Making an offer to settle

Fundin

Hi,

A friend of mine has an IVA of circa £50k, paying £360 a month over 6 years. 2 have been paid leaving 4 left, no defaults on payments. The parents want to make an offer to settle for various reasons, we've heard that IVA companies will sometimes take an offer based on the remainder, so roughly £18k to pay to date.

My questions is:-

1) What would you recommend as a figure, something around the £8-9k mark (50%) ?
I've seen some people offer 33% and 40% here but wondering what advice you have.

I'm guessing any offer is passed to the creditors to see if they accept or not.

Thanks for any help.

Charco_2

There are two things which can be just as important as the actual figure you intend to offer:
1. Why are you making the offer now?
2. Where is the money coming from?

Why are you making the offer now?
Have your circumstances changed? Have they changed for the better or the worse?
Your creditors are unlikely to agree to release you from your agreement simply because you can't be nothered anymore and you want out. However if you have a genuine reason for wanting/deserving a fresh start they are more likely to lend you a sympathetic ear.
You have lost your job and can't afford to maintain your repayments?
Your wife is pregnant and so you'd like a fresh start for your new family!?
You've just been promoted and don't want to increase your repayments so lets just end it now!? (Obviously this last one wont fly to well with your creditors)

Where is the money coming from?
This is kind of tied in with the first question too. Basically, why do you suddenly now have a lump sum to offer? Would you have this money anyway in which case your creditors are going to get their hands on it (or half of it) anyway. (Have you been promoted? Did Great Aunt Bessie die and leave you the farm?)

Get your story straight first (and i dont mean lie) and then think about your percentages!

Strictly speaking the offer you make should be the best offer you can afford to make. If you can get £17k then that's what you should offer but if your story is particularly strong then you might "get away" with less!
(We had a case once where an offer of £0 was accepted. Mrs was in an IVA but the sole income came from Mr who served in the army and died serving in foreign lands.)

The IVA will run for another four years and bring in roughly £17k. The IP will earn four years of supervision fees on this so roughly £12,500 will be going to the creditors. Discount some of that because the money is coming in now rather than over the next four years and an offer £9K or £10k would be reasonable you'd think... but if there were further mitigating circumstances to take into account then your offer could be less.

Fundin

Interesting stuff there Charo, thanks.

1. The offer is being made as a fresh start as marriage is happening - the intended has already got a prenup to protect all assets from the IVA people though so no extra money will come from there. Not sure if this is worth mentioning though as might make the situation go against them?
2. A huge amount of stress and stuff like all IVA people must have - does this get taken into account anymore?
3. A family is being planned so the payments will at some point drop considerably to match the missing income. Should she wait until the pregnancy is real though?
4. The house is in negative equity by 10% so no money is likely to come from there even at review stage unless the markets pickup alot over the next years Also the house is via keyworker so the IVA are last on the list (legally) to get any profit, unless house prices rise by 25% they would not get anything from the sale.

Is this all stuff worth mentioning when contacting?

The money is from a family member so it would never come to my friend anyway. Basically a gift. Two options are being considered, 1) a gift from a future inheritance 2) a gift from a family member

My friend is basically able to keep paying but its a strain and with a marriage coming, no equity in the house the family is wanting to clear the IVA to allow the fresh start to happen.