What would be a reasonable offer

[alexandra]

I have an IVA in place and have 2 years left to pay. I orignially owed £16000 and have been paying £220 a month. I have therefore paid nearly £8000 and so if I continued to pay £220 a month for the next 2 years I would have just over £5000 to pay. My father has offered to lend me some money to end my IVA as I have just had a baby and wanted to perhaps stay at home with her as childcare is going to cost £500 a month on top of my £200 fuel costs. What would be a reasonable offer to put to them and would it be likely to be accepted? Thank you for your help

[ianmillington]

Welcome to the forum and congratulations on your happy event.

There is no easy or definitive answer to your question, I'm afraid. It will depend on a number of factors - it can even simply depend on who your creditors are.

I'm assuming you don't own your home, and that your father has offered to lend you the money on terms which are advantageous to you? Would it be fair to say that because of the new arrival you will be unable to continue with it, rather than it would be more convenient to end the IVA now? If it is the former then against the prospect of a failing IVA the creditors will probably be willing to negotiate a reduction, maybe taking £3k of the £5k - don't quote me on this figure, please. If it's the latter then expect less willingness on the part of the creditors to do a deal. As a result, before you approach your IP have the reasoning firmly in your mind as the grounds for the request may well dictate the response you get.

Ian

[alexandra]

Thank you for the advice. I have just had a reply from my IP after requesting a settlement figure. They have said in order to fulfill the dividend of 41p in the pound I would need to pay £5000. Is it worth seeing if they will accept less or should I just settle with this as this is what I would have paid if I had have continued paying £220 for another 2 years?
Many thanks

[ianmillington]

This is a question that divides the Insolvency Profession. If you pay the total amount payable into the IVA but in a way not envisaged by the proposal then I and many others subscribe to the view that it is technically a variation which would require a creditors meeting to be called. Others will say that it's only if you are paying less that a creditors meeting is required.

Has your IP said whether a meeting needs to be called for the £5k to be accepted? If the IP is asking for the whole 5 year payments and is only paying the original dividend, am I right in assuming that the IPs fees have not been reduced to take account of the fact that this will now be a 3 year IVA?

Ian

[Adam Davies]

Hi
There should really be a saving on two years IP fees,although there will be a variation fee.
4k is a reasonable offer and should return the same dividend
Regards

[MelanieGiles]

I'm in Ian's camp on this one - you cannot change the terms of the IVA without seeking a formal resolution of creditors - unless the IVA allows for this in its terms and conditions which is unlikely.

[alexandra]

My IP has said there will be a meeting. Their fees have been reduced by approx £1000 but the variation meeting costs the same. They have said they need £5000 to achieve the 41p dividend. They have said I can make an offer of less but it is less likely to be accepted. My father is prepared to lend me the £5000 on favourable terms but obviously the less I borrow the less I have to pay back. Should I offer less than this or is it best to just pay the full amount so it is accepted?

[ianmillington]

What they have said to a degree makes sense - a variation based on the original dividend is clearly more likely to succeed than one that reduces it. That's a bit obvious really.

The bit I don't agree with is the fact that the variation fee very neatly equals the saving in IP annual fees. So what they are saying is 1 simple variation report is going to cost the same as continuing to administer the VA to it's natural end? Hmm.............