Worrying about improptu review + settlement

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Freddie94

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Post by Freddie94 » Tue Jan 04, 2022 6:34 pm
Hi all,

So I've been given a new Job with a pay rise which is great, I've only been in my IVA around 5 months, the pay rise is around 8% so below the 10%.

I told my IP today and they want a break down of the last 3 months bank statements which being honest, I wasn't expecting.

My partner and I have both been struggling with depression over the last few months and have been very bad with take out food as our oven has broken. Xmas has been stupidly expensive as well as things such as her car failing her MoT costing us 100s.

Now we've managed to get through it with the help of some family who we've paid back as well as my partner taking on some extra freelance work and me looking for a new job. I'm super worried about them going through the past 3 months of statements and seeing how bad it looks, because honestly, it looks terrible.

They said I've got this month to send it over, now we are in a position to get the new oven and sort out this months accounts, but the rest still look terrible.

On top of this, there is a family friend who has heard about my IVA and is happy to pay it off in full, but I'm really worried about how bad this will look on my part with offering to pay the IVA as soon as they wanted to go through my accounts, also is it too soon to pay off the IVA?

Any help would be great, as I'm going mad about what to do.

Thanks.

Fred

Foggy

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Post by Foggy » Tue Jan 04, 2022 6:50 pm
Hi Fred. First that 10% disregard does not apply to permanent pay increases -- that is for extra income by way of overtime and bonus payments.
Now, the standard clauses regarding pay increases are usually, or used to be applied such that the increase was all yours until the next annual review. After this review the IVA payment would increase by 50% of the net increase in income from the month after the review.
OK --- the clause has been rather loosely written and some IPs have, recently, started to introduce interim reviews to catch an increase early --- which, it seems, is what is happening here.
With regard to an early exit -- read your proposal carefully, as some have a clause preventing early exit within the first 6 or 12 months.
If and when you couch such an offer to your IP, do bear in mind that there are two common ways of dealing with this: One is a settlement, whereby you offer up a lump sum to cover the full remaining debt, plus fees and possible statutory interest. The other, more common, route is by making a Full and Final Offer. Here you make an offer based on remaining payments (plus 12 if you are a homeowner). This can often be reduced a little to reflect savings in costs and the 'bird in the hand factor' --- but, of course, the higher the offer, the better chance of getting it accepted.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Freddie94

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Joined: Tue Jan 04, 2022 6:27 pm

Post by Freddie94 » Tue Jan 04, 2022 7:08 pm
Thanks for this!

I didn’t realise that there was a difference with regards to permanent payment increases vs a bonus etc.

So does this mean that the full and final offer would increase if I waited to make the offer once my review is completed? As essentially the amount that I’d need to pay in to my IVA would increase.

What if I decided to take a lower salary from my job and basically turned around and said the company offered me too much initially it was meant to match my existing salary. So that way the full and final offer from my friend doesn’t become more expensive etc.

Thanks for your help

Freddie94

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Joined: Tue Jan 04, 2022 6:27 pm

Post by Freddie94 » Tue Jan 04, 2022 7:28 pm
Also I just read through my contract there is no clause stating I can settle early.

What is the main different between a settlement and full and final offer?

If I were to talk to the IP about paying it off tomorrow for example would I still need to go through the review procedure etc?

Thanks again

Foggy

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Post by Foggy » Tue Jan 04, 2022 8:49 pm
To artificially reduce your income increase could be seen as grounds to fail the IVA entirely, so tread carefully there !
The differences between the settlement and a F&F offer are as I outlined above, i.e:
"If and when you couch such an offer to your IP, do bear in mind that there are two common ways of dealing with this: One is a settlement, whereby you offer up a lump sum to cover the full remaining debt, plus fees and possible statutory interest. The other, more common, route is by making a Full and Final Offer. Here you make an offer based on remaining payments (plus 12 if you are a homeowner). This can often be reduced a little to reflect savings in costs and the 'bird in the hand factor' --- but, of course, the higher the offer, the better chance of getting it accepted."

Of course a settlement would have more chance (in the latest 2021 Protocol version it is a dead cert) but would usually be far more expensive.
Yes, if your payments were increased then a F&F would be based on the new figures and so might be more. But any increase should be based on the net increase in income --- a new I&E should also consider increases in expenditure as well. So the increase might not be that much. Do mention the anticipated increases in utility supplies which are about to hit us !

If you were to make an offer tomorrow, your IP might still insist on a review --- or, in the interests of working smarter, rather than harder, they might be happy to proceed on current figures. Impossible to guess which way they will jump.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

Freddie94

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Joined: Tue Jan 04, 2022 6:27 pm

Post by Freddie94 » Tue Jan 04, 2022 8:59 pm
Thanks for all the advice!

Makes sense, sorry I didn't see the part regarding the full settlement of debt, thought it was a full settlement of the IVA balance whereas a F&F would be an offer on the remaining balance etc.

With regards to the bank satements, I've looked through my agreement and it does not say that I need to provide them if my salary has increased outside of the annual review, am I able to just turn around and say, I'll happily send you my statements at the scheduled annual review that was agreed? Or do they have the right to view them whenever they want them etc.

Again many thanks!

Foggy

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Post by Foggy » Wed Jan 05, 2022 8:11 am
You are obliged to comply with any 'reasonable' request at any time. Refusal could see the IVA terminated for non-compliance.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

luluj

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Post by luluj » Fri Jan 07, 2022 6:20 am
I would work with your IP to review following your change in circumstances. I wouldn't try to "hide" anything- being upfront and honest with what has happened in the last few months and how you have dealt with it should in my opinion demonstrate resilience and ability to manage. If you have borrowed and paid back from family, got through Christmas with a broken oven and now in a position to buy a new oven, then you are no worse off than you were at the outset.

Offering a full and final offer to end using a third party offer is in my opinion the way forward. Use the detrimental effect the iva is having on your mental health and wellbeing as a reason to offer and ensure you make it clear that should the offer be rejected by creditors you will not have access to this money for any other reason.

Good luck and let us know how you get on.
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There is a solution for everyone .... Just need to stay positive !

Look at my blog "All I wanted was a baby"
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