IVA on BBC... 09.15

maxmycardagain

On rip off Britain 

May be on the i player later

fatbelly

It's the first article on today's programme.

Highlights a guy who had 26k debt and found an IVA-pusher online

Their description of an IVA is a bit garbled

Guy paid £150 per month and included were 3k+ in fees

His situation changed mid-way through and he inherited 140k.

So he was required to pay debts, fees and interest as per his agreement.

Standard windfall clause.

The article highlights that many IVAs fail (they say a third) and are being mis-sold. Stepchange say IVAs are suitable for 2% of their clients. I work for CA and I'd say it's less than that for the clients I see

The conclusion is to understand what you sign up to - the advice to check that there isn't a windfall clause isn't realistic as it's a standard clause.

CA person was OK - mentioned DROs. I would have liked her to be clearer.

IVAs are bankruptcy for someone with an asset to protect - usually a home with equity - and large debts and significant surplus income. Get advice from CA, Stepchange or National Debtline.

maxmycardagain

Imagine if he had won the euro lottery 140m...15%...

fatbelly

The IVA protocol says

Subject to the following sub-paragraph, the supervisor may claim as an asset of the arrangement any after-acquired assets. Any such asset will be subject to and be an asset of the arrangement.

After-acquired assets must only be sold or realised to the extent necessary to repay the creditors 100 pence in the pound including the costs of the arrangement.

So I think the 15% in this case was just what was needed to complete the IVA. It wasn't explained but an inheritance is just a standard after-acquired asset.

There are special rules with redundancy payments for example to allow you to keep a percentage but all other received lump sums are just 'after-acquired assets'

I don't think the BBC were deliberately misleading on that point but their staff are not debt specialists by any stretch of the definition.

maxmycardagain

fatbelly said:

The IVA protocol says

Subject to the following sub-paragraph, the supervisor may claim as an asset of the arrangement any after-acquired assets. Any such asset will be subject to and be an asset of the arrangement.

After-acquired assets must only be sold or realised to the extent necessary to repay the creditors 100 pence in the pound including the costs of the arrangement.

So I think the 15% in this case was just what was needed to complete the IVA. It wasn't explained but an inheritance is just a standard  after-acquired asset.

There are special rules with redundancy payments for example to allow you to keep a percentage

From what i recall it was stated as 15% regardless of what the debts were, so the debtor had to pay the debts, the fees AND 15% of his inheritance

fatbelly

Yes - you can't rely on the BBC for accurate information