www.iva.co.uk

I loaned a friend money on condition that she repay me from money she was waiting for from the Government. We drew up an agreement. After cashing the cheque she ceased all contact with me and refused to answer my calls, emails and letters. I now find she has entered an IVA but ommitted me from the list of creditors. Can I sue her for the return of the money or am I bound by the creditors vote even though I knew nothing about the IVA until last week?

Hi, and welcome to the forum.

Do you know who her IP is? If so, then I would get in touch with them and tell them about the loan. It should have been included in the IVA.

Thank you for replying. I have just found the IP. Really sad it has come to this between my friend and I and I would never have lent her money if I had known how much debt she was in. Hoping it won't come to a court case if I'm honest. I understand how things can overwhelm people but it is money we can ill afford to lose.
Anyway, thank you for your advice.

It is really bad that it has come to this, but you never know do you?

Give the IP a ring after the weekend and tell them about the debt. If nothing else, you should be entitled to a dividend.

Did she borrow the money after the IVA was in place ? If so then she is in Breach of the IVA and I would report her to the IP

Sounds very rotten that she has taken the money off you with the knowledge that she isnt going to pay it back

If your friend deliberately failed to include your debt, then you can argue that the IVA shoud be voided due to material irregularity. How much did you lend her?

Thank you for the advice Melanie. I'd rather not say exactly how much I lent her (I'll call her J for now) but it was in the thousands. I had money from the sale of my house when I relocated to another part of the country for work. We had lived in the same town for 17 years but I now live 100 miles away hence the reason we kept in touch by email/phone. She asked me to loan her the money as she was in mortgage/council tax arrears last September when we met up one weekend and because I knew she was due the Government money (compensation) I agreed. A mutual friend who is a solicitor drew up a formal agreement and witnessed our signatures. The compensation was much more than I lent and the agreement was done by a solicitor so I assumed it would be ok.

My cheque was cashed in the beginning of October and I have found out the IVA started 8 weeks later. Since November I have not heard from J. Last week I met up with another friend from my old town who erroneously told me J had been made bankrupt and details were on the internet. She also said J had to tell the court who she owed money to and the creditors were allowed to sue her. I did a google search and found the Insolvency Register and found J was under an IVA as opposed to being bankrupt and the date. Tbh I hadn't even heard of an IVA until then but having spent last night doing a lot of research on it the whole situation J is in is much clearer now. It has certainly been a learning curve.

It does appear I cannot sue her and not sure I have the stomach for a court battle anyway and I certainly don't have the money for court costs. I'm not vindictive and really all I wanted was my money back but that doesn't appear to be the case either. There is quite a lot of conflicting information from various IP companies. One stated that a debtor could write off 90% of their debts whereas another said 60% was more realistic.

I just want to add that J knows my address, phone number, mobile and email address and has all of my contact details therefore I am assuming she deliberately left me off the creditor's list because otherwise I would have received a letter from the IP?

Apologies if this sounds a bit rambling - I wanted to try and give a bit of background. Possibly I have been naieve but I trusted J after being friends for 17 years. I am more hurt and upset than angry at the moment.

I am writing a letter to the IP today giving the facts and will atach a copy of the signed agreement. I also have a copy of the letter from the Government showing the amount of compensation J was going to receive so will send that.

Thanks for your help.

You should at least be permitted to join the IVA and benefit from her regular dividend payments, but it is appalling that she did not include your loan. It makes me wonder if she was thinking of trying to repay you outside of the IVA, in which case this would be preferring you over the other credidtors.

Do you think she has received the compensation yet, as I wonder if her IP is aware of this?

Hi

Yes J has definitely received the compensation. It was received at the end of October and I know this because she told me in an email. This was the last email I received from her.

I don't know whether the IP knows about it. From reading about IVA and the criteria I see that J would have had to provide bank statements to the IP and these would have shown the amount I loaned her and the compensation amount (please correct me if I am wrong). Surely these rather large amounts would have been questioned by the IP.

In any event it does seem now that I won't get the full amount back and I will have to accept that. I'm certainly not the trusting person I was.

I am a bit confused over being allowed to join the IVA. Again, please correct me if I am wrong as most of my information is from the internet, but I am of the understanding that if J did not include me as a creditor and I've come forward after it was set up the IVA fails and J has committed a criminal offence. Is that right?

I have also read that the creditors in the IVA will not be happy as their share of money will be reduced if I am included.

I think it depends on the IP as to whether or not bank statements are required. We've never sent any off.

I would certainly speak to the IP and mention about the money you have loaned her, it could be that it can be included as Melanie says and that you could get some of your money back.

Not sure about the criminal offence, but the IVA could fail if the creditors weren't happy.

I would certainly try and get some of my money back.

I think that you need to get the IP to find out why the debt was omitted from the IVA before making assumptions as to the consequences. But probably the best thing that you can do is to bit the bullett and stand in line for your dividend, if you have no feel for a legal battle which could leave you worse off.

Does compensation have to be declared ?
Is it classed as windfall?

I think it depends upon what the compensation is for as to whether it is classed as a windfall.

if for example it was after a car accident?

I think it does depend on exactly it was for.

One of the experts will be able to answer that as I know the question has been asked before.