Hypothetical questions

[Hull_Tiger]

Hi All,
I've a few hypothetical questions about my IVA.

(1) My payments are probably going to increase shortly. If my circumstances change and I need a reduction but I can still maintain a level of payment that gives 42p/£ (my original agreement), is a Variation meeting required?

(2) As I have no equity release clause in my agreement, can I release the equity at a point in the future and make an F&F offer, providing it is close (or better) to 42p/£?

(3) I am presently in 'discussions' with my IVA firm regarding my pay increase. I can find no reference to pay increases or overtime in my proposal / agreement, only to windfalls. Am I right in standing firm to only pass over 50% of my pay-rise? The IVA firm is still insisting on 100% and 100% of my partners pay-rise (which is what I am most upset about).

All help greatfully received!

Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[pbeck]

1. I rather doubt that a variation meeting would be required to return the level of payments to that originally agreed, only to reduce it below that level.

2. It would appear that your home was excluded from the IVA proposal, these days that wouldn't happen anymore, and probably the creditors would only have agreed to it if at the time the IVA was entered into there was no or very little equity in it. Thus if the value of the home were to increase such that you could withdraw valuable equity from it, you could propose to your IP to call a variation meeting to approve a remortgage in lieu of the remaining payments, creditors are only likely to agree to this if the remortgage proceeds are roughly equivalent to the monthly payments that would be forgone.

3. I am surprised that there is no reference to pay increases or overtime in your proposal, such a review clause is now ubiquitous. Perhaps you can ask your IP on what basis are they asking you and your partner to make these payment increases, i.e. ask them to tell you where it appears in the proposal. If there really is no payment review clause, then you would be entirely justified in simply continuing the originally agreed level of payments right through to the end.

Philip Beck - www.freeivaadvice.co.uk

Licensed Insolvency Practitioner and IVA specialist

[Hull_Tiger]

(1) Thanks, just wanted to clarify the situation. Expanding this, I am paying £448 at the moment. My payments will be rising soon but if circumstances change and my payment needs to be reduced to less than £448 but the overall dividend is still 42p/£ or greater, would variation be required?

(2) Yes, house appears in Excluded Assets and the 'Equity Clause' was a rejected modification as there was no equity (in May 2007). However, the house two doors away (identical to ours) has sold for £74,000. We currently owe £41000 mortgage and £13000 secured loan. It's possible we could make £20000 on the property in the future.
It's not out of the question I could offer that as a F&F.

(3) The only thing I can find which references increases is as such:

21. I will keep the supervisor informed of any circumstances throughout the term of the arrangement (conditions 22 to 25 of the appended IVA Standard Terms and Conditions refers). If the supervisor calls for an increase in payments, as a result of the information provided, I undertake to accept the supervisor's reasonable decision and pay any reasonable increase in payment which may be determined. However, this undertaking will not prejudice my right to proceed under section 263 of the Act should I be dissatisfied with supervisor's decision.

Is the key word here 'reasonable'? Can I contest that they are being unreasonable by demanding 100% of both my and my partners pay rise?
I will be sending them a new I&E with an offer to up payments to £523 from £448. Currently they are requesting £606.

Sorry for the long post again!
Many Thanks to you all.

Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[MelanieGiles]

Were the payment rises built in to your IVA, or have they been stipulated following annual reviews?

You can argue that the Supervisor is being unreasonable, however at the end of the day they are doing their job for creditors. I would suggest that you tell them what you think you can afford, and the reasons why you cannot afford their suggested increase. Is your partner in an IVA as well, or was her income taken into yours by the request of creditors? If so, I do not feel they should take her increase into account at all, but your own IP may have different views.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Hull_Tiger]

Were the payment rises built in to your IVA, or have they been stipulated following annual reviews?

