do student loans have to be included in an IVA?

[kathy.c]

Could you please tell me if student loans have to be included in an IVA? Mine is currently deferred and will be written off in 3 years, when I'm 60. Thanks.

[kezza]

hi kathy

i'm no expert but i seem to remember reading on other posts that you cannot include student loans in an iva.

I'm sure a real expert will advise shortly

[Andy2]

From what I have read since 2004 Student Loans from the official STUDENT LOANS COMPANY cannot be included in an IVA or Bankruptcy - any payments made to the Student Loan Company must be maintained but will come out of your essential expenditure.

If your income is not high enough to make any repayments to the Student Loan Company it will not matter but if it is high enough I imagine these payments will be included on your form.

[spull]

Hi,
After reading the above information I am somewhat confused about the fact that my student loans have been included in my IVA. They did object at my creditors meeting to the proposal but as they were the minority vote they have to abide by the IVA. The loans were taken out before 2004 so maybe that is why. I wonder if the statement from the SLC applies to those loans taken out in 2004 and after??

[go_4_broke]

Hi spull

I'm sure Andy is right and the reason your loans were included is that they were pre-2004.

It seems highly unlikley that your IP would have got it wrong. If he did I'm sure the SLC would have put him right.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[Andy2]

I have read some people have included them in an IVA - but whether this means including them as an essential "outgoing" or including them in the creditors for a reduced settlement I do not know. I am sure one of the IPs on the forum will enlighten you soon.

[MelanieGiles]

Post 2004 Student Loans can be included in your IVA, but they will very likely reject. So if they are owed more than 25% of the total debts, then this will serve to fail the arrangement.

If you have similar circumstances, they can be left out, however this must be fully disclosed to the other creditors and if your income increases above the repayment threshold then you will be liabile to start making repayment which will affect the level of your regular contributions.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kathy.c]

Thanks for the replies.
I know that Student Loans CAN be included in an IVA, it's whether or not they HAVE to be included that seems to be the problem.

Melanie
I have the old mortgage style loan and I want to leave it out of any IVA I might arrange as this will give the creditors a lower return and therefore make the IVA less viable. As I said, it's been deferred until now, will carry on being deferred as I plan to stop working, and will be written off in 3 years when I'm 60.It seems pointless to include it in an IVA as I have no need to pay anything towards it. Could you confirm that what you're saying is that I don't HAVE to include it in any IVA, I just need to make sure my creditors know it's there. I think that's what you've said but I'm not totally clear.
Thanks
Kathy

[MelanieGiles]

Kathy

The student loan must be included alongside your other creditors, unless you get Student Loans express permission to exclude the debt. I cannot see that they will agree to that, but it is worth a try as your other creditors will benefit to their detriment.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kathy.c]

Melanie
You've confirmed what I thought, that Student Loans had to be included in an IVA. However, how does this relate to this thread

http://www.iva.co.uk/forum/topic.asp?TO ... udent,loan

where someone's IP didn't include them?

Presumably, if they're included in an IVA they'll vote to accept it if the alternative is that I go bankrupt, defer the loans and they write them off completely in 3 years.
Thanks
Kathy

[MelanieGiles]

Kathy

That post related to post-2004 Student Loans. Pre Student Loans have a high dividend criteria - I have seen them demand as much as 70p in the £, so they will be a problem for you if their debt represents more than 25% of your aggregate debts. Is this the case?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kathy.c]

Melanie
Thanks, that explains that one.
My student loan represents roughly 15% of the total. My point is that if the IVA was declined, I would go bankrupt and they would receive nothing(deferred and then written off). Surely an IP would point that out to them? Even the lowest IVA would give them over 2 grand, surely that's better than nothing?
Kathy

[MelanieGiles]

Yes Karen, your IP would point out the commercial sense of them accepting the arrangement, but as they only represent 15% of the overall votes this is not really a problem. Do you think that you will propose an IVA?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[kathy.c]

Melanie, thank you for your help. At present I'm thinking of proposing a F&F IVA (using the equity in my flat) and looking at bankruptcy if not accepted. I don't think that there's anything to lose by trying an IVA first.
My creditors are LLoyds (CC and overdraft), HFC(personal loan),Marbles,Egg(CC), Barclaycard(x2) and SLC. Total around £55,000. Depending on price flat sold for I should have £20/25,000 available (to include fees).That would include my husband's share of the equity (all debts in my name).
Kathy

[MelanieGiles]

Hi Kathy

Well that looks as if it would work as an IVA - most of those creditors are relatively commercial in accepting offers of settlement. It is a shame that you have to dig into your husband's equity - presumably he is happy to support you?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk