www.iva.co.uk

Hi there,

This is my first post am hoping that someone can help me..

I took out an IVA with a chartered accountant nearly 5 years ago (so nearly completed payments). At the beginning of the IVA, my total was just over £10,000 including their fees..

Now that I am nearing the end of my IVA agreement, I have received a letter instructing me that I owe them £10,000 in fees and charges for work done on my case...!!!

Can anybody help please?!?!? Has this ever happened to anyone else?!?!

Thanks

Hi andrew and welcome to the forum

This is bizarre! Can you give me a little more information about the basis of your IVA - presumably it was based upon you making monthly contributions - how much were you paying per month.

Also, what ongoing contact have you had with the IP? Presumably you have been receiving his annual reports at the end of each year. The only reason I can suggest is that your creditor claims have increased from those put forward, but the figures look a little odd at the moment.

Do you mean that your total contributions plus the IP fees only amounted to £10,000? Could you send details of the letter - or paraphrase the points he/she is making?



Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

I have to agree with Melanie, this does indeed sound bizarre, their fees should have been incorporated in the IVA so that by the time you finish paying it off you would have also paid off their administration fee. It seems like a rip off to me, sorry to be put through that unnecessary stress, some people are really unscrupulous arent they?

Can you email us a copy of the letter or fax if necessary. This sounds very strange.

Regards

Lee
www.123debtsolutions.co.uk - 08000 114 123

Hi Melanie,

Thanks so much for responding so quickly! I must clear this up to avoid any further confusion; I was actually posting on behalf of a friend of mine who didn't want to be named or be mentioned. To be honest, they are finding talking about any of it very difficult!! Sorry for misleading you..

Anyway, I have found out some more details regarding the IVA and the letter my friend has received.

At the beginning, the IVA total stood at just over £10,000. It was the total debt outstanding plus the IPs fees for arranging the IVA. There was an additional £3000 to be paid to "complete" the IVA as the applicant was a homeowner.

Early on in the term of the IVA, the applicant missed 3 months' worth of payments. A letter was sent to the IP, asking if the IVA term could be extended for 3 months to make up for this. The Ip negotiated with creditors, and it was agreed.

Unfortunately, this happened again, early on in the term...and again the creditors agreed to the IVA being extended for a further 3 months. Since these "mishaps", all payments have been made in full and on time.

In October 2005, the applicant had sufficient funds to clear the remainder of the IVA (£5000) - the applicant wrote to the IP enquiring if it was possible to settle the IVA immediately to prevent any further payments, this was declined by the creditors.

The letter that my friend has just received has advised her that in order to close or settle her IVA, she must find the £3000 she agreed at the beginning of the term by March..

Furthermore, the IP is stating that their involvement and work throughout the term of this IVA has accrued costs in excess of £10,000, which the applicant must arrange to settle following the IVA closure..

The IP have have kindly offered the opportunity to pay these over 50 monthly instlaments once the IVA has been settled.

Obviously, my friend is concerned not only about making these payments for a further 4-5 years, but is also worried that she may face further fees at the end of THAT term..??!

My friend has been seeking advice from the CAB regarding this, but obviously we would like any and all help we can get to understand this better..

THANKS EVERYONE!!!

Tell your friend that it is inappropriate for her Supervisor to wish to be paid further monies once the IVA has concluded. They should check the terms of the IVA with regard to fees, but my gut feeling is that the IP fees would have been fixed and the IP is trying it on.

I could be wrong, but if IP fees are still owing by your friend, then the IVA should not be concluded until these are settled. I still don't understand the £10,000 figure, as this is incredibly low for even the smallest IVA. But if the contributions were only calculated at £10,000, then I cannot see that creditors would have agreed to fees of such quantum.

Difficult to advise further without examining all of the papers, but I suggest you get your friend to write to the IP asking for a full explanation of the conduct and a settlement figure. Your friend will have to comply with the original terms of the IVA to get an eventual Certificate of Due Completion - but this will be based upon the fee level agreed by creditors and no more!

I am interested to follow this post, so please keep us informed of progress.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi Again Melanie - thank you so much for your help so far.

I spoke to my friend, and this is more information regarding the initial debt, and the correspondence that they have received from their IP - hope it makes more sense to you than it does to us!!

Original debt only totalled £8,311.58 over 5 different companies. (one debt was even only for £102.45)

IP added "The Associates fee" of £2,046.21 to the above sum, I presume that was their "setting up fee", which made the total debt for the IVA £10,356.79.

This sum was to be paid over 5 years at the following rates:-

1st Year:- £100 per month

2nd Year:- £150 " "

3rd Year:- £200 " "

4th year:- £225 " "

5th Year:- £250 " "

Total payments for 5 years would be £11,100

To date payments have been made which total £10,500

Therefore according to our calculations, the amount still owed should be £600 + £3,000 equity = £3,600
(At the end of the 5 year period, £3,000 was to be paid extra as equity on her property)

She also had it written into the IVA that the creditors would be receiving 92pence in the £ "minimum dividend" of the debt.

