Do I have to carry on paying IVA until I have paid everything back ?

[Willow.x]

I am 15 months into an IVA and planned payments each month is 250 pounds, I pay extra because of a pay rise. I have also had PPI which has gone towards my IVA.
So I had planned to pay 15000 and my overall debt was 20000. If I have paid over this 15000 does that mean i don't have to pay anymore into the IVA or do I have to carry on till I have paid everything back.

[Foggy]

Hi Willow. You will continue to make payments until such time as the arrangement comes to its agreed end or you repay the total original debt, plus fees and possible statutory interest.

[MelanieGiles]

It looks like you may be one track for a full repayment Willow, so well done for that.

I wonder if the PPI claim had been considered prior to you entering into the IVA whether you would have still plumped for the same option?

[clee123]

what is the statutary interest that is charged? is it from day 1 of the total debt?

[Foggy]

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by clee123

what is the statutary interest that is charged? is it from day 1 of the total debt?

Statutory interest is calculated at 8% simple on the reducing balance from the start of the IVA. But .... check your paperwork, as in some arrangements ( as it was in mine) statutory interest is excluded -- which could save you a few quid. In many cases a sympathetic IP can request it's exclusion and this has been agreed before --- after all this interest really serves to punish a debtor for repaying in full -- hardly equitable.

[clee123]

so Is the 8% charged per annum? o

[clee123]

if so - it would add a further £2000 in year one, etc, so that is adding to my debt - I wish I had questioned this initially - as i thought all interest on the balances etc were frozen,
oh dear! I thought I had paid a third off and by year 5 would have paid two thirds off, so only had £10k to find - if they are then going to slap another lump on for interest it could be another £10k

[Foggy]

Statutory interest only kicks in if you have paid 100% of the total original debt as well as the IP's fees.

It is worked out on the reducing balance so you might have £2k for the first year (assuming dividends are paid over annually). In the second year it will be 8% of the original debt less whatever dividend had been paid over ... this would reduce every year, so in the last year there would be little interest to be added.

In reality, it probably reduces a lot faster as dividends are usually paid over quarterly.

[Rubyred]

Hi Clee,
If you do have the statutory interest clause in your proposal then it should only affect you if you pay 100% of your original debt. If you are on track to do this you can request that a variation meeting is called to have this removed.

[MelanieGiles]

It is very rare to see statutory interest included in IVAs these days - generally only inserted by HMRC and not even in most of the cases they are influencing creditor on now.