Is this the way things are usually done

[dvy]

On one of the threads someone has posted about a personal loan in an IVA needing to be counted as the whole amount (total interest included) rather than the amount borrowed. Is this the way things are usually done, or was this an exception. If it's normal then any hope of an IVA goes out the window!

[MelanieGiles]

Hi dvy

It depends upon the exact terms of your contract - especially those which refer to non-payment. Some creditors do apply all of the future interest, and some don't. Check your agreement to be sure. Why do you say that this will make an IVA unworkable?

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

[jamesfalla]

dvy

Melanie is right, some creditors apply interest per day and so the balance you are given on the day is the balance that you would add to your IVA.

However, it is more usual for interest to be added to the loan up front. You can check this by looking at the loan agreement which should tell you the total amount you will pay back over the term. To calculate the outstanding balance (which needs to go into your IVA), you should multiply the normal monthly repayment by the number of months still to pay on the loan.

You should always use this method when calculating the loan amounts that should be listed in your IVA. It is far better to be realistic at this stage than have your IVA rejected later.

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions for over 10 years.

For more information visit www.jamesfalla.com and visit my blog at: http://jamesfalla.blogs.iva.co.uk

[jane.l]

very good point, this is another worry of mine regarding the IVA not being feasible, we borrowed £20000 off Northern Rock and this is the amount I told my IVA company but I have since had a letter from Northern Rock saying I owe £30000!!! If this is the case I know definitely that the IVA will not work, its already stretched to our limit!!!!1

[MelanieGiles]

Jane

Make sure that your IP gets a detailed breakdown of the debt, so that you can satisfy yourself that the amount is correct and in accordance with your credit agreement.

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