creditor adds interest & charges after IVA agreed?

[tigger]

One for the experts! and apologies for the long post.

Without going into detail (i.e. digging up old threads!) NatWest are chasing my wife for the overdraft from our joint account. The overdraft is included in my IVA but NatWest are using “joint & several liability” to claim the outstanding balance off my wife.

The account was opened in 1996 and my wife was only added to the account in 2005 after we were married. My wife played no role in managing the account or agreeing overdraft limits etc. As she was not working at the time (baby No.2 [:)]) she never ever funded the account. The only monies entering the account that could be associated with my wide were Tax Credits & Family Benefit. The overdraft itself consisted mainly of debt repayments in my name alone – virtually no cash withdrawals as we were living off cash advances from credit cards at the time (now doesn’t that sound familiar! [:I]) and a stack of penalty charges.

Up until recently Allied Credit International were harassing my wife for full payment but after we sent them a CCA (Consumer Credit Act ) request they appeared to have backed off. However, my wife received a letter from NatWest at the weekend stating that as she had made a CCA request they were legally obliged to provide a current statement of the account.

My IVA that contains the overdraft was agreed on 14th November 2006, but the NatWest letter states that:-

“No interest has accrued on the account since November 2007

No charges have been applied to the account since March 2007”

I estimate that they’ve added a further £800 to the overdraft debt since the IVA was agreed.!! [:(!] Also there was no indication (or reduction) of the 20.7% dividend that would have been paid out against this debt earlier this year (I was fortunate enough to pay out my yr4 equity clause during yr 1 of my IVA)

I’ve sent all the details to my IP but in lieu of their reply any expert opinion is most welcome!

Many Thanks

David [:D]

[chris.g]

I'm not an expert but I think that because the account was joint with your wife, they are acting legally, she is as responsible as you and they are going to try to get the cash from her...not fair but legal I think.
Hope an expert disagrees with me

[tigger]

Hi Chris,

Thanks for the reply. We know that they can legally chase my wife for full payment which we know how to deal with. The issue is can they add interest and charges to an acoount that has been legally bound within an IVA?

David

[chris.g]

Try and get in touch with your ip. The thing I'm thinking of is that as they can still chase your wife then the debt is still live and fear they may well be able to apply charges....hopefully they are just trying their luck and the charges will be dropped.

[tigger]

Hi Chris,

Yep, they know the full situation and I believe are just chancing their arm yet again. NetWest are my main creditor and were severely annoyed when they discovered that I'd been advised to enter an IVA by my .....NatWest financial advisor!!

[ianmillington]

Unfortunately David, they are within their rights to do what they are doing. The IVA only binds the Bank in so far as they have rights against you. So their claim in your IVA is limited to the amount due at the date of approval but as regards an unprotected co-debtor they can continue to charge interest. By implication any dividends from your IVA will also be applied in reduction of the debt.

Without going over the embers of how this happened, someone ought to spell out the realities of this to NatWest and I would have hoped this would be your IP. In fact it can only really be your IP as a variation of your IVA seems inevitable, for one of the following 2 reasons:

Either

1. to include a clause in your proposal to release your wife from liability for this debt in light of her contributions to your IVA or

2. To reduce the IVA contributions (by reduction of your wifes contribution) to enable her to service this debt.

Given that NatWest is as you say your largest creditor the second option seems somewhat pointless, given that the Bank will bear most of the cost in any event. That is, of course, unless the bank manager perceives keeping the account live and charging her the ongoing interest to be his or her primary purpose in life.

If the Bank will accept neither option then your wife is in an impossible position as the bank wants it both ways, in which case I would say it's probably a formal complaint by her to the Banks Head Office.

Ian

[tigger]

Hi Ian,

Many thanks for the clarification [^] My IP has already agreed that if "push comes to shove" that any payment my wife makes will be deducted from the monthly IVA payment.

However, the onus at the moment is on NatWest to prove my wife's liabilty. They've already passed the mandatory 12 working day period to produce the necessary documntation and the clock is ticking down on the further 30 calender days they have left to offer proof. All very tiresome & childish!! [}:)] but hey ho!

Cheers

David

[ianmillington]

Now I come to think of it, does your proposal ( or modifications)allow the Supervisor to unilaterally reduce the contributions by up to 15% if need be? If so, then depending on the numbers maybe a variation won't be needed anyway. If that's the case, even if the bank can demonstrate liability, this might be a rather hollow victory?

Ian

[tigger]

F.A.O. Ian,

You posted as I posted & must have read my mind!!!

Just a related technical question. Given that I've already satisfied my IVA equity release clause, my monthly contributions are simply now covering the IVA charges.

My minimum contribution was £118 which rose to £133 after my anuual review. Assuming that I wouldn't be allowed to go below the minimum payment threshold would the maximum contribution my wife could make to NatWest be £15 i.e the difference between £133 & £118?

Also, as this reduction would be less that 15% wouuld a variation meeting have to be called?

Thanks again!

David

[ianmillington]

Hi again David

Do you have the 15% clause in your IVA which, if you do, will probably have been submitted by Tix representing (ironically) NatWest!

The clause is:

"Contributions will be made for a minimum period of 60 months unless an early conclusion is agreed by Creditors. The Supervisor will have the discretion to allow contributions to reduce by no more than 15% (relative to the original proposal) of the forecast monthly contribution. If the reduction is more than the 15% against the forecasted monthly contributions, the Supervisor will convene a meeting of creditors to request a reduction in payments. The duration of the Arrangement may be extended at the Supervisor’s discretion in order to complete any final administration but Creditors must receive final dividend payments within the above minimum period plus 12 months."

My reading is that the Supervisor can agree a reduction of up to 15% of the original contribution (in your case up to £17). Also, rather oddly it leaves the question of extension to the discretion of the Supervisor although this is stated to be to finalise the administration rather than for you to make up any arrears.

If you have this clause in your arrangement then that may well be good news for you, but check with your Supervisor that they agree my interpretation of it.

ian

[tigger]

Hi Ian,

Thanks for the reply. I'll double-check my paperwork tonight. As you say it would be a "hollow victory" if my wife is forced into making a contribution (for people unfamilair with this saga my wife's contribution to my IVA is geared at 100%).

NatWest would be literally cutting off their nose to spite their face!