How to get out of an IVA - urgent help needed

[Goldlady]

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]

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]

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:mad:

 

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]

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]

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]

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]

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]

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]

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]

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]

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/SAR 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]

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]

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 SAR 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]

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 53p in the £1 however the paperwork in my possession indicates that this was 38p. This is indeed backed up by a copy of your original letter sent to one of the creditors which I have received.

 

Secondly it seems that correct account balances were not obtained from the creditors at the commencement of the arrangement. I am at a loss to understand this, and also would dispute the increase of over £3000 in the Barclays balance. Surely my clients are entitled to an explanation of this large increase.

 

Thirdly, if the balance owed to creditors has been increased legitimately, surely the outcome of this should be that the payments are apportioned differently, and indeed the dividend be reduced accordingly, rather than my clients having to pay extra money.

 

Fouthly, I note that you expect them to pay an extra £1000 or so into the arrangement. As they are living from week to week I question how you expect them to find a lump sum such as this. Particularly as they have sent you their wage slips every three months, which is more often than required under the agreement, to ensure that such a shortfall does not occur.

 

 

Finally, I also note from the original paperwork that the mortgage lender had refused to accept the proposal to remortgage and allow 75% of any remaining equity to be remortgaged towards the end of the agreement (which has now increased to 85% according to your letter). It is certainly my clients' understanding that this requirement had been excluded from the arrangement, and indeed again the creditor’s copy of your letter would also indicate that the property was not included in the calculations.

 

I would appreciate your urgent response to these questions.

 

Yours faithfully

 

 

 

Goldlady

LLB (Hons)

[fermi]

Hi.

 

I'm interested to see how this turns out.

 

This might be useful if it turns out that you have grounds for a complaint:

How to make a complaint against an Insolvency Practitioner

[Goldlady]

Thanks for that Fermi - I suspect I may need to do this:D

[Goldlady]

Hi again. My friends' PPI claim was successful and we are waiting to see how the recalculation of their payments on the secured loan will pan out.

 

In the meantime, and fermi already knows about this, my friend has received a letter from 'THE IVA COUNCIL'. These people have told her that it is likely her IVA was mis-sold and that they are trying to help people in that situation. The letter implies that they are an official body but in fact they are a bit like CAG as far as I can see, and their website (which I have been waiting since last Friday for a password so I can post there) says that they are trying to get a body of people together to fight the 'claims farm' type of IVA practitioners who are in it to make a fast buck at the debtor's expense.

 

I am going to ring these people tomorrow and see what I can find out. They seem to be fighting in the right corner. I have read that they tell people to stop paying their IP - my friend's letter does not say this at all I must say.

 

Incidentally her IVA company have now ignored two letters from me - the one I posted above and a reminder I sent last week.

[Goldlady]

Hi again. Finally got a response from the IP on this one.

 

There is a lot to take in, but the paragraph that particularly appeals to me is:

 

The balances stated at the outset of the IVA were those provided by the Clients as confirmed by paperwork they provided. If the Clients dispute any of the claims made by creditors if they confirm this we can contact the creditors and request that they substantiate the claims and then present any proof to the Clients for their comment.

 

Is this the time to send CCA letters to all the creditors? Do I see a window of opportunity?

[Goldlady]

What does anyone think about sending CCA letters to the creditors?

[fermi]

A CCA is only going to get you a "statement of account". Perhaps an S.AR would be more appropriate if you are looking to dispute claimed balances?

 

Please avoid the IVA Council. I've lost count of the number of professional debt advisors that I've asked for an opinion about them in passing, and the all say the same thing; "Avoid like the plague". This is coming from people who have no love of IVAs and even less for any genuine mis-selling. I've even spoken to an IP that hates the "IVA factories" that "mislead" people into IVAs, and he tells me that they are worse than even these "vultures".

[Goldlady]

Thanks fermi. I have not contacted the IVA council and am still waiting for my login details to their website:mad:.

 

I have a good friend who is an IP and I am going to have a chat with him about their situation. Their financial position has improved for a variety of reasons and I think there must be a better way of sorting out their finances. The terms of the IVA are crippling and I really can't believe that they agreed to it.

 

I have been sent a copy of the final agreement which they signed. Not only is it 53p in the pound, but they have agreed to remortgage for up to 85% of the property value in two years time and what is horrific is that if they are unable to obtain a remortgage they have to pay the difference in value within the next twelve months.

[fermi]

I have a good friend who is an IP and I am going to have a chat with him about their situation.

 

Sounds like a good plan.

 

IVAs are something that I really need to read up on more sometime, but the conditions you have stated don't sound that unusual. :o That's one reason why I'm not a big fan of IVAs, and why the professional debt advice organisations (CCCS etc) only recommend one in a very small percentage of cases. I tend to point people asking about IVAs in the dircetion of this first: Guide to IVAs - Are they worth it?. Somewhat simplistic, but it is more realistic than the sales talk you will get from the IVA company advisors.

[Goldlady]

When I was at the official receivers last week (on another matter;)) I saw leaflets saying you could arrange an IVA through them. I haven't had a chance to read it yet but wonder if that would cut out the extortionate IP fees.

[fermi]

That would be a Fast-Track Voluntary Arrangement I think.

 

What is a fast-track voluntary arrangement?

 

An FTVA is a binding agreement with your creditors to pay all or part of the money you owe them. You can only enter into it after you have been made bankrupt. In an FTVA the official receiver acts as nominee; that is, he/she helps you prepare a proposal to put to your creditors and, if they accept the proposal, acts as supervisor, looking after the arrangement and making payments to your creditors in accordance with your proposal.

 

The official receiver's fee to act as nominee is £300, and as supervisor he/she also charges 15% of all sums realised. In addition, you will have to pay a registration fee of £35 for your FTVA to be recorded on the public register of all individual voluntary arrangements.

[Goldlady]

Ah that would be the one then;)

 

I must contact my friend who managed to get out of an IVA by remortgaging. I know it is a really bad time to even consider doing this but what I can't work out is how he managed to get the remortgage in the first place.