stop paying IVA?

tallyhoh

I apologise before I start that I do not have all the details. I have a friend with an IVA (fee paying) who has lost her job. From what she has told me the debts are over 12 years old & she has been paying IVA for 2 years, she was previously on DMP. She has 2 small children and rents a property.
What is the worst that could happen if she simply stopped paying the IVA?
Thanks in advance

sourcrates

The IVA would eventually fail, she would be best advised informing the IP beforehand of her intentions, then she would be back to square one, it would take time for the situation to filter down to her creditors, any money she has paid would be first used to pay the fee`s associated with the arrangement, this is likely to take all of the pot to be honest, infact she could end up owing them.

Her creditors have the right to sue for her bankrupcy, however, if she has no assets, then there is no benefit to them in doing this, the usual senario will see a resumption of collection activity, there are no other specific penalties for failure of the arrangement.

tallyhoh

thank you Sourcrates. Can I ask if the IVA would still stand if there had previously been 6 years without payment? As the debts are so old could the creditors take further enforcement action if they no longer had copies of original agreement (credit cards) Is it worth her asking for original agreements before she stops paying IVA, would creditors still apply for bankruptcy if IVA failed & they didnt have them?

Thank you again

fatbelly

The IVA won't terminate quickly - it could take a year.
For now her food and her rent take priority over the IVA.
She should inform  her IP that she is in difficulties and she should claim the benefits she is entitled to.

Edit: I can't say I'm  surprised that she was sold an IVA but I suspect if we had looked at it we would have advised bankruptcy and that would have continued quite merrily in her circumstances. Debts gone, no further payments.

tallyhoh

Thank you fatbelly. She says that the IP has been far from helpful & insist they want the usual payment. This would be impossible at the moment.

sourcrates

tallyhoh said:

thank you Sourcrates. Can I ask if the IVA would still stand if there had previously been 6 years without payment? As the debts are so old could the creditors take further enforcement action if they no longer had copies of original agreement (credit cards) Is it worth her asking for original agreements before she stops paying IVA, would creditors still apply for bankruptcy if IVA failed & they didnt have them?

Thank you again

Entering insolvency is an admission of your debts, so the limitations act would not apply unless there was a clear 6 years since the date of default, prior to that point, if that were the case, she could argue they were statute barred under sec 5, Limitation act 1980.

Asking for CCA`s is one of your statutory rights, she can make this request at any time.

Its highly unlikely any one creditor will fork out the £680 bankrupcy fee, on top of the losses they have already made, it just does not make financial sence to do so, its only if the debtor possesses substancial assets that that option would be explored.

It does beg the question, if the debts were statute barred, why did she enter an IVA, why not just send the statute barred letter and have done with it ?

tallyhoh

Thanks again. Unfortunately she had no idea about debts being statute barred & went along with being talked into an IVA. I must admit to knowing little about them myself. So its a possibility that she could still go down the statute barred route IF there was a 6 year period before the IVA?
The only financial tie she has with her partner is the tenancy agreement. They have no credit cards or joint accounts etc. Would bankruptcy be a problem if for example they had to rent another property?
Cheers

Galloglass

Unfortunately she had no idea about debts being statute barred & went along with being talked into an IVA. 

Name of the company offering the IVA?

tallyhoh

Galloglass said:

Unfortunately she had no idea about debts being statute barred & went along with being talked into an IVA. 

Name of the company offering the IVA?

I'll try and find out 

fatbelly

tallyhoh said:

Thank you fatbelly. She says that the IP has been far from helpful & insist they want the usual payment. This would be impossible at the moment.

So she doesn't ask them - she tells them.

She can get a 3-month break under corona regs

https://debtcamel.co.uk/coronavirus-new-rules-ivas/

fatbelly

JayAre47 said:

Hopefully I am on the right page. On the 8th August 2014 an IVA was due to be set up for me by Pay Plan. However, on that day I moved house and went to live with my daughter. The IVA was approved but as I didn't sit in on the meeting I don't know the outcome. No agreement has been signed by me. Since that day I have not contacted Pay Plan, made any payments or acknowledged the debts to any of the parties involved.
On the 8th August this year it will have been six years since that day. I have checked the Individual Insolvency Register and my Credit file and an IVA is not listed. I have recently moved into a rented accommodation. I have just received a letter from Drydensfairfax Solicitors acting on behalf of Max Recovery saying that my IVA has failed and they want a payment of £7331.00
This amount is a lot less than the original debt total.
I am elderly and on pension credits so my income is minimal. This IVA seems non existent. Also, would it become statute barred on or before the 8th August ? As of yet, I haven't replied to Drydensfairfax. I was advised to send a "prove it" letter.
Can you please advise me as to what cause of action I should take.
I await a reply.
Jay.

This needs to be a new thread and one of the mods will probably move it.

I would leave this alone unless you get a pre-action protocol letter, giving you 30 days to reply - in which case post again.

There is a definite argument that this will be statute barred  in August, though I can also see contrary arguments. Certainly I'd want to get past that date - so one month today.