IVA & DRO

IVA & DRO

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IVA prior spending

Posts: 725 Forumite
Part of the Furniture 500 Posts Name Dropper Combo Breaker
My friend is looking to go into an IVA as he owes one company a lot of money due to a failed business venture.

He owes a good friend of ours £800. If he paid this prior to applying for the IVA would it be seen as favouring creditors?


How dimly do they look on your spending habits prior to applying for the IVA?

Any help appreciated.

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Comments

  • That's a very good question! You have to put together an iva proposal when applying for iva and in that spell out how debts have arisen and the reasons why it's not possible to pay them straight off .
    It is preferring creditors if your friend pays one off in favour of another but to answer your question fully one might ask the total debts on question here , and what you mean by spending habits prior to iva ? It sounds to me like there's a much bigger story here - it's easy to miss important facts and give an unbalanced reply if there's not enough information in the question
    now debt free and determined to maintain good spending habits and build savings
  • Posts: 725 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    The debt is to one company for his parents failed business that he signed to be jointly liable ( hindsight) . There is a counter claim that is another story. Anyway the court ruled the are jointly liable for 50 k and they want the money now.

    He has no personal debt whatsoever and never has. He does have 3k in the bank but booked a holiday and owes our friend 800. He is now worried this will look really bad and I guess it does. But what are the real consequences?

    Thanks
  • Posts: 5,259 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Rebecca01 wrote: »
    How dimly do they look on your spending habits prior to applying for the IVA?

    Who are the 'they' you are referring too? In this case with apparently one creditor all he has to do is convince that creditor that an IVA will give them their best return.
  • Posts: 884 Forumite
    Part of the Furniture Combo Breaker
    Lots of people, prior to entering iva's attempt to snowball their debts, so this is no different.

    What you spend your money on prior to the iva is also irrelevant, unless some blatant fraud is suspected.

    I suggest he pays off the small £800 debt to save the friendship, then go for the iva. I suspect this was an informal loan, so won't show up on his credit history, and he may struggle to prove to an IP that this is a legitimate debt anyway.

    Regardless, this is a relatively small amount of money in the grand scheme of things.

    The reason for considering the iva is the £50k.

    He just had to hope that the sole creditor agrees.
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