Questions about current IVA

Hokushin

Hi All,

I'm new to these forums, so hi. I'll jump straight in.

I have some questions about a current IVA my sister has which is in its third year. Since the beginning of the IVA, her circumstances have changed and she is now earning a lot more. As a consequence her repayments to the IVA firm (in this case Simple Debt Solutions) have gone up. So far, so good.

However, considering her initial debt (£15K) and her current repayments (a whooping £682 per month) I asked her to get a final settlement figure because if I could afford it I would have paid it off and then she could repay me, without the SDS taking their fee. However, when she phoned SDS and asked for 1.) the current balance and 2.) the final settlement figure they kept telling her things like "We can't get you the current balance". When she asked them why they replied "It doesn't work like that", with no explaination.

Now, considering I'm completely ignorant about IVAs and I've only just read up on all the online resources about them this seems very unusual to me. They don't know the current balance? What? How could they not know this? When my sister asked them for a rough figure they replied £18K? WHAT? Even with their fees, with her currently repayments this isn't possible, surely? After challenging this figure, they told her they'll call her back, which they then eventually told her everything will be paid back in 11 months. 11 times £682 is less than £18K. WHAT?

Secondly, they then proceeded to tell her that although the interest rates on her debts are currently frozen, they may decide in the future to recind this (furthermore they said that they'll backdate the interest to the beginning of when the IVA started). I thought the whole point of an IVA was to freeze your debts and to reduce payments to a manageable level because you can't afford to repay your debts are the current rates?

So my two questions are, is it normal that a IVA firm can't tell you the current balance on your debt? Or come up with a final settlement figure?
Secondly, can creditors decide to go back on the agreement and backdate the interest on the debt?

I've asked my sister to send me absolutely all documentation related to the IVA so I can go through them and see what is what. So unfortunately I can't tell you kind ladies and gents what it says in the IVA agreement until I receieve them.

Thank you for you time and patience.

FoggyBrain_2

Hi. There is no such thing as a settlement figure in an IVA, as the whole original debt is payable until the IVA has been completed. The dividend, which has been promised to creditors can be made up, with the creditors agreement, to make a full and final settlement. To get this figure, multiply the original payment by 60 (assuming a 5 year IVA), then take off what has already been paid across.

The only time creditors can claim interest back is if the IVA fails. Otherwise they are bound by it and the debt goes when the IVA completes. Are you sure this is an IVA and not a DMP (Debt Management Plan), as in the latter, creditors can resume charges and interest at will. DMP's can drag on for decades!

If SDS are now saying everything will be paid back in 11 months (which should be based on the original debt plus their fees) then your sister might well have been badly advised to enter an IVA in the first place. What they might mean is that the estimated dividend will be met in 11 months, in which case the payments after that will simply increase the dividend to the creditors. An IVA doesn't end when the dividend is met, only at the end of the term or if the TOTAL debt is paid, plus fees, before the end of the term.

If they do mean the dividend will be met in 11 months, then a F&F now, would be based on 11 x 682.