Paying off iva

salou321

I have approx 2 years left on my iva. I hate it, it was a big mistake. I had just had a baby when I took it out and honestly don't think I was thinking straight! Anyho, my original debt is around 14000. On my creditfox app it says I've paid 3500 and have approx 3500 left , wiping out 50% of my debt. Now someone has offered to gift me 4000 on the condition I pay my iva off as it has had such a bad effect on my life. So I worked out that that 4000 would be more than if I continued to pay my monthly payments, but obviously not enough for the original debt. I don't really understand how it works, are they likely to accept that as a final payment? Ir would it have to be the original debt amount?

sourcrates

Hi,

Your right, with a debt of only 14k an IVA was a bad idea.

If you wanted to settle the arrangement early, you would have to pay the full original debt, plus fee`s/interest/bank charges VAT etc etc etc, average IVA fee`s are between approx 3-6k, so your looking at around about maybe 18k to settle, minus what`s already been paid.

You are in a 60 month insolvency arrangement, so why should your creditors accept early settlement from you of less than they would receive if your IVA ran its course ?

Answer is they won`t, not unless you have good reason, for example, if you are ill and can no longer work, or you've lost your job for some other reason, or your circumstances have changes so much you can no longer afford your payments.

Under those circumstances they may accept what you offer in final settlement, but you must have a good reason for them to accept it.

Pay no attention to the figures you have quoted, IVA`s do not work like a conventional repayment loan, you make your monthly payments into a "pot" from that pot, your IP will disburse payments to your creditors at regular intervals, only when all payments have been received will you know what has been paid to who.

MrFrugalFever

Sourcrates that is not entirely accurate, the OP could propose a F&F to the IVA company who in turn are legally obliged to call a variation meeting and offer this to her creditors, as 3 years have already passed, there’s a good chance it will be accepted providing that the last 3 annual reviews have been fairly static, I.e. no continued increase in income. 

If the creditors come back with a resounding NO or a counter offer the op simply carries on the agreement or considers the counter offer.

The OP must be aware that it takes time to do the above and that it may delay paying off the IVA to 61/62 or even 63 months.

sourcrates

MrFrugalFever said:

Sourcrates that is not entirely accurate, the OP could propose a F&F to the IVA company who in turn are legally obliged to call a variation meeting and offer this to her creditors, as 3 years have already passed, there’s a good chance it will be accepted providing that the last 3 annual reviews have been fairly static, I.e. no continued increase in income. 

If the creditors come back with a resounding NO or a counter offer the op simply carries on the agreement or considers the counter offer.

The OP must be aware that it takes time to do the above and that it may delay paying off the IVA to 61/62 or even 63 months.

Yes that`s true, but you usually still need a good reason why they should accept the deal on offer, rather than wait out the full term, if you want them to accept it.

Otherwise what`s the point of the IVA in the first place if they were going to accept less than what was promised, why bother agreeing to it ?.

I settled my IVA in year 5 on the basis of payments made to date, as I lost my job, and couldn`t make the payments any longer, any deal you offer has to represent the best possible outcome the creditors could hope to achieve given your circumstances, or it will just be rejected.

MrFrugalFever

I quite agree, the idea of settling early is a bit odd given that the whole purpose of the IVA is to reduce what you pay in order to survive but to provide the creditors with the most amount of return, as well as learning a valuable lesson.

I offered a F&F settlement just 3.8 years in to my agreement and my reason was because I no longer wanted to have my income constrained and I offered 80% of total left to pay, the creditors reviewed it and counter offered with 100% left to pay (I’m referring to the IVA payments set from the latest I&E review). I went back and accepted 100% and that was case closed. So can be done.

The OP has little to lose by doing so.