Can we get out of an IVA?

Brummie123

My partner has an IVA from before we met which is about 2 years in to the 5 year term.

We're both now in good jobs and my partner's financially much better off that when she took the IVA.

Is there any way we can get out of the arrangement?

debrag

What happens if my financial situation improves during the IVA?
The Supervisor will undertake an annual income and expenditure review to ensure the monthly payments still reflect your surplus income.
You should keep the Supervisor informed of any changes during your IVA. If there is an increase in your surplus income, your Supervisor may request up to 50% of the additional surplus, to be added to your monthly payments.

Don't know about leaving, it's legally binding isn't it?

squirrel_pigeon

The IVA would be legally binding so you can't just opt out unfortunately and that will have been made clear when your partner signed up for it.

The best thing for her to do would be to have a word with her IP. It may be that even though she is now better off, staying on the IVA with a higher payment would still be a better option than letting it fail and trying to clear the debts herself.

Without knowing exactly what her situation is however, it is hard to advise so speaking to her IP is definitely her best bet.

Brummie123

Thank you both for the information. I wouldn't want her to let the IVA fail but wondered if there would be a settlement amount if we could make a lump sum payment, and if so would this be cheaper rather than carry on with the current arrangement?

debrag

isn't an IVA a settlement amount but over a period of time? She would have agreed an amount less than what she actually owes when she started

tyllwyd

I had a look on google, and it seems that it is possible to settle an IVA early. Have a look here
http://www.insolvencyhelpline.co.uk/iva-guide/how-do-i-settle-or-finish-my-iva-early-htm.html

Brummie123

I'm sure she did and the agreement at the time was right for her.

However, circumstances have changed since then as she is in a much better job and her earnings have increased. The frustration is that each time her earnings increase, so do her IVA payments.

I am also now in a position to be able to help.

What I would like to do is to help her clear the arrangement, making things simpler for her and allowing us to arrange a mortgage etc.

Dom123

I am an insolvency professional.
Unfortunately there is no easy way out.
As far as nearly everyone in the IVA industry is concerned the purpose of an IVA is to get us much out of you as possible!
Almost all IVA's contain clauses so therefore unless you can pay all your creditors in full plus possibly interest there is no simple lawful way out.
You could try proposing a significant one off lump sum as 'full' and final payment, it might even be worth taking out a loan to do this - but don't stretch yourselves please.
Your Supervisor would have to agree to this, if so they would convene a Variation Meeting, which would have a cost implication perhaps £500 - £1000. Then your creditors would have to vote in favour (75% by value of debts).
It might be worth considering if you are hoping to get a mortgage in the near future.

Good Luck!

bailesjm

Hi - as Dom123 said you can offer a sum as a full and final payment. I did this after two years of my IVA.

You will have to put this to your IP and they will decide if it is a reasonable offer before convening a variation meeting with your creditors. In the end my F+F was a few pence in the £ lower than the actual IVA agreement but was accepted. The upside being that the creds get their money sooner and there will be lower fees etc from the IP using up the balance. You need to put forward an offer that strikes a balance and the maths can be a bit tricky.

Obvoulsy you cant really say you have managed to save money for the offer as theoretically all spare cash should go in to the IVA. I said that my parents had offered to loan me cash (partly true) so that I could end the IVA. Hope that helps.

skintandscared_2

The thing about and IVA is that it is a five year plan and anything not paid off in those five years is written off. So if creditors agree to the plan they take the risk that they may not get all their money back. But it works both ways and if they accept that proposal they are also entitled to receive higher payments if your circumstances change. By accepting your partner's offer they have shown they are willing to negotiate but I don't think they would necessarily be happy to then give up the opportunity of getting higher payments for the next three years.

Would the payments you can now afford to make jointly clear the original debt in the next three years? If so, I'd say it's likely the creditors will want to do that. I've heard that in the fourth year it's not unusual for creditors to insist on a release of equity in a property to fulfil their original debt.

I don't mean to sound disrespectful to Dom as (s)he obviously knows what they are talking about but I'm amazed that any advice in this situation involves taking out a loan?!!! :eek: