Paying off IVA

MadAsAFish

I started on an IVA about 7 months ago, currently paying around £140/month so I have a total of around £7500 left to pay. My original debts added up to around £13,000.

The situation I find myself in at the moment is that I am going to be made redundant in a couple of months after 17 years with my current company. I have another job I will be able to move straight into with very little in terms of changes to my salary although my work benefits would be reduced - such as car / fuel payments. This would result in less available to the creditors each month.

It is my understanding that all of my redundancy pay will be expected to be paid into the IVA, but that it won't be anywhere near enough to pay it off as the debt would be considered to be the original £13K plus IP fees and interest etc.

Would the following be legal and possible to end the IVA, and what are the chances of success?

So can I ask my new employer to loan me the £7,500 to pay off the IVA before my redundancy. My reason for the early payback would be the transition to a new job with less available for the creditors. My redundancy pay would cover the loan from my new employer leaving me with some money and no IVA.

Thoughts please?

sourcrates

Hi,

In short no.
For one thing no new employer is going to loan you 7.5k, for another, why are you even in an IVA with only 13k of debt ?

Looks like you were badly advised on that front.

Don’t mess with the IP, they know all the tricks.

MadAsAFish

Thanks.

The fact I already have the job lined up despite being several months away might give you some clues - i.e. that I know the employer pretty well.

I agree that I was probably badly advised, but I'm in the situation and have to make the best of it. Obviously I won't be happy about losing nearly £9,000 in redundancy pay so I am looking for options.

Do I have to give up my notice pay as well is another question?

PrettyKittyKat

Your idea of trying to get a wage advance of 7.5k to offer as a full and final is a none starter I am afraid, as the creditors only need to wait a little longer and they will get 9k redundancy so there is no reason for them to accept.

However, you say you will have a reduced disposable income. Can you work out approx what your new I&E will be? If you disposable income will be next to nothing then you could offer a full and final on the basis that all the redundancy would be paid however you would no longer have the funds to continue paying (evidenced by the new I&E). This process can usually take 2-3 months so bare that in mind and the IVA company may require the money paid in and confirmation of new job and I&E before putting it forward.

Your notice pay would likely be assessed under the additional monies ruling - so you may get to keep 50%. However I would confirm this with your IP.

With the notice pay do you think you could pay 100p in the £? This is another option to consider and may be worth asking your IVA company how much it is

Alternatively you could fail your IVA and see if you could negotiate partial settlements directly with your creditors.

MadAsAFish

Thanks again for the advice.

I think the thing that is really frustrating me is that I will end up paying significantly more than the original debt and as such end up much worse off for entering into the IVA. The total payments on the IVA worked out to something like £8400. My redundancy will be near £9000 so more than the IVA was in total anyway.. then I have to continue paying another £7500 in making my total payments £16400 or thereabouts - on £13000 debt.

Not sure of the way forward - I don't have an issue paying the debt, but feel like I shouldn't lose out by over £3000

foxy-stoat

You shouldn't look at it at "losing" £3000 because of this change in employment as if you had kept on the same path when you started 7 months ago you would be "saving" £4600 plus interest charges.

I do agree you were not in enough debt to go down the IVA route.

You need free cash from family to offer full and final settlement, not loaned or advanced money.

MadAsAFish

It makes me wonder if it is worth going back in to work straight away though. I could take a 4-5 month break from work and be no worse off. That doesn't feel right, but as far as I can see would be perfectly fine under the rules.

If I do follow this route, what are the rules on doing some freelance work?

PrettyKittyKat

I am guessing from what you have said that £16400 is your 100p in the £ calc (approx). So if you continue to make payments at £140 per month you may find that your IVA concludes before month 60 anyway (it would conclude once you had paid 100p in the £).

As someone has said above, you aren't 'loosing' £3k. You are in the fortunate position that you may be able to pay 100% of your debts back. Yes you will also be paying additional 'on top' for the iva fees but consider the benefits that you have experienced for this...
- presumably you were insolvent and struggling to pay your bills which is why you entered into an IVA, therefore you've had the last 7 months of not having to worry about meeting payments and mounting debts and will continue to not have to worry about this.
- you have been and will continue to be protected from creditors contacting you to chase payment and taking further action
- there is no interest being added onto the debts (which there would have been had you not entered your IVA)
- Do you have a property? (usual reason for entering an IVA) If yes, then this has been protected.
- Should your circumstances worsen in the future and you can no longer afford your payments (such as illness or loss of job) then you will be in a strong position to offer a full and final variation on payments made to date due to the redundancy money being paid in so your IVA is unlikely to fail.

You knew when entering the IVA what the fees were - so I'm afraid that it isn't something you can now be unhappy about paying. I can understand why you may feel abit peeved but it is just one of those things. The only other thing you can do if you really feel that strongly is to fail the IVA and approx your creditors to offer partial settlements instead. But then I suppose you have to consider if it is worth the hassle of doing this? (only you can decide that!)

If you did not go into immediate employment after your redundancy then usually you will keep 6 months worth of the monthly income that your IVA is based upon so allow you six months to find work. Any after that is paid in, If you start work before the 6 months is up then you need to pay in the remaining funds (e.g if your income is £1000 a month and you retain 1000 to pay your bills for 6 months but start work again after 3 months you will need to pay in the remaining £3k). if you are still out of work after 6 months payment holidays may then be used to allow more time to find work. If you are doing freelance work in this time then you are working so you would need to speak to your IP about how they would assess this money.