She was assured she wouldn't have to sell her property, but I don't understand why they didn't add this extra £3,000 to the monthly payments, which would have been easier than finding it at the end of the term from "thin air"?

The most shocking statement was in the last communication in January 2007 which listed Supervisors fees as plus £10,054.11 (gross)!

The Supervisors report to January 2007 listed the following:

Receipts

Voluntary contributions £10,250 (she has since paid 1 more £250)

Interest net of tax 86.95

TOTAL 10,336.95


Payments

S of State Fees 35.00

Specific Bond 50.00

Nominees Fees 1,900.00

Nominees Expenses 300.00

Supervisors Fees 4,182.47

Legal Fees 206.00

Irrecoverable VAT 810.00

TOTAL 7,484.15

Balances in hand (added) 2,852.80 (???)

TOTAL 10,336.95

There is another statement of "minimum dividend calculations", which I really don't understand at all - if you can provide any enlightenment at all on any of this, it would greatly appreciated!!

Many thanks!!

I'm not an expert, but I am amazed that your friend was even advised to enter an IVA. I could be wrong, but to me it seems as though the IP has used your friend's relatively low debts to make money. I've always thought that you needed to owe more than 20k for an IVA to be considered?

Good luck with getting this sorted out.

Onwards and upwards!!!

This would never be put forward as an IVA these days, as it simply does not fit current IVA criteria. I personally would not have put it forward 5 years ago either!

Can you confirm the basis of the IP fees which were detailed in your friend's proposal. I cannot see how these were calculated to fit the dividend to be returned to creditors. I also do not understand what is meant by "Associates fee". Can you get them to clarify exactly what this is with the IP directly, so I can give proper advice.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Thanks again for all your help, I will go back again and try to get more information before I post a response tonight or tomorrow morning!

Thanks

Andrew

Hi again Melanie,

I got an email from my friend:

Sent in January 2007



Minimum dividend Calculation



Step one



Bank balance:- £2,852.80 (?)

O/S Contributions £1,450 (?) Arrears to be paid

£3,000 Outstanding Equity

Sub Total £7,302.80



Step two



Amounr required to achieve minimum dividendof 92p in £ £9,529.27

Less dividend paid to date NIL

Sub total £9,529.27

Plus preferential claims N/A

Plus supervisors fees £10,054.11

Sub total £19,583.38



Step three



Sub total (c) £19,583.38

Less subtotal (a) £7,302.80

Amount required to achieve minimum dividend £12,280.58



Divided by monthly contribution amount (12,280.58 divided by £250 for 50 months)

V.A. extended by 50 months at the rate of £250 per month


I can't follow this logic?

It appears that every time we write/phone them we get more charges added to the bill!

We were never informed that if we communicated, the bill would escalate.

I am at the end of my tether now, & running out of time! I don't have the time to start writing more letters. The IVA ends in March & I can see that I am going to lose my house if they fail the IVA & take me to Court for Bankruptcy. It's so unfair when my original debt was for around £8,000 & I've paid £10.500 & appear to still owe £12,280.58 + £3,000 equity!!!

I do appreciate your advice but don't know where to go from here.

I am willing to settle the outstanding £3,000 equity + arrears, but I dispute the arrears that they state.

Hi Andrew_xib,
Sorry to intervene but you are in good hands on this forum as you have gathered, and will get expert brill help, but it sounds bizarre even to me who hasn't been thru IVA. There must be a Professional Body to put a Complaint in about the Accounting Company who it seems made an awful rip off mess surely. Thomas Charles seem a decent Company and your friend could phone for free consultation i guess, mind you Melanie is excellent![8D]
razamataz_

Hi andrew xlb

I am sorry for the delay in responding to you. For some reason I missed your reply.

I have read and read the post now several times, and just cannot understand the logic of this case at all - or the fact that it was accepted by creditors with IP fees more than the creditors themselves. This is incredible, and quite honestly very poor advice if I have understood your notes.

What were the terms of the original IVA agreement - it seems from your earlier post that contributions in the region of £11k were to be made with a £3k equity release. And what was actually said about fees? If the IP got what is referred to as a "time-costs" resolution, then this gives him the right to be paid on the basis of the amount of hours he has spent in working on your friend's case. If he has had to spend an abnormal amount of time, due to difficulties - I note that your friend is in arrears with her contributions - then some of this additional time may be justified, but I cannot see that all of it can.

This appears to be a definate case for referral to the IP's regulatory body - on the basis of overcharged fees which do not accord with the proposal. I cannot give definitive advice within this forum on specific cases, but it seems to me that your friend should never really have entered an IVA in the first place.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

i have wrote to the governing body and they have informed me that they cannot assist in the refund of monies from the company this has to be taken up with independent professional advice and be remedied through the court, would that be the same for some one being over charged whilst in an iva as mine was the lead up to the proposal, just a thought before andrew wrote to them
kerri