Claiming whilst starting an IVA?

[121o121]

I have told a friend of mine about this website. She is absolutely pennyless and with Christmas approaching very depressed. She lost a lot of money on the Farepak scheme too, so not alot is going right for her.

 

I am reccommending her to start this process but she is so worried about it all.

 

My question is this. She has literally just started an IVA program. The creditors haven't even been told yet, she only sorted it all out yesterday with Debt Free Direct. Can she claim knowing she will be going down the IVA route? She currently banks with the Woolwich with a overdraft on the account. She is setting up a step account with NatWest as her "new account". The claim will be against the Woolwich, but as this account will now be under an IVA, will that matter?

 

I personally don't think it will matter, it's her money she wants back. But I don't want to advise her wrong and would welcome any input.

 

Thanks guys

[chesham]

Within the Insolvency Act, an IVA or a bankruptcy tranfers what is known as the "right of action" to the Official Receiver or representative, which is why the creditors are not able to hassle the debtor any longer. However, with this transfer, all claims to the assets or liabilities within the petition are surrendered to the representative - in effect, they own it. So if you were within an IVA or made yourself bankrupt, you would have no "right" to claim off a debt which was no longer yours.

 

If you are about to declare bankruptcy, or enter into an IVA, the money which may have been claimed prior to entering into one of these agreements will be determined as an asset, as would be selling your car or your house, and they would expect this money to be put towards your debt. Failing to do so (in an IVA) may result in the disagreement of the creditors or the representative and the IVA may be denied, which means that you either carry on with the debt or go bankrupt - and then the money would be demanded from the Official Receiver - so either way, you would lose out on the money claimed.

 

If your friend was to put in a claim for the charges, the Woolwich would close the account after they had settled, which would mean the full amount would be demanded in full, and there would be no way in which to come to an arrangement about this debt - all creditors have a clause in their terms and conditions that the debt is repayable on demand. The only reason you can pay back a credit card over any length is because they [obviously] make money over the length of time you make your payments. By demanding full payment (usually within 7-14 days) your friend may then then be given a CCJ or the bank could petition for her bankruptcy.

 

It's a sorry shame, but if you are in debt problems, it's not your time to collect your charges back!

 

Hope this post helps. Good luck to your friend.

[poppynurse]

Has your friend spoken to one of the free debt services?

[121o121]

Thank you so much for taking the time to reply. I didn't know if she could, hence the post. She has spoken to Debt Free Direct (I think it is) about the IVA but not mentioned the claim issue.

 

To be honest I don't think she'll have the determination to see the claim through to the end. I think more so she intended on writing all the letters out on the hope they make the "50% offer". I know thats not what this website is about, but I think she's just so desperate at the moment. But I want to find out as I don't want her to get in more trouble.

 

Thank you again to both of you.

 

Regards

[chesham]

Sometimes money worries can make people do desperate things - trust me, I know! But there is always that old saying "it's only money" and in the grand scheme of things, it is ONLY money. There are always ways out of situations and there is always something which can be done.

 

It doesn't look like the IVA is in place yet - they will have to hold a meeting, which will be in a couple of weeks or so, for them to agree to accept it. In the meantime, it might be worth looking at both other options and a long term strategy in order for your friend to cope and to get on with enjoying life, rather than being unhappy about it.

 

If you or your friend want some assistance, I'm more than happy to help, with both the debt management or anything else - PM me to keep the details private, and we'll see what we can do,

[121o121]

Thanks Chesham, I appreciate that!

[robert_harper_2000]

prolly not very helpful now but moneysavingexpert.com mentioned about farepak and chargebacks.. not sure if you could do it going with an IVA

[Jimbo44]

I have told a friend of mine about this website. She is absolutely pennyless and with Christmas approaching very depressed. She lost a lot of money on the Farepak scheme too, so not alot is going right for her.

 

I am reccommending her to start this process but she is so worried about it all.

 

My question is this. She has literally just started an IVA program. The creditors haven't even been told yet, she only sorted it all out yesterday with Debt Free Direct. Can she claim knowing she will be going down the IVA route? She currently banks with the Woolwich with a overdraft on the account. She is setting up a step account with NatWest as her "new account". The claim will be against the Woolwich, but as this account will now be under an IVA, will that matter?

 

I personally don't think it will matter, it's her money she wants back. But I don't want to advise her wrong and would welcome any input.

 

Thanks guys

 

Just as an aside to the more pressing needs of your friend, I found out yesterday that some insolvency practitioners don't even know about the whole question of unlawful charges by banks and credit card companies.

 

I am a creditor to someone in an already-set-up IVA and was speaking to the practitioners concerned about another matter. As an 'aside' I mentioned the matter of unlawful charges as I knew the debtor concerned had incurred quite a lot from both a bank and credit card companies.

