Extra income during IVA

[chris2]

I am in year two of my IVA, which began in October 2006. Whilst I have made all of the monthly payments to date, I recently received a letter requesting £1,341. This amounts to 50% of the additional income I received in the first year. I have 7 months to make this payment or I will have defaulted. My initial proposal was based on my net salary at the time, which has increased approx £1,500 net. A clause in my agreement states that 50% of any income over and above the initial net income stated in my proposal is payable to the creditors. Hence, with my basic salary, overtime and bonuses, this amounts to a substantial amount each year. I am now making provisions to pay back the amount owed for year 1, whilst trying to make up the difference for year 2. Is this the norm? I@d sent my wage slips every quarter for review but this wan;t flagged at the time.

No doubt it's my own fault for not understanding the terms of the proposal fully.

Any feedback would be appreciated.

[ianmillington]

Hi Chris

Was this provision in your proposal or modified by the creditors?

To me the term "net income" is a bit misleading. Does it mean your earnings after tax and national insurance or does it mean your disposable income? To me the latter is the only fair definition, so in arriving at the amount you owe has the IP taken into account any increases in your essential expenditure too?

Ian

[chris2202]

Hi Ian,

Sorry not sure what happened there had to create a new account. The initial net sum I refer to was included in the proposal put forward to the creditors and is my earnings after tax and national insurance.

There were no amendments to my expenditures for year one. The additional amount they seek is the extra money I earned after tax and NI.

Thanks

Chris

[goulda]

Hi Chris,

Can I ask who your IVA is with as it seems to me different companies have varying ideas regarding calculating a "net income" figure and varying policies regarding payment of overtime into the IVA

[chris2202]

Hi A,

It's with Blair Endersby / Baines and Ernst.

Chris

[ianmillington]

Hi again Chris

I note you have been sending your payslips quarterly. Is there a reason for this eg a requirement for a quarterly review?

When you say there were no amendments to your expenditure for year 1 does that mean that the proposal estimate was accurate or just that you haven't been allowed to claim additional expenses?

I assume that the Supervisor has also told you you need to increase your payments for this year as well? What was your original contribution?

Ian

[chris2202]

Hi Ian,

Yes, I had to send wage slips on request for a quarterley review but nothing changed following the reviews.

My original contribution was £430.00. This is a fixed amount for 5 years with 50% of any additional income payable.

Having spent some time reading the forum, it seems I should have been putting the additional 50% aside each month. I intend to do this going forward.

There has been no request for additional payments for year 2 yet, just the £1,341 following the first annual review. I will make sure I have it available when it is requested following the next annual review though.

My outgoings were pretty accurate, no major changes to date.

Just trying to get my head around what I need to be paying, so I don't have a shortfall again.

Thanks

Chris

[ianmillington]

Alan

I'm of the view that "net income" means the bottom line. It's no good someone working their butt off trying to improve their lot (possibly incurring significant additional expense in the process) if they are going to be deprived of much of the benefit. An IVA is all about compromise - whilst a win/win situation is probably over-optimistic, the IVA should create something that everyone can live with.

Invariably, domestic expenses (gas/electricity/Council Tax - not to mention mortgages) are increasing year on year and it's inherently unfair if the debtor potentially sees all his or her overtime going to meet those increases, meaning that only the creditors see any benefit. The new protocol makes appropriate provision for this, I am delighted to say.

Rant over

Ian

[ianmillington]

Hi Chris

I can see why you are confused. Yes, strictly you should be putting away 50% of your overtime to meet the demands on review. The next 6 months are going to be somewhat tough I think if you have not only to put that 50% to one side but also settle the arrears.

Presumably the payslips you submitted to BE for each quarterly review showed this overtime? If so this begs the question as to why they waited until the end of the year to tell you that you had a (retrospective) increase. Have they given you any reason for this?

Ian

[chris2202]

Hi Ian,

Yes all overtime and bonuses, along with my pay rise are clearly stated on the wage slips which they received every 3 months. It is taken them until January to request the arrears, when the annual review was in October. I have to have paid the arrears by the end of Septemeber. I have tried to speak with them to get advise and ask why the request was so delayed but have found myself coming off the phone even more confused than before.

It is going to be very tough for a while. The one good thing is that at least I know what to expect for the remainder of the the iva, or at least I hope I do.

Thanks again

Chris

[ianmillington]

Hi Chris

You are obliged to submit your I&E for quarterly review. Don't they have an equal responsibility to carry out your reviews on that basis? Can't they cut you a bit of slack here given that it would appear they at least have a share of the responsibility for the problem?

ian

[chris2202]

Hi Ian,

Can I ask what the new protocol is?

Thanks

Chris

[chris2202]

Hi Ian,

I'm not sure how to broach this with them. Perhaps I could put something in writing but they are very forecful when making requests.

Thanks

Chris

[ianmillington]

Hi Chris

The protocol provision is as follows:

"The IVA provider should ensure that they are provided with copies of payslips (or other supporting evidence) every 12 months. The supervisor is required to review the debtor’s income and expenditure once in every 12 months. The debtor will be required to increase his monthly contribution by 50% of any net surplus one month following such review. The supervisor will also be able to reduce the dividend by up to 15% in total relative to the original proposal (without referring back to creditors), to reflect changes in income and expenditure".

That seems clear to me. 50% of the "surplus" which is fair.

Basically on your problem I would ask to speak directly to your IP on this. You have every right to do so. After all, if this were to escalate into a formal complaint it would be against the IP personally and not the firm. The IP personally is probably blissfully unaware of the somewhat inflexible and heavy handed treatment you are receiving and, if it were to be drawn to his attention, may well want to help.

Ian

[chris2202]

Hi Ian.

Unfortunately, I have tried to speak with my IP but there is no way I can actually get beyond the Payments Department, who appear to be nothing more than an unqualified call centre. I may try to put something in writing but I'm not convinced it would actually reach my IP.

It's worth a try though, because I would much prefer changes to be implemented quarterly.

Thanks for all your help and advise.

Chris