IVA and change of circumstance

Avenger2

HI
We have had an IVA for approx 6 months, term is 5 years at £150 a month, I have had a job oppotunity on a self employed basis, I have been advised for tax I would be better setting up a limited company which I have done, prior to me taking this job because of our current financial situation we requested a 3 month break from the IVA repayments, this is coming to an end next month, there are number of issues if any one can give some guidance;
1/ I am finding it differcult to obtain just a basic buisness bank account, I do not require any credit it is just for a sum of money to be paid in and a weekly wage to be paid into another account. Are there any banks that would consider anyone with an IVA?
2/ How is my new wage taken into account with regard to the amount we pay back to the IVA, if the limited company paid a dividend at the end of each month we would declare that as additional monies to be paid back to our creditors, if that money remained in the company bank account would that have to be declared,
3/ As our circumstances have changed so much we would really like to get out of the IVA and repay on a monthly basis with out the handling company completely, is this possilbe?

balmk

Hi,

In brief (based on my experience):

1) Barclays do a basic bank account - I went with them when I had my IVA.
2) You would be best discussing this with your IP - this would likely be a variation to your agreement. Remember, your IP is there to work for you, so should come back with the best mutually agreeable solution.
3) This is unlikely, but check with your IP. A worst case scenario would be that by coming out of the IVA it will have "failed" and the creditors will be free to petition you for bankruptcy. Again, your IP is best placed to advise on this.

Hope that helps.

RuthnJasper

Hello Avenger2,

The advice provided by BalmK is spot-on and exactly what I would have said. I just wanted to say that I was able to obtain a Natwest STEP account when I got my IVA over three years ago. So far, they've been very helpful.

Good luck to you - with the business and the IVA; hope both work out well for you. x

Avenger2

Thank you both for your replies, I will speak to Barclays and our IP, do you know if Harrington Brooks have there own IP or would it be someone that is contracted out? We have had a tough time over the last 2 years, however with this new job it is looking brighter, we only went into the IVA a few months ago, it did take the pressure of in the short term but I'm starting to regret it.
We have arrears on our morgage and a secured loan at the moment but while we have had a break from the IVA for the last 3 months we have taken the oppotunity to reduce these, how do we stand with regard to secured debt? does that take presidence over the IVA?

dancingfairy

The problem as I see it is you have signed up to a legally binding IVA. Do check it's not a dmp though. An IVA gives you protection from your creditors. Given your situation you seem to have been badly advised as you say you have been in an IVA for 6 months, you've already had 3 months off for a change in circumstance, you've now gone ahead and changed your employment status for tax purposes without thinking through the implications on your IVA etc. It's sounding like a complete nightmare. However, if you have genuinely signed up for an IVA then you need to try and work out how to get out of this mess.
You have agreed to give your creditors a certain return over the 5 year period - you now have the option of varying your proposal (merely 6 months in -this is not good) but you stil want to keep them on side and make them accept your offer or perhaps trying to buy yourself out of the IVA.

Check your contract very very carefully to see if you are in an IVA or have been had and are really on a dmp. There is a register you can check somewhere as well to check your IVA has been properly registered. In your case it might actually be better if you had been conned and were actually on a dmp as in a proper IVA your options are limited. I would also be looking at whether you were mis-sold the IVA - you need Charco probably to have a look at this and tell you.
Check the paperwork and come back as I have a funny feeling something is not right.
df

dancingfairy

OMG - o.k this is sounding worse and worse.
O.K I am glad that you have taken the opportunity to pay off mortgage arrears and secured loan arrears. Was any note of these made in the IVA proposal? I would have thought that as part of the proposal you agreed to catch up on these - perhaps paying these off before you paid off the other creditors anything?
I wish I could help you more but it seems like you need to get a variation in place, buy yourself out of it or get the IVA cancelled due to the fact it doesn't seem to have been suitable for you/bad advice.
Have you communicated your concerns to the IVA company? what have they had to say?
Hopefully Charco will be around later and can help.
df

Avenger2

Hi sorry for the delay I am working away and have just arrived home for the weekend so I will get all information together and speak to IP on Monday morning, nothing was really discussed in detail from the outset about the secured debt, I'm going to Email the IP over the week end with my concerns.

SunshineBear

Avenger2 wrote: »

HI
We have had an IVA for approx 6 months, term is 5 years at £150 a month, I have had a job oppotunity on a self employed basis, I have been advised for tax I would be better setting up a limited company which I have done, prior to me taking this job because of our current financial situation we requested a 3 month break from the IVA repayments, this is coming to an end next month, there are number of issues if any one can give some guidance;
1/ I am finding it differcult to obtain just a basic buisness bank account, I do not require any credit it is just for a sum of money to be paid in and a weekly wage to be paid into another account. Are there any banks that would consider anyone with an IVA?

If your were not a LTD company you would not need a business account at all. Can you get out of registering as LTD?

I had my business account before IVA and don't have to inform them as I don't owe them money.
2/ How is my new wage taken into account with regard to the amount we pay back to the IVA, if the limited company paid a dividend at the end of each month we would declare that as additional monies to be paid back to our creditors, if that money remained in the company bank account would that have to be declared, If structured as a formal wage and dividend I would have thought this would be all you 'declare' However as a self employed person, when you get your accounts back from the accountant you will need to declare the amount you pay tax on. It is the amount you tell the tax office that the IP will really be interested in. I am however in negotiation with my IP to work out a plan for payments untill I get mine through.
3/ As our circumstances have changed so much we would really like to get out of the IVA and repay on a monthly basis with out the handling company completely, is this possilbe?
Very much doubt it. Failer would mean bankruptcy. I wouldn't recommend this. As you have used up your 3 months 'grace' I would be very careful how you proceed.[/QUOTE]

Hope this helps.

smartiedriver_2

Sunshine Bear - all businesses need a business a/c, whether they are limited company, partnership or sole trader. If a bank catches an individual using a personal account for business purposes they will normally give you 30 days' notice to cease, and insist on a business account. If you fail to comply, the personal a/c will normally be closed.

SunshineBear

smartiedriver wrote: »

Sunshine Bear - all businesses need a business a/c, whether they are limited company, partnership or sole trader. If a bank catches an individual using a personal account for business purposes they will normally give you 30 days' notice to cease, and insist on a business account. If you fail to comply, the personal a/c will normally be closed.

While that may be correct, the majority of banks don't care two hoots about sole traders using a non-business account.

I have been self employed for over 20 years and can guarentee that 80% of sole traders don't have a business account.

smartiedriver_2

SunshineBear wrote: »

While that may be correct, the majority of banks don't care two hoots about sole traders using a non-business account.

I have been self employed for over 20 years and can guarentee that 80% of sole traders don't have a business account.

Sunshine bear - I cannot comment on other banks, having only ever worked for one, but I have given many clients 30 days notice to close in my time!

You may have been able to 'get away with it' thus far, but it's only fair that readers of these posts know the consequences if they are deliberately misleading their banks.