f+f setttlement - three queries

[willow]

Hi I have been in an IVA for a year and regularly read this forum which I find most helpful. I have two questions. First the usual one about the amount to offer in f+f settlement.

I owe £110K and have to make payments of £420 per month for 5 years - total £25200- so have now paid £5040 and by the time any settlement is accepted there would probably be another £1260 paid making £6300 already paid leaving £18,900 to pay. (I also have to pay £16,500 in equity release as a seperate amount in January 2008). After fees £2K to nominees and 1K per year to supervisor totalling 7K plus VAT I end up paying approx 33p in the pound. The sum I would like to offer is £15K taking into account the saving on fees for 3/4 years- 3/4K plus vat. (This £15K is in addition to the £16K lump sum which I have to pay.) Does this offer have a reasonable chance of success?

The reason I can offer this money is that my spouse has inherited some money from a relative. I have seen on the forum a question about a spouse offering to pay and Melanie said that was okay. However my query is surely when you offer the f+final the idea is that you have to pay back the person who is lending it and therefore cant pay your creditors the money as well. So if you borrow from your brother-in-law it is on the understanding you will pay him back and he writes to the supervisor saying that he is lending the money in f+f settlement and that he will expect to get it back. This would not happen with a spouse as no one would expect a husband to pay back a wife or vice versa so would the supervisor/creditors not just say lets have the money and make you continue to pay into the IVA?

My third query is whether having the HMRE as a creditor will affect an offer of f+f settlement? They never voted on my original arrangment because they kept wanting answers to all sorts of questions but the other creditors voted yes and they were over 75% so it went through without the HMRC voting.

My spouse has said that they can give me £15K max to pay off the IVA and if it is not enough then I will have to continue in it. I am self-employed and am likely to be cutting down on my work load soon due to age and health problems so I want to try to settle the IVA as soon as possible. I would be grateful for any advice on these queries.

[catullus]

Hello Willow.

Broadly speaking I think that the amount you intend to offer creditors in settlement is roughly equivalent to the original amount that was offered, assuming that your IP restructures their fees for an early settlement and that you will be able to release £16.5k by way of remortgage.That's good.

Probably the strongest reason that you've got for making such an offer is your deteriorating earning prospects, caused by your health and age.If this is properly explained to creditors it will give them a strong reason for considering an alternative offer.

Your point about the money coming from your wife isn't really correct. She's under no obligation to pay this money to your creditors and can simply keep it and allow the IVA to continue (or possibly fail).

So if the creditors want an early settlement using this money, for the reasons you will set out, the creditors will have to vote for it regardless of any repayment arrangements to your wife that may or may not exist.In other words what happens after the IVA is irrelevent, it's all down to the quality of the offer on the table now, taking in to account the possibilty that your IVA will run in to trouble.

As to HMRC, they generally have a policy of not voting when they are owed less than £8k so the chances are that their involvement won't affect the outcome of your potential offer.

Hope that helps.

[MelanieGiles]

I agree that the offer looks like a good one, but would strongly recommend that you enter into a formal repayment agreement with your wife based upon your current disposable income. This will avoid creditors demanding that you continue to make any ongoing payments.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Adam Davies]

Hi
Good advice
The key is a well written variation proposal,be sure that you are happy with it and that it is convincing.
Creditors do seem to like early settlements
Good Luck
Regards

Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[willow]

Thank you all for your replies. I will contact my IP this week with my offer. Two points - Melanie you suggest a formal replayment agreement - can this be done between ourselves or does it need a laywer to make it formal? HMRC have about 24% of the debt- my other creditors just managed over 75% for their yes vote. I read on this forum some problem with HMRC with f+f which causes delay in sorting the settlement - that was my concern but so far they have taken no part in my IVA so hopefully that will continue. I will report in due course as to how I get on. Thanks again for the help.

[MelanieGiles]

A formal agreement can be established between the two of you, without a lawyer, but I would get it witnessed just to be on the sage side.

The problem with HMRC debts is that all of the tax due in the current fiscal year, which does not end until 5 April 2008 forms a claim. This simply means that the IVA cannot be concluded until after the tax year concerened, but doesn't stop the full and final settlement being acceptable to HMRC.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[willow]

Further to my posting in December in February I made a F& F offer of £15K plus the payments in March and April. The variation date was 2nd April and I have now heard its been refused. When I phoned to get the details sent to me as they had not done so I was told that my IP was no longer going to represent me - it is a small IP practice that I chose because it was local. They said I have been moved to another IP - it appears I have no choice in this but I have a lot of questions about the F & F and what went wrong as some of the people I was dealing with I now find out left during the period my F & F was being dealt with. The rather strange thing is that I was told today when I phoned that The IP I was being moved to was called Melanie Giles of Philip Gill and Co !!! Could this be correct? Could I have been moved just like that to Melanie of these boards - if I have to be moved I am very happy to move to Melanie. My question is really how can people be moved like this from one company to another without any notice?

[MelanieGiles]

Hi Willow - it is true that I have just taken over a small number of appointments from an insolvency practice in Leicester as a result of the retirement of your own IP.

I only collected the case files on Tuesday, and my electronic data is being updated tomorrow, so please bear with me until I can investigate this matter further. Philip Gill & Co is another of my trading companies - but you will deal with me directly in the first instance whilst we explore options for you.

I was appointed by Order of the High Court, and this is quite normal in these circumstances when an IP retires. Nothing sinister is happening without your knowledge! And I will be shortly writing to all my new clients to welcome them to my practice and my staff.

Hope this helps for now.