 

I was somewhat astonished to learn that this was 'news' to the person I was speaking to! He/she had no idea that such things had happened and, I think, was somewhat embarrassed to be told of it by me.

 

One thing that did transpire though was that any 'repayment of charges' would be treated as a 'windfall' to be shared among the creditors.

 

I can see some 'black humour' here too; sue the bank to get charges back and they eventually get the same money back again as a 'windfall payment'! I suppose it puts another slant on the saying "what goes around, comes around"!!!!

[bill-k]

121o121, I took out an IVA last year, and then I found out this year that people were claiming back their unlawfully deducted penalty charges. Soddit, I thought. I thus found myself in a similar predicament to your friend, I think, and I sat down and thought for a while (painful though the exercise was) !!

My eventual reasoning was this:

 

1. The banks took this money from me UNLAWFULLY - and years ago, some of it - and they have kept it and used it all of this time.

 

2. In doing so, they played a big part in forcing me to take out the IVA.

 

3. The IVA was taken out LAWFULLY, and with their agreement, whereas the penalty charges were NOT.

 

4. I believe that I am entitled to legally claim money UNLAWFULLY taken from me, regardless of who took it, or why.

 

5. I believe the banks are entitled to legally claim money LAWFULLY owed to them, which is the IVA dividend which they have agreed to.

 

6. I do NOT believe the banks have a right to keep the penalty charges they UNLAWFULLY took from me, prior to my being eventually forced to enter into an IVA.

 

7. So there !!

 

However, in my case, I had already signed an IVA which had been running for about a year (Scottish Trust Deed in actual fact), whereas I think your friend can still back out. As I think Chesham & Jimbo here might agree, any lump sums or 'windfalls' I now get must be paid to my creditors, so I have to be 'careful not to get any such windfalls.' That is now THE LAW as far as I am concerned, as I have entered into an agreement as such with my creditors, who in turn have agreed to settle for a lot less than I originally owed them (bless 'em !!??). I intend to try and keep within the law, and 'not receive any windfalls whilst my IVA is in force,' and at the end of the IVA period, they can then take THEIR LEGAL ENTITLEMENT under the terms of the IVA to "a pound of my flesh" - and we then all walk away owing each other NOTHING.

 

At that point, I intend to exercise MY LEGAL RIGHT to reclaim money unlawfully taken from me, from those very same people who walked away with a few pounds of my flesh. The six-year limitation period does not seem to apply in this case, so there's no hurry from a legal standpoint, I believe. However, I do understand the pressure that lack of ready cash exerts, especially at this time of year, and I have been struggling myself with this.

 

What is defined as a 'windfall' is not clear, but it seems to me reasonable to assume that any single receipt of over £1000 is a fair guide. However, I have heard that as little as £200 may be taken as a windfall, but getting straight answers from my own IVA administrators has been like getting blood from a stone.

 

I would venture to suggest that, if your friend has managed to reduce their debts by a SIGNIFICANT amount with an IVA, then they should go for it, as it means that they can legally "dump" the rest of their debts after the IVA is paid off. It means living a bit like "Del-Boy & Rodney" for a while, but it's amazing how we can adapt if we're prepared to make the effort, and "bite the bullet." Between now and then, there is nothing to stop your friend assembling a truly amazing watertight case against those who took his or her money originally !! Having that to look forward to might help.

 

A further alternative, particularly if your friend's IVA doesn't reduce their debts by a huge amount, is a less formal arrangement, where you declare your difficulty openly to your creditors, via a third party or intermediary (such as CAB), and set up a repayment schedule for them all. This latter method involves paying the FULL amounts owed, but with interest frozen (hopefully). In this case, I believe you are entitled to keep your 'windfalls' - but a few quid offered to your creditors as a 'bonus' won't go amiss !! I believe that, in this case, your friend will still be able to go for their unlawfully taken charges.

 

Whichever way they jump, though, I don't think your friend will see any cash this side of Christmas, so I would personally suggest the IVA, and the long-term "bite the bullet" option. Meanwhile, try and sort out a "cash in hand" extra income for the time being.

 

If Chesham, Jimbo or any others have stuff that agrees or disagrees with this, then PLEASE post it here, as I am aware that my advice is purely my own experience from my learning process so far, and I am still interested in learning more.

 

My IVA, by the way, is the Scottish "equivalent" known as a Trust Deed, by the way, and I have a small thread on this somewhere, here. I'll try and find it for a link. Any contributions from you guys would be welcome there, too !!

 

PLEASE, though, tell your friend that THEY are not the villains, here. The truth will out, and revenge is a dish best served cold.

 

Hope all this helps !!!

 

Bill.

[bill-k]

Further to the above, Jimbo, as a creditor, I hope none of my post has caused offence. Your input as such is worth a helluva lot to us guys. My Trust Deed thread is:- http://www.consumeractiongroup.co.uk/forum/debt-bailiffs-advice/42981-trust-deed-scottish-iva.html

 

Also (tenuously), does St. Mary's Chuch, Lowndes Park (& Shottowe's Pond) mean anything to you, Chesham ? I am now an ex-pat living in Scotland !!

