How to get out of an IVA - urgent help needed

Goldlady · 20th November 2007, 22:59

Friends of mine are about a year into an IVA. Their original debt was about 40K (no doubt including lots of charges and other nasties). I have the IVA agreement in front of me and it says that they will review the payments on an annual basis.

My friend has just called to say that the IP has told them they have to pay £1000 NOW because her OH had earned £2000 more than he had expected to. They send payslips every three months and the IP tells them how much to pay. Her OH does seasonal work so his earnings will now drop until Feb/March.

I have suggested that they approach the original creditors, whose names and addresses are handily supplied in the IVA agreement, to see if they will accept direct payments and kick the IP into touch.

What I need to know - asap - is whether this can be done? If the OC's agree to accept direct payments then the IP cannot use the BR weapon. There is no 'get out' clause in the agreement as far as I can see - unless you die. Any advice from someone who has been in this situation would be welcome.

Thanks

Goldlady

gizmo111 · 20th November 2007, 23:34

AFAIK you cannot pay creditors direct when you are in a IVA as it is a formal insolvency arrangement. Did the IP make the proposal based on seasonal earnings? What is in their agreeement about windfalls, bonuses etc.
What assets are they trying to protect with the IVA?

Goldlady · 20th November 2007, 23:39

Hi Gizmo, they own their house - we are having battle to reclaim £13K + interest of PPI at the moment which will mean they will have some equity - at the moment they don't have much equity

The agreement states they will pay £xx per week and that they will also pay 50% of any excess income and that they will supply payslips to the IP every six months. What they have been doing is sending them every three months and the IP has been adjusting the payments accordingly. So all of a sudden they are told that they need to pay this extra £1000 when they have been keeping the IP informed and have been taking guidance from him about how much to pay.

gizmo111 · 20th November 2007, 23:43

Can they afford this IVA?
With no equity, did they consider BR and why did they reject it?
The PPI is likely to end up in the IVA as well.

Goldlady · 20th November 2007, 23:49

Deleting the PPI will reduce their secured loan debt. I guess it will not substantially improve their situation day to day as the reduced loan payment will affect their outgoings and therefore the IVA payment but at least they won't have such a huge debt secured on their home.

I think like most people they were terrified of the idea of BR. Possibly they might have kept their house but they did all this without telling anyone or getting advice - just contacted one of these IVA companies who advertise on the telly!

sequenci · 20th November 2007, 23:59

Quote:

Originally Posted by Goldlady

I think like most people they were terrified of the idea of BR. Possibly they might have kept their house but they did all this without telling anyone or getting advice - just contacted one of these IVA companies who advertise on the telly!

Arrrghhh!

I'm sorry to read this, an IVA is only suitable for a VERY slim percentage of people. The only way really of finishing the IVA is if it fails, if this happens the IP is duty bound to inform the creditors of the next best option, which could be bankruptcy proceedings. Do your friends have the £1000 available? I'm guessing not. Was there an equity clause within the IVA?

Goldlady · 21st November 2007, 00:18

Hi sequenci, by equity clause do you mean was the house included? There is a paragraph saying that originally 'Mr' had intended to place 75% of his equitable interest in the house into the IVA but because a major creditor had refused to accept this proposal as they felt it was unrealistic (

) it did not happen. The IP has registered form RX1 with HMLR which apparently means they cannot sell the house without the supervisor being notified.

My friends have managed to locate the T&C (always useful) and I will be getting a copy from them. It seems that the supervisor can be removed by the creditors - from a paragraph my friend read to me I do wonder if they can approach the creditors themselves? As the IP is getting 2/3 of the payments I suspect if it can be done they might just accept. I will wait until I see the T&C in full.

sequenci · 21st November 2007, 09:48

Quote:

Originally Posted by Goldlady

My friends have managed to locate the T&C (always useful) and I will be getting a copy from them. It seems that the supervisor can be removed by the creditors - from a paragraph my friend read to me I do wonder if they can approach the creditors themselves? As the IP is getting 2/3 of the payments I suspect if it can be done they might just accept. I will wait until I see the T&C in full.

I'm really interested to hear more about that paragraph, as an IVA is binding I really would be surprised if your friends would have the ability to negotiate directly with the creditors. One thing to also consider is that when you make payments within an IVA, the first payments usually go to the IP for their fees - some folks may think they have paid a significant amount to their creditors when in reality all they have done is lined the pockets of the IVA company.

