Of sound mind!?

martin400

I entered into an IVA June 2018 after 6 months previously having spent 3 months in rehab due to alcohol related issues. I took early redundancy due to ill health in December 2019 and am looking to settle with Creditfix. My original debt was £21,288 and have paid circa £3k off this. The settlement figure is £26.5k which has left me speechless. I feel I have been mis sold this product with other options not explored in detail by Prometheus the company who first contacted me. My mental health also had a huge impact as I feel that if I had been of sound mind that I never would have gone down this road. Creditfix appear to be intransigent and feel that a FCA complaint may be the only course of action!? 

Any thoughts would be very much appreciated. I should also add that I am actively seeking a job but difficult in the current climate. My pension is insufficient for me to live on and have a 17 and 20 year old at home and pay maintenance fora third child.

sourcrates

Hi,

Oh dear, you made the newbie mistake of taking debt advice from a fee charging debt management company, its actually akin to taking savings advice from a bookie, all they want to do is make money from you, and your situation.

Just for future reference, debt advice should only be sought from organisations that have no interest in selling you anything, such as the free to use debt charities, like Stepchange/Payplan, National Debtline are also a free to use service, but be careful when Googling, as imposters a many are out there, with very similar names.

21k of debt is borderline for an IVA, they were originally designed for homeowners, with massive debts, who obviously because of the assets they owned, could not go bankrupt, for an IVA to be workable for you, you would need to have over 40k of debt to be fair, what they fail to tell you is that a portion of your debt does not always get written off, if you can afford to pay the full amount off with the 60 months, then thats what you do, only if that would be impossible, due to your budget constraints, is the remainder of the debt written off, this is a common reason why these things are mis-sold.

In reality you will not have paid a penny off your original debt as yet, the fee`s associated with an IVA can total a few thousand pounds, and they are deducted first, from your payments, all this would or should have been explained to you, however, If you feel this was a case of mis-selling, them make an official written complaint to your IP, not the FCA, the FCA are the regulator, and do not deal with individual complaints.

If you remain unhappy, then you can make a complaint about your IP here :

https://www.gov.uk/complain-about-insolvency-practitioner

But you must complain to the IP in the first instance outlying why you beleive you have cause for complaint.

fatbelly

I can't find any reference to Prometheus as a UK advice agency. I suspect they existed (probably short term) as an IVA lead agency. They would have been paid a 'cut' from creditfix, who are now taking their fees from you. 

You should complain and there is a guide here, but this is all standard practice for this industry and as she says 'If any IP is likely to have done the same thing, it is unlikely a complaint will achieve anything.'
https://debtcamel.co.uk/complaint-iva/

If your only income is your pension I presume you are not currently paying creditfix and so the IVA looks destined to fail after 18 months, which is fairly typical for IVAs.

Debt Camel can help with your options here, going forward

https://debtcamel.co.uk/when-iva-fails/
Edi: just noticed that you were made redundant. Did you receive a substantial payment? Is this causing a problem with the IVA under windfall regs? They are entitled to everything over the equivalent of 6 months' wage.

https://debtcamel.co.uk/iva-redundant/

martin400

The essence of my complaint is that I wasn’t of sound mind and certainly did not understand the level of fees involved. If I had known I wouldn’t have gone down this road. I have also been informed by a different forum that my level of debt circa £22k was borderline for an IVA and may have been mis-sold. Other alternatives were not explained in detail. I know about windfall, 6 months wages and I am still paying monthly as required. 

fatbelly

Then you need to have a look at Fehily v Atkinson [2016] EWHC 3069 (Ch)

Summary here

https://www.nelsonslaw.co.uk/capacity-enter-transactioncontract/

elsien

martin400 said:

The essence of my complaint is that I wasn’t of sound mind and certainly did not understand the level of fees involved. If I had known I wouldn’t have gone down this road. I have also been informed by a different forum that my level of debt circa £22k was borderline for an IVA and may have been mis-sold. Other alternatives were not explained in detail. I know about windfall, 6 months wages and I am still paying monthly as required. 

Not of sound mind is going to be next to impossible to prove.  The legal presumption is that someone has capacity unless it can be evidenced otherwise,  and lack of capacity can't be evidenced retrospectively.
Having a mental health diagnosis is not a presumption of lack of capacify - there are people in hospital under section who are perfectly capable of managing their finances, albeit unwisely at times. 
Unless you have very strong evidence indeed from the time period in question, you are into a loser with that line of challenge.  

martin400

As per post 3 months in rehab plus doctors evidence from that time plus lack of objective information and guidance? How can you say on one hand lack of capacity can’t be evidenced retrospectively and then state unless you have strong evidence from the time period in question you are ‘into’ a loser? Is this not a contradiction?

fatbelly

paras 126 & 127 of that judgement give the legal basis - an IVAis not voided just because of mental incapacity - you would have to show that the creditors should have been aware of it at the time

martin400

I made no mention of voiding. The IP made no attempt to ascertain my mental capacity their MO was to sell IVA with no attention given to other options. The legal basis in this judgement gives some scope for a complaint followed by a law suit. As I will get legal aid nothing to lose.