IVA - PPI Final Settlement

Curlybing

Hi All,

I would be very grateful for some advice please. I am almost 2 years into my IVA now and as a part of the IVA PPI was claimed through Equity in Finance; in total I have been advised that £5779 will be put into the IVA from reclaimed PPI. I had hoped that this would be classed as a windfall and used to reduce my IVA considerably. It was agreed at the begining of the IVA that my total payment would be around £13,000 over 60 months. I have already paid around £4000 into the IVA.

I called Debt Free Direct today to ask them about having a final settlement and how much I would need to pay to bring the IVA to a close and they have told me that the PPI money will be added to my debt and my creditors will receicve £18,000 now not £13,000.

I am totally confused by this as I was led to believe that the PPI would reduce the amount I owed.

Advice would be greatly appreciated before I sent a stinking letter of complaint to DFD!

UpToMyNeckInIt

Difficult to advise on the limited information. How much was your total original debt?

Unfortunately, I suspect that something has got lost in translation here.

In an IVA, we undertake to pay back a minimum dividend (£13k in your case I assume?), based on what you can afford Monthly.

However, you remain liable for the whole of your original debt + IP fees for the duration of the agreement (ie, not just your minimum dividend). Any windfalls/realised assets will normally go into the iva pot.

I assume that you can still afford your Monthly payments? If so, DFD are entitled to keep the agreement running for the original 60 month term, or until you have paid of all your original debt, whichever comes soonest.

The only time normally an IP will accept a F&F by way of a PPI payout, is if you cannot continue your usual Monthly payments for whatever reason.

Sorry if that's not what you wanted to hear, and I stand to be corrected if you can provide further clarification.

Good Luck.

Curlybing

Hi, thank you for your post. My total debt was £24k, agreed with DFD that £13k would be repaid. I was struggling with £227 (made 8 payments) a month so DFD agreed to reduce it to £193 a month which I have been paying for 13 months. I am due my annual review soon and i can't afford any more on a single wage (I have had a pay freeze while the cost of living continually increases). Yet I know DFD will push me to pay more. I understand that the debt will be paid off in 5 years and I take some responsibility for my debt but I also got into debt for an ex-partner. I was not informed that the PPI would be added as a dividend, I was lead to believe that it would come off my debt. I suppose the saying is right "assumption is the mother of all f@ck ups"!

UpToMyNeckInIt

Sounds like DFD have taken advantage of their discretion to lower payments by 15% (the maximum they can do usually, without calling a variation meeting with your creditors). BE ADVISED: This shortfall MAY be added onto the original agreement (ie they may extend your IVA to make up the shortfall).

As you say: never assume anything - always ask you IP if in doubt.

My previous point still stands though: You 'agreed' the £13K minimum dividend, but DFD are well within their rights to seek to increase that dividend by making reasonable PPI/windfall enquiries etc. In the same way your payments will go up if you have a significant payrise. This applies up to your original debt amount + IP fees.

As you are coming up for your annual review, you ought to check out the Stepchange budget guidelines here:


https://docs.google.com/file/d/0B7LabJy69BP1M0gxeHQ1SDFiN1E/edit?pli=1

Very useful reference. They provide for little luxuries such as: hobbies, hairdressing, pocket money, newspapers/magazines etc. Well worth 'claiming' for, as you never know when you need to off-set this 'essential' expenditure against other areas/save for emergencies etc...

Just had my review: I near enough 'maxed-out' all the allowances to off-set a small income increase. Result? IVA payment unchanged, but life is now just that little bit more comfortable :-).

Hope this helps you.

Curlybing

Thank you for your advice to be honest the whole IVA process has really started to get me down and affect every aspect of my life. I am going to have a good read of the document you suggested, I was not aware I could make allowances for dentist and hobbies. I would do anything for a little break away somewhere but even that seems out of reach in an IVA!