www.iva.co.uk

Hi

I am wondering if someone can help me regarding my IVA, I believe I could of been mis-sold my IVA. When I was put forward for the IVA my debts were a total of £54K but the IP added the interest on and it took it over £77K. They submitted the amount of £77K which made my payments £638 per month but the debters agreed that the debts should of been £54K but the amount was not reduce so I am paying £638 which I can no longer afford. Due to a clause I can not ask for the IVA to be re-calculated until Jan 09.
Bankrupcy was not an option given but due to my Job I was keen not to go down that route due to my career...

Can any one help?

I think your payments would probably have been set at £638 per month initially whether your debts were £54K or £77K.

The payment rate is set according to what the debtor can afford, not what his level of debts are. If you could afford £638 per month initially, but cannot now, this is because of a change in your circumstances rather than the IVa being missold. An IVA at £638 per month would have been suitable for someone owing either £54K or £77K.

Hey matty, welcome to the forum. By any chance have you received anything through the post telling you that you may have been mis-sold your IVA? If so, ignore it, it's just advertising rubbish. If you are struggling with your monthly repayments, contact your IP as soon as possible as they may be able to reduce them without the need for a variation. Good luck and let us know how it goes. Viki X

yes you need to contact your ip he may be able lower your payments as for the 77k bit i am not sure but you wont be paying that
60 x 638 = £38,280 unless your iva is over a longer term do you have an equity release at a later date?

It appears that your IP did not properly verify the creditor balances prior to the presentation of the proposals. This is always dangerous, and whilst it may take a little longer to work through the process, it means a far safer IVA for all concerned.

As Philip says, IVA payments are not established in accorddance with your creditors but are based upon affordability. There may have been errors in the workings - and if this is the case your IP should put those right - but this does not really tantamount to any "mis-selling" claim.

Did your IP also advise you about bankruptcy proceedings and a DMP - or were you just recommended to propose an IVA?

Hi All

And a big thank you to all that has been in touch and gave me their points, I will keep you all posted THANKS.

When I was approached by Debtmatters they agreed to send a rep to see me, when he came he did not go through any other proposal only explained the IVA process. As my funds covered the original IVA of £430 per month (this was calculated with no interest on all debts). Then it went to their head office who changed the figures to include the interest and a higher repayment term (I.E. 45% of debt). I was then advised to include my partners income even though we did not live together to ensure the IVA was secured. I agreed to this as I was so scared of going bankrupt and losing my whole career and house.
I do not blame anyone but myself for this predicament and have no problems paying all the money back through repayments and equity if there will be any due to the CREDIT CRUNCH. But it seems they are not interested in helping anymore.....

Hey Matty, Doesn't seem right that they included your partner's income if she doesn't live with you. You should have also been advised on DMPs and BR. Maybe the experts can comment on this for you. X

Your partner's income should not have been included unless this was at your direct instruction and with her/his agreement. I am wondering if this was done to effect a minimum dividend once your IP found out that your debts were substantially higher once they had verified the balances.

The balances were substantially higher when they add the interest on for all my credit which pushed the repayments to a virtually impossible repayment. To tell you the truth I have had a lot of help from my family to keep the payments up but I can not keep been a burden as I feel I need to pay them back(although they would never ask for it). My current IVA states I can not have a variation until I have paid 2 years worth of £638, is this possible to amend???

I would be prepared to challenge that 2 year ruling with a variation, but I know a lot of IPs who do not share my view. I guess you have to seek what your IP is prepared to do, in order to save the IVA in the long term for both you and your creditors.

There was a legal case (quite old now, I think dating back to the last millennium) which said that an IVA could not be varied if it didn't have any terms which allowed for its variation. This was back in the days when IVAs were first being set up and the new law was still to be tested.

Since then we've had standard terms which allow for creditors' meetings to approve changes to IVAs so this gets over the legal ruling, but it would be my opinion that if creditors have put in a modification forbidding any changes in the first 2 years, then this would override the standard terms, and any IP seeking a variation where it has been expressly forbidden would be risking a challenge in the Court or black mark from their monitoring authority.

Wouldn't you be prepared to have a go at varying that term Philip - if there were good reasons such as the loss of employment or marital separation, and if you got the permission of the creditor who had put forward that modification originally?

Especially if you could demonstrate that by doing so you preserve the longevity of the IVA and the creditors dividend?

It seems a strange modification to me. It was one of the terms of my IVA, and the main reason it failed. When I discovered I couldn't afford the IVA payments I asked my IP for a variation, but was told it wasn't possible due to that modification, which left me with no option other than to go BR. As far as I'm concerned my creditors shot themselves in the foot with this as they will now get practically nothing.

It was brought in Skippy because creditors were getting fed up of some IPs habitually putting forward variations on behalf of their clients during the early few months. Creditors believed that some firms were falsely inflating clients disposable income in order to get the IVA accepted and then varying at a later stage to a more affordable level. I'm fortunate in that I only have this modification in literally a handful of cases, but there have been many worthy IVAs failing as a result of something which I feel is very unfair all round.

I have discussed this modifcation with both our regulators and leading Counsel, and suffice to say that most of us are a bit baffled by what it was designed to achieve. Thankfully I don't see it much these days and I think it has died a death.

If I could have had a variation I would have carried on with my IVA - I was happy to extend it to make sure the same return was reached.