salary

cootambear

an ahem friend who is about to enter an iva, has been offered a salaried post. it is his understanding that the iva will last for five years?

obviously the iva will take a large chunk of his salary, leaving money for the bare essentials?

q1? he has understandably a v poor credit rating and no savings. with this mind would it be possible to purchase a car on credit?

q2 the salary range for this job has been quoted as £25k to £35k negotiable. Is it the case that the creditors would look at the salary payslip in making calculations as to payment if say he started on £25k?

q3. because he may have the opportunity to negotiate a starting wage of £25k, but rising steeply by say £2k a year to £35k over the 5 years. would the creditors find out about these wage rises, without him telling?

please please hurry your responses, many thanks

Charco_2

Yes he can certainly attempt to purchase a car - on HP!

It would otherwise be considered fraud to accept credit with no intention of repaying the debt in full. Other debts that your friend took on were taken in good faith albeit he/she finds him/herself unable to pay in full now.

The IP when looking at earnings will look at the most up to date pay slips, or other note of salary when calculating income. This will usually last for a year until the annual review when your IP will look for further evidence of what you did earn and what your forthcoming salary will be.

This does not include overtime or bonuses however which obviously will still need to be dealt with but are not used for the total calculation.

cootambear

i take it then that the hp company would not be included in the list of creditors, however the hp payments would be taken in to account when calculating the payments to the creditors?

nicolascowen

Hp is a secured debt therefore can't be included in an IVA and would go as an expense, however creditors get sniffy about expensive cars so be careful what you choose - sigh! You should also make sure that your IVA still works for the creditors with this additional expense. Your IP will check your income from wageslips and then every year on the anniversary of your IVA they should again check your income and make sure you haven't taken any credit ( you must ask permission if you need to do this once in an IVA) unfortunately the creditors get some of the benefit of your payrises as they are writing off debt. Speak to your IVA administrator if you need more help

cootambear

how much of the benefit would they get nicola?

nicolascowen

cootambear wrote: »

how much of the benefit would they get nicola?

anything up to the full amount your IP will tell you specifically it will be detailed in your contract

Charco_2

yes, creditors might get sniffy about an expensive or flash car so you should really be thinking practical but also something that is going to last... However since the car doesn't belong to you until you've paid for it it cannot be included in the IVA. Don't go for a ridiculous mid-life crisis banker car but dont be afraid to get something you're happy with... just make sure you'll still have a surplus for your IVA.

As regards overtime and bonuses, it's usually the first 10% for you then the rest split 50-50. There has to be some benefit for you to do overtime or earn your bonus otherwise you'll refuse overtime and slack off at your job!

So if you earn £25,000 normally - call it £1,550 per month - you can earn usually £155 in overtime without having to make an extra contribution to your IVA. If you earn £200 more in a month then you'll have to contribute half of the extra £45 so £22.50.

It will depend a bit on the paperwrk but that's a rough guide!

The following year at your annual review your IP will consider the extra amounts (so save them up and err on the side of caution... if your IP asks for them you'll have them if he doesn't then it's your savings!). Your IP may however try to take some of it into account as your earnings in the following year... but only agree to whatever is written on your wage slips... overtime and bonuses should remain overtime and bonuses because they are not guaranteed income! If you wages go up by £2k then that will obviously change your I&E but you can try to mitigate the increase with increases to your costs... Negotiate!

cootambear

hmm just spoken to someone in the iva office (only a contract drawer, not the iva man himself) who reckons its 50% of any increase. he could of course be wrong.

nicolascowen

he's probably right in these large companies the IP usually does an overview and then signs it they aren't that involved

Charco_2

I work in insolvency... it COULD be 50% of any increase but I would say he's wrong! (or mistaken or confused)

The full amount of your actual wages should be considered at all times. So if your wages go up by £2k your IP (or his staff) will redraft your I&E at the new level but its up to you then to argue that your expenses have increased... £2k over the course of a year is about £120 a month some of which will go to your IVA.

50% applies to bonuses and overtime. But check the paperwork they send you out!

Charco_2

It's an interesting interpretation... and I'm not saying it's wrong, it may very well be exactly correct but it's not the way we've interpreted it. Perhaps your proposal is worded differently but I'd would guess it isn't.

I can see the logic for your interpretation but I can also see the logic for the interpretation I normally see used!