spending savings prior to IVA.

kavabean

Hi All,

I am considering entering into an IVA and have a few questions that I haven't seen discussed anywhere.

1. I have £1000 in savings. I know once I enter the IVA these have to be used to pay off creditors. I also have some items I need to buy for work (laptop and some essential software). If I spend the savings to buy these items now will it look bad if I apply for an IVA in 1-2 months time?

2. In my case it is a work expense but it seems obviously smart/advisable in general to spend all reasonable savings on useful items, particularly things that forestall future expenses and increase productivity/output/income before entering an IVA? Examples would be car mainenance, productivity enhancing tools, replacing insulation in house, install double glazed windows, etc. The only reason not to is that it would affect the likelyhood or terms of your IVA negatively. Can anyone explain how exactly spending prior to the IVA is considered by IP's and creditors? Clearly the expenditures mentioned above are not frivolous. Does that matter?

3. If your work has occasional significant expenses that are not very regular how do you put these in your agreement? Examples might be tools, for example anew computer, construction equipment, etc; and training, e.g. course to improve programming skill.

Thanks
Benjamin

Max_1066

I would certainly 'lose' the savings as its a 'relatively' small amount even if you only take it out in cash for future use. You can always say you needed it for work related items. I've found that being totally honest in this situation def doesn't pay unfortunately.

happychappy74

To put this into context, I have a friend who went into a full and final IVA (I was in a 5yr agreement, so have no bias either way) and was expected to pay his kids savings into it. As the accounts were in his name, as per adult overseeing a childs account.

Between now and the key date 'take care' of the money on an important and unavoidable cost because it may make the difference when you need it.

Just a matter of interest, and this is something that made a BIG difference to my IVA once the agreement has been made just be mindful that you can still claim PPI and credit card fees of old. It does wonders when you need it at a later date...........for example offereing a full and final during an IVA (if the amounts owed are classed less than a windafall) or for picking up the pieces after.

Good luck.

james78_2

Yeah invest it in a laptop as you won't be able to afford it later!!! They'll make sure of it!!!


One company told me to max out my cards too, get a nother couple and max those out. And try get a loan before I apply for an IVA.....of course I did not take this "advice"

happychappy74

Thats good to hear because if it can be suggested, and evidenced, that prior to an IVA/BR there was behaviour amounted to obtaining and/or utilising credit facilities with an intention of failing to repay those debts then it is an offence.

But there is a difference between running up 'needless and avoidable debt' and spending funds on reasonable costs and requirements on the run up to the IVA. That difference? Being able to explin any questions in a reasonable and readily acceptable manner.

sourcrates

Put the money in a savings account and keep quiet about it, you have to look after number 1 with these people.

happychappy74

The problem with a savings account is it is potentially an audit trail leading to a wilfull disregard to compliance with a legal agreement. Dodgy ground.

Moving a large amount of money in one sum, or quick succession is bound to raise eyebrows (and suspicions) if identified ie linked accounts/companies.

I obviously would not advocate 'bypassing' a legal agreement, which may have civil/criminal implications, but I certainly would be looking at whats in front of me in a planned, methodical approach in a manner that would suit my circumstances in a manner that wouldnt bite me on the ar**.

:eek::eek::eek:

Charco_2

Kavabean, are you self employed?

I doubt sincerely that spending this £1,000 on a laptop (or even a lap-dance) is going to affect your IVA - try to spend it sensibly though, even if "spending it" just means putting it in your mattress for a rainy month!

Wouldn't use a savings account until well after your IVA has started.

As regards the work emergencies... when drawing up your accounts (I'm assuming you're self employed) you would be allowed a contingency/miscellaneous fund, not a fortune but an amount that it is unlikely you'll spend every month but will add up over the months to be enough to cover the emergencies as and when they arise.

The IVA would also be flexible enough to allow temporary changes when your circumstances change. Circumstances change all the time but if you think you're going to have difficulty maintaining your contractual contributions then you should contact your IP and see if you can come up with a way round. (Reduced Payments, Payment Holidays, Extended Terms, Missed Payments* - there are ways and means t help your IVA run to a successful conclusion and it is in the interests if your IP to hep you wth this)

*missed payments are not recommended but as long as you catch up it's not coing to fail you - it's better to try to keep in touch with your IP about changing circumstances as soon as you see a problem arising