[bill-k]

PPS 121o121, I have just realised your friend is a "she." Sorry if I called her a "they." It's not easy being PC, these days, and I try and respect our sexual neutrality on the forum when I can !!

[chesham]

Bill-K, I know those places, not far from me - I live in Chartridge on the border with Bellingdon, and the places you mention look nicer in the older photo's than they are now - kids hanging round, litter etc!

[121o121]

Thanks guys.

 

So far I've just made a SAR so I we'll see what she is eligable to claim before making any decisions. Any payout would be made into the account she is claiming from, which would be under the IVA, so therefore counted as an asset. If she does win, she would be down as the court fee and AQ fee etc would be refunded into an account she couldn't touch.

 

I think I'll tell her to let it go for the time being. I don't want her rocking the boat and getting in more trouble. After Christmas I'm sure times will be easier.

 

Thanks for your help guys

 

Regards

[Jimbo44]

Further to the above, Jimbo, as a creditor, I hope none of my post has caused offence. Your input as such is worth a helluva lot to us guys. My Trust Deed thread is:- http://www.consumeractiongroup.co.uk/forum/debt-bailiffs-advice/42981-trust-deed-scottish-iva.html

 

Also (tenuously), does St. Mary's Chuch, Lowndes Park (& Shottowe's Pond) mean anything to you, Chesham ? I am now an ex-pat living in Scotland !!

 

Caused me offence, bill-k? Of course you haven't, perish the thought!!! I do appreciate your concern though, thanks very much!

 

My situation as a Creditor in this IVA is a 'one-off' as far as I'm concerned as it's far, far more usual for me to be 'on the other side' as a Debtor.

[bill-k]

Yes, that looks like the best bet. She will probably find that they will all close her accounts when the IVA comes into force.

 

If she has any claims less than £200, she can still try for them, and ask for payment by cheque. I've done that with a few of mine so far.

 

On the other hand, the longer she waits before claiming, the more she'll get back if she claims contractual compounded interest. In fact, she might well find that her hitherto unreturned penalty charges are a very nice investment in her current circumstances !!

 

Off-thread:- Chesham - small world. Know what you mean - the old place ain't the same whenever we revisit. Nicer where you are - out of town a bit.

[robert_harper_2000]

How long would she have to wait ? Sorry if I have just joined in.. lol

[chesham]

IVA's last for 60 months (5 years) and you can claim charges going back 6 years, so at the end of the IVA, there would be no charges to claim back, as when the IVA starts, the charges will stop being applied to the accounts. She may have a grace period of a year, where charges had been added within the last year.

 

For example, if an IVA started in January 2007, it would end in January 2012, and at the end you would then be able (in theory) be able to claim charges from January 2006, but the claim would have to be signed, sealed and delivered prior to the 6 years being up.

[bill-k]

How long would she have to wait ? Sorry if I have just joined in.. lol

Hi Robert. I think an (English) IVA will take 3 to 5 years, and a Scottish Trust Deed is usually 3 (mine is). But one can settle early if one can secure "third party" funding. For example, helping friends/family reclaim THEIR charges.

[bill-k]

Chesham - sorry, I just entered my post to Robert as yours came up !!

 

There is some debate about the Statute of Limitations regarding these charges. Although unproven in court (as far as I know), the nature of the charges and the apparent concealment from us of their unlawfulness, apparently puts them outside of the usual application of this Act. Thus, the 6-year limit appears to have only started ticking from the OFT's report earlier this year. There is/are thread(s) on this, but I'm useless at finding and posting links. If you have trubs finding them, let me know.

[gillytilly]

My friend, has had an IVA running for a year. Alot of their problems are caused by charges. She rang her executor and asked about claiming charges back, and they never nothing about it. However they a said that if the charges were charged after the IVA was started they would be able to keep the money. As it is money that they have lost after it started. i.e the money she has left is what she could legally affort, which was agreed by the creditors. She has recently lost the money due to bank charges so she hasnt gained anything just got back what she was reasonalbly expected to live on by the creditors. Does any of that make sense

 

Gilly

[bill-k]

I'm not too sure, Gilly, but you (or your friend) might find these threads useful. Have a read, as I think there is more to this than just a miserable existence !!

 

http://www.consumeractiongroup.co.uk/forum/debt-bailiffs-advice/42981-trust-deed-scottish-iva.html

 

http://www.consumeractiongroup.co.uk/forum/general/55013-claiming-back-charges-after.html

 

http://www.consumeractiongroup.co.uk/forum/general/53898-friend-has-iva.html

 

http://www.consumeractiongroup.co.uk/forum/debt-bailiffs-advice/50864-getting-out-iva.html

 

HTH

 

Bill.

 

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