IVA - Full & Final Settlement Offer

fred98

Hoping someone can help?

3yrs into an IVA, with a projected £11k to pay back. Currently paying a dividend of 44p in the £.

Having got this far, keen to see it through to completion.

Just been made redundant, in receipt of £20k. My dilemna is as follows:

- We owe our inlaws £10k.
- I will need to keep back 6 months budget whilst I seek alternative employment.

How will this situation be looked upon by our IVA practitioner? we are with StepChange.

thanks in advance

fred98

Can anyone help, thanks

Find_The_Real

Hello Fred,

Sorry to hear about your redundancy. You will need to discuss this with your IP as this would be considered a windfall and although you may be able to keep some of the money whilst you search for a job, the rest of the pay out should be offered into the IVA.

fred98

thanks for the response.

I understand we may keep 6 months of our agreed budget whilst I look for a job, so 6 x £2,200 = £13,200. This leaves £6800, of which we owe our parents £10,000. Is it unreasonable to offer this to the IVA as a final settlement given that we have a projected £11,000 to pay? This also assumes that our parents can wait for the monies owed to them, which I suspect they cant :-(

Anondebtadvisor

Your IVA company are unlikley to agree to that as if you owed money to your parents they should have gone into the IVA as a creditor.

Your IVA company will probably allow you to retain 6 months worth of salary to tide you over until you find a new job and then review your income and expenditure if you do find a job, if you do not they may need to call a variation meeting with creditors to see if they will accept the payments you have made to date in final settlement.

Foxy-Stoat_3

Yup, if your parents 10K was not mentioned at the start and you mention it now you may be in a serious breach of the IVA as you needed to of stated ALL your liabilities from the start.

Keeping quiet probably isn't an option as the payout will show up at the annual review.

Was your take home salary £2200 a month?

Best speak to your IP and go from there.

FiatFan_2

If you have the same IP as me a SC then you're not going to get anything more than the 6mths allowable, they'll expect the balance asap, so they can have their 15% cut before spreading the balance to your creditors. Speaking to them about the balance being used as F+F would be a good idea as i'd imagine it's about the expected return over the next 2yrs.

Unfortunately I was advised by them that any monies owed to family couldn't be added to the iva and that they would either have to accept they wouldn't receive the money back, or we pay the back from our allowances.

fred98

Really appreciate everyone's feedback, thank you

Whilst I understand we are bound by the terms of the IVA I'd like to think there is a little room for negotiation. In the event that we are unable to mutually agree how the money is carved up what options do I have?

i.e. If I allow the IVA to fail is there then an option to negotiate directly with my creditors?

UpToMyNeckInIt

Hi Fred,

Sorry to hear of your predicament.

However, it would be foolosh to 'let' the IVA fail. You would at best, be back to square one: By the time creditors add statutory interest (up to 8% p/a I read somewhere), and your IP adds his fees (say £4K for the sake of arguement), my guess is that you would be left with an amount owing at least equivalent to your original debt.

There is a big risk that creditors may then push for bankruptcy.

If you really want to pay your In-Laws back, best to let the IVA run for its remaining 2 Years, and then go from there.

I know the feeling, I owe my Dad £2,000. He knows about the IVA, and would rather wait a few years for the full amount, rather than get 36p in the £ over 5-6 Years.

Hope you find new employment soon. Good luck.

fred98

Thanks UpToMyNeckInIt, agree that it would be foolish to let this fail after 3 successful years, but desperate to pay our parents back.

With regards to bankruptcy, we are homeowners but have zero equity in our house so not sure if this is something the creditors would pursue.

Sounds like paying back our parents now isnt an option as the IP would fail the IVA, oh well.... onwards and upwards

fred98

Having declared my redundancy, I am now in negotiations with the IP for a full and final settlement figure. I have been advised not to spend any of the redundancy money until we have an agreement in place which is fine with me.

My final questions are:

1. Can they claim the money without my consent i.e. now they know its there can they just take it and just leave me with the 6 months net salary that I am entitled to?

2. If we don't agree on a full and final settlement what happens next?