IVA and overdraft

[Marshalsea]

I am in the process of trying to set up an IVA, using an IP from a local firm of accountants. He seems very competent and professional, unlike some of the 'IVA factories'. One thing that is puzzling me is how my overdraft fits into all of this. It currently stands at around £900, against a £1400 limit, which I have exceeded only once in the last ten years. My IP advised me to exclude the overdraft from the IVA proposals unless the bank (Barclays) withdraws my banking facilities. I wrote to Barclays two weeks ago explaining my situation and advising them that I was looking to enter an IVA. So far I have heard nothing back from them. Incidentally, I also have around £8K on a Barclayloan which is included in the IVA.

Couple of questions: firstly, has anyone else managed to exclude an overdraft from an IVA in this way? It seemed odd to me, but my IP did not see it as presenting a problem. Secondly, if I reduce the overdraft, either before or after the IVA is (hopefully) approved, does this constitute preferential treatment of a creditor?

If Barclays pulls the plug, I will just lump the overdraft in with the IVA and move banks. But having been with them for twenty years I am reluctant to do this unless pushed. There is a further twist in that I run a small company in which I have a 50% share: the company is my sole source of income, and its bankers are... Barclays. The company has a £2K overdraft facility (unsecured, no personal guarantee) and if Barclays withdraw banking facilities for the company I will be in real trouble.

I would speak to my IP, but having bothered him a few times already I thought I would see what people here think first.

Richard

[steve532]

Richard.
You have to include ALL debt in an Iva including your overdraft. You will have to change banks anyway as barclayloan is one of your creditors.
Im suprised you IP didnt know this!!
Also please dont pay any up front fees before your creditors meeting, and check you have your IP fees in writing before you sign up. There has been some bad stories on here about accountants running with an IVA.
Be Lucky.

steve

[Marshalsea]

Hi Steve

Thanks for that. The firm I am using is a mid-sized (six offices) firm, with a specialist insolvency unit - so hopefully they are not complete muppets. My IP has been in the business a long time, so I am surprised if he has failed to understand the implications of the overdraft. Possibly he has misunderstood something from our initial meeting - I had better give him a ring and check.

The IP suggested that I send him a cheque for the first month's instalment on the proposed IVA, so that he can wave it in front of the creditors as a demonstration of good faith on my part. That doesn't sound too unreasonable to me, although I have not yet sent him a cheque. He told me that all his fees would be bundled in with the IVA and paid, in effect, by the creditors, so I would have nothing to pay. I will make sure I have this in writing.

Richard

[steve532]

Dont pay please.
Tell them you will post date the cheque for the date of your creditors meeting. Believe me if you pay them they will not work as quick or efficently as an IP that has to get your IVA approved before he gets any money, and like you say his fees come out of the IVA so he doesnt need anything to wave infront of the creditors noses.
Please contact one of the companies on here for a 2nd opinon,
This one sound a bit dodgey the stuff about the overdraft just doesnt ring true.
be lucky



steve

[scaredkez]

i would just like to say if you are happy paying up front fees always ensure you know what exactly will happen with them should they not produce the goods ie your iva, get it in writing as once they have it and it doesn;t go through it is very hard to get it back believe me i paid 1566 upfront over 5 months my iva was rejected and they kept the payment as fees for their work putting the proposal together,
speak to a few other companies before you commit yourselves to anything remember 5 years is a long haul, get alternate advice especially on the overdraft as part of the iva agreement is that you will not incur further credit! and all unsecured debts have to be listed anyway.
i wish you luck
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[go_4_broke]

Richard

The way IVA's have evolved means that pretty much anything can be written into the agreement as long as it's acceptable to the appropriate majority of your creditors.

I'm guessing the reason the overdraft is not viewed as acceptable is not because it's banned in IVA's as such but that it probably won't be OK with your other creditors.

You and your company are separate legal entities but the banks don't seem to take that view. Both your overdrafts could be called in at any time and it may be that your IP is trying to protect you from this by avoiding Barclays getting any whiff of what's happening. He could argue with your other creditors that this is in their interest as you need to keep the business going.

I'm sure an IP will be along to tell me that's all tosh but let us know how you get on with it and best of luck.

-Best.

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