IVA and Inheritance windfall

HopeToHelp_2

Hi,

I am hoping to get a little advice on behalf of my sister who has an existing IVA and is about to receive some inheritance.

Some background:
My sister is 26, she got herself into debt living off of credit cards, which obviously became unsustainable. Owing her creditors a total of approx £27k, she arranged an IVA which started in Feb 2008 and she has since then been paying £250 pcm, she has been doing well with this, not missing any of the 33 payments so far.
I believe it is with one of the non-profit providers, as they were recommended by citizens advice, I'm afraid I can't remember the name of them at the moment.

She earns a fairly low wage, and the reason she is able to afford the £250 a month is because she was living with her mother at a vastly reduced rate of rent and sustenance.

The present
Sadly our mother recently passed away and as a result she will inherit, as part of the estate (of which I am the executor) approx £30,000.
Obviously, she both wants and is required to use some of this inheritance to finish the IVA.

Being not very familiar with IVA's myself, and wanting to get opinions from experienced people other than the IVA managers (who I have a hard time trusting myself), I have the following questions and thoughts I was hoping to get some feedback on.

1. When receiving a windfall, is it usual to have to pay back the full original debt (£27,000) and is this minus what she has paid already, or just the remaining installments of the IVA agreement? and is this negotiable.

2. Because she has such a low wage, and now will have to pay the full cost of renting a home and living costs the sum of which are much higher than "the rent she paid previously" + "the IVA monthly payments", her wage alone would not be enough for her to be self sufficient without a significant decrease in quality of life (on top of the extremely distressing situation of having just lost her mother at a relatively young age).

If she has to pay back the approx £20k of the original debt remaining, that is going to wipe out a large proportion of the inheritance that it is hoped (when invested) will help supplement her low wage and allow her to go forth being self sufficient, at least for a few years until she can improve both her own financial status and we all see an improvement in the current economic climate.

Obviously, the more of the inheritance she can hold on to, the longer she can exist without help from state or (god forbid) getting her self back into debt.

I guess my question is, will the IVA management company \ her creditors be open to receiving an offer for lower than the remaining £20k given the circumstances, or will they just look at the total of the windfall and take whatever they can?

Many thanks for any advice.

devonshire

When she recieves her money from the inheritance she needs to ring up the iva company and ask about offering a full and final settlement. the ip should discuss with her what a likely amount the creditors will accept. the creditors need to agree on the amount though.

complainer

With inheritance it is classified as a windfall and this should be covered within the proposals your sister will have signed. Usually the whole amount would need to be paid in.

The IVA can be classed as settled upon full 100p/£ return to creditors and all associated fees for the company (and there will be some even if they say non fee paying).

However a full and final settelment can be offered to your sisters creditors and with the reasons you have given above there is a strong argument to offer a reduced settlement. She should speak to her IVA company and request a full and final variation to be presented to her creditors the offer would be based upon advised from the IVA company and ulitimately what your sister wants to offer.

Hope this helps

debtinfo

The first thing to do is dig the proposal ot and come back and tell us what it says about windfalls