again

Well Charco, I took your advice and wrote to BE again explaining to them that my partner will be made redundant shortly (his dept restructured and he did not get his job) and we had planned to move in together but agreed to sort out our respective finances before he ended his redundancy period.

I wrote to them on 22nd December but to date have had no response. Someone from BE rang me last week regarding £40 arrears which is an increase from my review as I'd forgotten to increase my SO. I asked her about my letter which she said was on file and would ask my case officer to contact me to go through an I&E. I asked her if my case officer could ring me after 6 as it would be easier to go through my I&E at home and she said she would get her to call me the next day (12th Jan). I haven't heard anything since.

I'm eager to know whether my creditors will or will not agree to my settlement so that I know either way.

Any suggestions??

Much appreciated

Luce74

Charco_2

Funny how slow they are to respond to your progressive approach to your IVA but how quick they are when they're not getting their money!

My advice now would be to keep ringing them. They've had your letter and haven't made contact with you. Your letter aint much use sitting on file if no-one is looking into it.

They are going to need to run through an I&E with you to see how much you can still afford to pay as monthly contributions. Then weigh up the possible impact of your partner losing hos job and money in your household becoming tighter. Then take on board your desire to make a home with your partner and have a fresh start for a family possibly.

It is your proposal and so you can insist that whatever offer you want is put forward to your creditors... BE should be able to advise you on it's likelihood of success but with the standard of service you're currently receiving any good grace they had might be quickly evaporating for you!

The only other thing to remember though is that if your offer is rejected then no harm done... you can still attempt to miraculously muddle on through with the IVA you have - you won't have lost anything!