Full and Final Settlement

[irish_ram]

Hi All,

Wondered if anyone could help.

I have been in a IVA since November last year, so exactly a Year and there might be a chance I can offer F&F Settlement but unsure whether I could do it after a year or whether my amount would be Enough, I know no one on here will know exactly, but on peoples experience, would the amount I am offering based on figures below be anywhere near enough etc.

Original Debt: 17K
IVA: 13K
Paid Off: 3K
Monthly IVA: 230

F&F Settlement Offer: 7-9K coming from a gift from GF from selling an Asset.

So, I am unsure what they would take the F&F payment against, the Original Debt or the IVA, and if I take the average of the F&F settlement of 8K and add the 3K I have already paid, thats 11K if it worked like that.

So does anyone know if this would be a good offer, or ahve I got my wires crossed on calculations etc

Cheers for help?

[Skippy]

Sorry, I can't help you on this one, but I'll bump your post back to the top x

[Cybus]

If you are considering offering full and final settlement to your creditors, the amount you are proposing to introduce will be on top of what you have already paid.

I'm not quite sure I understand the information you have provided here -

Original Debt: 17K
IVA: 13K
Paid Off: 3K
Monthly IVA: 230

I have assumed that you are 12 months in to your IVA and have to date paid £2,760, being 12 contributions of £230. You are proposing to introduce, for arguments sake, £8,000 from the sale of the asset (Which I asume is not yours, otherwise the sale proceeds would be introduced and the arrangement would also carry on until the end of year 5).

Introducing the £8,000 would mean total realisations of £10,760. That would mean a return to your creditrs of 63p in the £ before costs -

10,760 divided by £17,000 worth of creditors x 100 = pence in the £.

At this stage, if you are serious about proposing a variation to introduce the sum in full and final settlement, contact your IP and ask him / her to tell you what the return to creditors would be after costs. It is that figure that is most important. Then ask if they think that your creditors would accept this in full and final settlement of your debts.

[irish_ram]

Cheers Cybus.

Sorry for the confusion

So far I have paid back about 3K, as overpaid one month i think cos of overtime.

However, I am confused now, as I have done the calculation of how much creditors would get in the 5 yrs if I paid 230 for full term and the other way of lump sum payment of 8k after I have paid 3K already. tel me if I am wrong but calculations below.

Paying over Full Term of 5 yrs at 230

Original debt: 17K
IVA: 13K
Fees: 5K
To Creditors minue fees: 8K

Calculation: 8K divided by 17K * 100 = Pence in the £: 47p to creditors

Lump Sum Payment

Original debt: 17K
IVA: 13K
Lump Sum: 8K
Paid 3K
Total Paid: 11K
Fees: 5K
To Creditors minus Fees: 6K

Calculation: 6K divided by 17K * 100 = Pence in the £: 35p to creditors

Someone tell me if I am wrong, but how can a Lump Sum agreement work if you are offering less than IVA and works out paying less back to creditors or am I missing something and being stupid?

[Michael Peoples]

Hi.
Creditors will likely accept an early settlement for a number of reasons even if the return is lower. First of all, your debts may have been sold and given you are only one year into your IVA a full and final settlement at 35p in the pound would likely show a profit for whoever bought the debts.
Second of all, there is always a danger that your IVA could fail at a later time and a settlement now guarantees creditors a reasonable return and finally, given that the IVA will complete early, the costs will likely reduce so the the reduction in dividend may not be that much.

Very best of luck and hopefully your offer is accepted and your discharge follow.

[irish_ram]

Cheers Michael,

That does make sense I suppose, they get less in the £ if taken lump sum but no risk as gaurenteed that amount.

Do you or anyone know, what happens to the fees if I pay early, the original 5K of fees, does it go down, or does it go up as have to pay an early settlement fee maybe. Also if I ask for a F&F settlement and says it all goes through but doesnt get finalised for says 4 months. Do i keep paying the monthly amount for 4 months or do the payments stop the minute i hand over the cheque etc

Cheers again

[Michael Peoples]

The fees should reduce as there will be three years less supervision to take but there will be a variation fee which your creditors will have to approve.
You must continue your payments until the variation is approved in case it is rejected but once accepted you can cancel your standing order. Even if it takes a few months afterwards to finalise the paperwork you will not be expected to continue to pay.

[irish_ram]

Cheers again,

That clears things up a bit now.

Does anyone know if my calculations above are correct the way i am working it out. Also, I am on my yearly review and my wages have gone up so might have to pay a bit more every month, meaning the creditors are getting more in the £ than before,so I am guessing this could be a big factor in them wanting to stay in it for 5 yrs as payments improving?

Does anyone know how long it should take to get the F&F settlement Figure once askedd for?