Goldlady · 22nd November 2007, 20:46

Hi sequenci, I now have the T&C's - apparently they are standard relating to IVAs. The paragraph my friend highlighted reads:

19. Removal of Supervisor from office
19(1) [Methods of removal] On cause being shown, the Supervisor may be removed from office by the Court or by a resolution of a meeting of Creditors
19(2) [Notice of requisitioned meeting] Any notice served by a Creditor upon the Supervisor under Paragraph 60.2 (notice requisitioning meeting) for the purpose of convening a meeting of Creditors to remove the Supervisor from office must set out the grounds upon which his removal is sought.

60(2) [Power to requisition a meeting] If requested in writing by the Debtor, or by Creditors with not less than one quarter in value of the total amount of Debts subject to the Arrangement, the Supervisor shall, unless relieved by the Court from so doing, convene a meeting of Creditors within 21 days from the receipt of such request.

As you rightly state the supervisor is claiming £9500 of costs - out of total IVA receipts of £24K he gets 25%. In year 1 the creditors get nothing, in the second year just over £2K and in total over the five years they get £14855.

My friends are in the process of reclaming PPI on a secured loan which will hopefully reduce their secured debt by 20K. I have suggested to them that if they can keep the IVA going until they have done this they will be able to borrow a further £20k and offer this to the creditors as a ffs. It will give the creditors more than the IVA, immediately, and I think it might work.

I will send a link of this thread to eggie who succeeded in escaping from an IVA by doing exactly that to see if he can give any more guidance.

Goldlady · 14th February 2008, 20:12

I am re-awakening this thread incase there is anyone out there who has managed to get out of an IVA.

All comments welcome.

Thanks

Goldlady · 16th February 2008, 12:51

Here I am again. The Supervisors have written to my friends saying that in almost all cases the creditors have claimed more than was originally put on the statement of affairs - some by a few hundred but one of them (Barclays) by over £3K. As the original calculations were to give creditors 53p in the £1 then my friends have been told they have to increase their payments.

Also, there is a charge on the house meaning that in year 4 they need to give 85% of the equity to their creditors. This was in spite of the mortgage company refusing this.

I can't understand how the creditors can suddenly increase the amount. And also wonder how my friends can be asked to pay more. Presumably the original calculation of how much they could afford should be re-jigged so that the split between the creditors balances out rather than them having to pay more.

Also, is it possible to send CCA/S.A.R - (Subject Access Request) to creditors when under an IVA? Obviously no-one has ever ascertained how much of these debts amount to charges (particularly in the case of Barclays and the sudden extra £3K).

Ideas anyone?

Pen · 16th February 2008, 21:05

Hi GL.
I am glad you have raised this Issue as I have friends in very similar situation and have been searching on here for a get out clause.

These are a young couple, no equity one is a student the other works for a call centre I think the owe £8,000 and apparently they tried to get a loan to pay off all the debts but for some reason they were talked into a IVA this IVA is apparently not making the agreed payments so the couple are still getting letters from their creditors.

Am I right in thinking that you need to have debts totaling a minimum of 15,000.

I have just read that once a person gets a IVA they are unable to obtain any further credit similar to the rules of Bankruptcy also it's entered into their credit file. They are fuming as they were not told any of this info so know think they have been sold something they did not want.

They have just received a letter annual review and like you want to know if they can cancel.

I am really upset for them as reading all the debts most of them are for credit cards which have a hell of a lot of chargers on them and could have claimed this all back.

Goldlady · 16th February 2008, 21:27

Hi Pen, I am not sure about the lower limit for an IVA but they have definitely been mis-sold it - new type of claim 'mis-selling of IVA'.

Strangely I have a copy of the original letter sent to the creditors by the IVA company in with our S.A.R - (Subject Access Request) to the secured loan company. This says that the agreed amount is 38p in the £1 and not 53p in the £1 - it also says that the equity in the house is not included in the IVA.

Someone somewhere is telling porkies. I have drafted a letter to the IP but I need to know who they are answerable to as I wonder if this might be a way out for my friends. The other creditors I guess - if I can manage to 'discredit' them .....

I will post the letter up when I have finished it - hopefully others will come along and help here Pen. I will see what I can find out about the limit.

Goldlady · 16th February 2008, 22:08

16 February 2008

IVA company

For the attention of Fred and Wilma - Insolvency Practitioners

Dear Sirs

Re: Goldlady's friends

I write in connection with your letter to the above-named dated January 2008. I will be obtaining a signed authority from them to deal with matters concerning this Individual Voluntary Arrangement, which I shall forward to you in the next few days.

I have a copy of the original IVA paperwork and have some concerns which I shall address here.

Firstly your letter of January states that they had agreed to pay a minimum dividend of

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