IVA confusion, IP awful!

edited 30 November -1 at 1:00AM in IVA & DRO
2 replies 1.9K views
B3thenyB3theny Forumite
2 Posts
edited 30 November -1 at 1:00AM in IVA & DRO
My mum entered into an IVA 5 years ago along with her business partner and they have a joint PVA on their business. Last year they were subject to a variation and all were extended, my mums is due to finish next May.
Since then the business as closed down as her partner was diagnosed with cancer, he passed away at the weekend and we are trying to sort out what to do with her outstanding debts. After nearly two weeks of trying to get hold of her insolvency firm they called back yesterday. The guy I spoke to hadn't even read her file properly and couldn't answer most of my questions his main point though was that in her IVA it states that in the final year she must sell her house and give her creditors anything left over once she has paid her other debts. There is a real possibility that this will be much more than the debt listed in her IVA but the IP said that didn't matter. I kept asking what the outstanding debt was now (after 5 years of payments) and he just said it was irrelevant as mum would have to give them everything anyway, any extra would cover interest accrued but I thought this was frozen?
We plan to have a meeting with the IP soon (I'm handling it as her business partner was also her 'boyfriend' of 20 years and she's not coping well) but any information would be great as he was less than helpful. Surely she cannot be asked to pay back more than 100p in the pound? And can they take all her equity once the hiuse is sold as that will leave her nothing to live on. She is looking for work but can only do so part time as she cares for her mother).

Replies

  • mwarbymwarby Forumite
    2K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    I don't think you can be made to repay more than 100p in £ but to get to this you have to
    -have paid all the debts
    -All the IP fees(will be in the agreement)
    -Pay statutory interest on the debts(this isn't on, or enforced on all agreements)

    If there is anything left over from that, then that would be repaid, as I understand it

    It's unfortunate that the 'sell house at end' term was included, this is quite a severe term, most probably added as a variation at the creditors meeting. This will have been agreed with your mum and partner and probably accepted as being better than the alternaltive of bankruptcy.

    Going forward you need to get the IVA firm to tell you where your mum is in terms of payment, and balance outstanding. This in my opinion is needed for next step, you need to know if it's a small or big shortfall

    Your mum and IVA firm then need to propose a modification(ideally offering the creditors something in return for dropping house sale clause) and call another creditors meeting(who need to vote on it).
  • Tinks74Tinks74 Forumite
    201 Posts
    The payment of Statutory Interest as mwarby mentions above will make it appear that more than 100p in £ has been paid.

    The base statutory interest is a flat rate of 8% per annum, however it is possible (uncommon but not impossible) that an individual debt has a specified interest rate within the original borrowing agreement T&C's.

    It is not always paid and it is rarely paid in full.
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