Actually neither. I volunteered the information as I knew I would be getting the increase.
My partner is not part of the IVA nor is she in one. Her income was taken into account at the request of the IP as I was told there was no chance of getting the IVA approved without it. The first proposal already included her income.
What is irking me is that there is no mention of how much would be taken from pay increases. If the insistence is that 100% of both my and my partners increase is to be taken, I shall just refuse any further pay rises until the IVA is completed.
This may sound unreasonable on my part but I am more than happy to pay over a percentage of my increase but where is my incentive to earn more money in order to pay more to my creditors when I see precisely zero of it for the next 4 and a half years?
I had enough of basically 'working for nothing' when I was servicing my creditors before my IVA.


Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[pbeck]

You are referring to the Standard Terms & Conditions of the IVA proposal no. 21, this doesn't say that the payments will increase, merely that if the payments should increase, then you'll comply with it and not argue.

You should ask your IP on what specific basis in the proposal do they consider that they have a right to increase your payments. A "review clause" which would normally be the basis for increasing payments must be spelt out in the main body of the proposal, it would not be part of the standard terms.

Philip Beck - www.freeivaadvice.co.uk

Licensed Insolvency Practitioner and IVA specialist

[Hull_Tiger]

I've checked my propasal and chairmans report again and can still find no reference to pay increases except for the above mentioned clause, which is in the proposal not in the reams of standard terms and conditions attached to the back. There is also no reference to overtime or bonuses, just windfalls (paid in full).
Am I within my rights to offer to pay 50% of my pay rise? My I&E has pretty much remianed the same (up £10) so I can offer to up my payments from £448 to £523 (50% of my pay rise, 0% of my partners).
I believe this is fair but I cannot honestly justify keeping the rest in my I&E other than the fact I will be saving it.

Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[MelanieGiles]

You can offer what you like, Shaun, but at the end of the day your IP has ultimate control over the amount he feels that you should be paying. Personally, with the absense of a 50% provision, if I were your IP I would be reassessing your whole income and expenditure statement and asking you to pay over all of the disposable income, as the spirit of entering into an IVA is that you pay as much as you can afford for a finite period of time.

You can always go to Court to appeal the IP's decision if you do not agree with it, and there is always room for compromise, negotiation and good common sense!

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Hull_Tiger]

Hi Melanie,
Thanks for the prompt reply.
Don't get me wrong, ultimately I would go with IP's decision. I just wouldn't be happy about it. The main thing I don't want is for them them to take my partners pay rise as they were insisting.
Sadly, they seem insistant that because her income was included on the IVA proposal, that any of her pay increases must also be included. Their basis for this is that 'she benefited from the credit I took out.' Most of the debt was consolidating previous loans etc. from before we met, but apparently this doesn't matter.
Thanks for your time.


Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[MelanieGiles]

I don't agree that they should take your partner's increase. She is not party to the IVA and your IP has no right to include her pay-rise. However, an adjustment should be made to the way you share the expenditure if her payment has increased and this may give rise to a slight increase in your payments as a result.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Hull_Tiger]

Bizarrely enough, the actual ratio of our wages has not changed really. It was 56.1 - 43.9. It is now 56.7 - 43.3.
However, the original proposal was basically set out as:
(my wages + her wages) - overall expenditure = IVA payment.

Now they want:
(my new wages + her new wages) - overall expenditure = IVA payment.

At the very most I feel it should be:
(my new wages + her old wages) - overall expenediture = IVA peyment.

I just don't agree with it.

Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[luluj]

Sorry....you spent the money on whatever, you are now getting yourself out of the mess you put yourself in, so therefore surely all that is available to your creditors should without any questions be passed over to your IP!

Lulu

[Hull_Tiger]

Rather harsh.
My girlfriend neither contributed nor benefitted from my woeful borrowing record so why should she suffer the consequences of it?
She is already having to pass some of her income into my IVA, why should she be expected to contribute more?

Shaun

£47000, 42p in pound.
The end is in sight (9 / 66)

[Skippy]

I agree with Shaun on this. If my other half had an IVA I wouldn't be happy about paying all my surplus income into it!

Yesterday is history, tomorrow is a mystery, today is the present - a gift to make the most of.

View my blog at http://skippy13.blogs.iva.co.uk/

[MelanieGiles]

And I agree to - non-insolvent partners should not be required to keep paying over their salary increases during an IVA.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp