Cancelling an IVA

Samburu

Is it possible to cancel an IVA and reclaim monies back. My son entered into one a year ago and we have since found out they haven't paid anything or logged the IVA against the loan despite their annual report saying they have. And for credit card it's been sold to a debt company. My son was 20 at the time, very stressed and and they constantly kept ringing him to agree to one. The other debt was for an overdraft which occurred as they told him to close the bank account and this amount has now trebled 

sourcrates

Hi,

No you cannot cancel it, nor can you reclaim what you have paid, first off, you have to understand how an IVA works, its not like other debt solutions where your payments reduce the balance, it works differently.

All creditors would have to have agreed to the IVA for it to happen, this is called a "creditors meeting", so they will all be aware of the insolvency, so don`t worry.

You cannot cancel it once its begun, but you can fail it simply by non payment, however that can take time, up to a year, and his creditors could then sue for his bankrupcy, and he will still be left with the debt, plus now all the new charges/interest etc.

I`m guessing he had about 10/15k of debt, and responded to an add, most likley on social media, who suggested he could wipe out 90% of his debt, yes ?

IVA`s are mis-sold on a regular basis, as the companies selling them can make large profits from the fee`s charged, allow me to explain how it works, your son, will make 60 monthly payments, these payments go into, lets call it a pot.

From that pot, the IP running the arrangement will take certain fee`s, VAT, interest, and any other charges associated with running the arrangement, at certain times, they will also distribute payments to creditors, this is called a "disbursement".

At the end of 5 years, the IP will have taken their fee`s, all other charges needed to run the arrangement, and whats left is distributed to his creditors.

He will then be asked to remortgage his property (if he has one) if not, a further 12 months of payments may be called for.

Now whilst the IVA is running, debts can be sold on, as sometimes IVA`s fail, and the DCA that buys it may get a payday,  balances shown on statements or credit files are unlikley to change until the arrangement ends, when it will just show as settled, or satisfied, makes no difference if interest or other charges are added, all are wiped out at the end of the arrangement once all payments have been distributed.

He also has legal proctection from creditors whilst the arrangement is running, so cannot be taken to court, thats basically how it works, if things don`t go according to that plan, then he, should make a complaint to the IP and find out whats going on.

MinuteNoodles

Was it with a proper IVA with a licenced IVA practitioner or was it with one of these companies who claim to manage your debt and be able to set up a debt management plan and charge you for the privilege? The two are completely different things. One has the weight of law behind it, the other does nothing more than you could do yourself or could get a charity like Stepchange to do on your behalf for free. With the latter lenders don't have to take any notice, with an IVA as long as lenders who control 75% of the debt agree to the IVA then any lenders who don't still have to comply. Have a read of this page, it may explain what has happened if it's a proper IVA:

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/individual-voluntary-arrangements/setting-up-an-individual-voluntary-arrangement/creditors-and-the-individual-voluntary-arrangement-proposal/