Considering cancelling my IVA

Paulalouise79

I have, so far, paid 35 payments to my IVA. Recently I have been lucky enough to secure a new job with quite an increase in salary. As a result, my IVA review has determined that my payments need to increase by almost £400 a month. Having done the (basic) sums, I think that I will be paying more back than I actually owe to my creditors. I am considering whether to cancel the IVA and make arrangements with my creditors directly. I know that I only have a further 37 IVA payments left and will then be debt free so to speak but I feel
quite frustrated at the significant increase to my monthly payment. Just wondering what people’s thoughts or ideas or experience of this situation would be so I can make informed decisions about my next steps. I have e-mailed the IVA company and tried to call them but have not yet heard back from them. I have asked for a breakdown of creditors, the balance owed and how much they are receiving each month. Should I be asking anything else? 

sourcrates

Hi,

First let me explain to you how an IVA actually works, before you do anything else.

When your arrangement started, your IP opened a new bank account, and that is where your IVA payments have been going, into a pot so to speak.

Now at various times throughout the arrangement, at the IP`s discretion, they will take from the pot -

(A) Any fee`s associated with running the IVA,
(B) Make disbursements to your creditors, dependant on how much is in the pot at the time,
(C) Add/remove VAT, tax, interest, plus any other fee required to run the arrangement efficiently.

This will happen on occasion, at your IP`s discretion, throughout the arrangement.

So its impossible to say how much a creditor will receive until the IVA ends, all disbursements have been made, and all fee`s etc have been paid.

Yes you can end up paying more than you originally owed, this is due to the fee`s charged in an IVA, they can amount to quite a few thousand pounds, there are also a whole host of other fee`s and charges related to the running of the arrangement as well, these fee`s are paid first, before your creditors get a penny, so you need to take good advice before you do anything rash here.

fatbelly

Just to add that your IP will take its fees as a priority over the creditors. If you terminate now you may be surprised at how little has been paid to the debts.

As you mention a 6-year arrangement it could be that you are a homeowner. 

Probably the complaints route is the one to take in the first instance

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

Paulalouise79

Thank you both, I am just trying to gather as much information as possible before I decide what I am going to do. I thought it was strange that the company actually rang me this time to discuss my review and new payment as they have never done this before. I do think as well that they may have miscalculated what salary I will be bringing home (I have only just started my new job which may mean that my monthly payment is higher than it should be). I am also conscious of the possibility of having to remortgage. At the time when I took out the IVA it was most definitely the right decision but now, as hindsight is a wonderful thing, I am in the mind that I wish I had found another way! I am going to keep contacting the company in the hope that we can talk it all through and see what happens from there. 

Paulalouise79

Is it worth contacting all creditors myself? 

fatbelly

Paulalouise79 said:

Is it worth contacting all creditors myself? 

Not at this stage. You and they are both bound by the IVA

MrFrugalFever

What IVA firm are you with?

In my experience, they handle so many cases that they appear to just use an automated process (creditfix use Experian castlight for example) which will tot up numbers loosely and work out a new monthly figure, if thus is more they normally call.

cancelling your IVA would not be the best course of action IMO, this will open you up to the possibility of having your creditors petition for your bankruptcy, which may not be the best route for you given the fact that you’re a homeowner.

perhaps look at a F&F offer? As you’re almost 50% of the way in to the agreement, this could be a good alternative.

Paulalouise79

@MrFrugalFever. Thank you for this. I am with StepChange. Can I ask what a F&F offer is please? 

MrFrugalFever

Sorry it was an abbreviated version of Full & Final settlement offer.

if you calculate your current remaining payments X by amount of months left, that total would be a settlement offer to close and finalise the IVA for example. 

I had payments of £413pm and had 18 months left, I went in with an offer of 85% of that, which got proposed at the creditors variation meeting and rejected, they then came back and said they’d accept it at a specific dividend yield, which was basically 100% of remaining amount predicted to pay.

so if you calculated your newly revised monthly payments, you’re saying that will mean you pay back more than what you originally owed? Can you put some more meat on the bones here with your situation?

stepchange has a great reputation and is a charity, not a business trying to make maximum profit from you.

fatbelly

Debt Camel explains an IVA settlement here.

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

Can you access a lump sum?