Advice on purposing a full and final settlement

[Toe]

Hi all,

I’ve been in an IVA since August 2024 after I was struggling to maintain payments in an informal debt arrangement (DMP). My debts totalled £7,127, I’m now aware in hindsight that I shouldn’t have let myself be talked into a debt solution which didn’t really work in my best interests in the long term but that is ultimately spilt milk at this point. The fact interest would be frozen and contact from creditors would halt was really emphasised and at that stage I was very overwhelmed and that was enough for me to rush through the process in an attempt to find some relief, it did admittedly provide that for a while but now my circumstances have changed it is no longer a good fit.

I have made 16 payments of £100 into my arrangement thus far and have been informed my payments are due to increase to £128 per month starting from December 1st. On this annual review email I was requested to send over a statement of my savings account also which I did. The savings account showed a total saving of £7100+, I’d managed to save as my earnings have been at an all time high recently due to an uptick in my hours which I’ve been forthcoming about with my IVA company, I’m also back at home rent free (I’m a self employed domestic/commercial cleaner). The Review Officer responded with:

Good Morning,

Thank you for your email.

Regarding the additional earnings, you can either send proof of your earnings for the last few months via a cash flow as we’ll need to see your expenses too and I can re-evaluate the income & expenditure or we can wait for your 24-25 Tax Return to be completed.

I note your savings has over £7,000 currently, how has this accumulated and what are these funds for? Any asset over £500 is usually payable to the creditors under the terms of the IVA.

I’ve not responded to this email after seeking a bit of advice on another forum before becoming aware of this existence of this one. The things is, the money was sent to my brother to help him put a deposit down on his first home, I did this whilst I was still very naïve in regards to what can and can’t be done whilst in an IVA. I will get the money back but it is not available to me just yet. The initial request for me to explain these savings hasn’t been followed up. I’m also under the impression my IP is unaware and that nothing has been noted on my account in relation to this.
I’ve been going round in circles in my head about this and it’s been having an adverse effect on my mental health. I was worried that my agreement was going to fail but at this stage it is still active and no breach has been issued. The whole situation feels like a bit of a stranglehold and I’d like to free from myself from it.

Is my best option to ask a member of my family to offer a full and final settlement figure to my IP, somewhere in the ballpark of £128*43 = £5504

Best to just get shot of it and move forward with my life debt free, I’m aware that my credit score will still be screwed for another 4.5yrs but at least my money will be mine and I’ll be able to spend it as I please.

Any advice appreciated, T.I.A

• This topic was modified 3 months ago by Toe.

[Foggy]

Hi, Toe. Apologies for the delay in replying.

Although the IVA might have seemed a good fit a couple of years ago I always question the wisdom of a heavy hammer such as an IVA being used to crack a £7k nut !

I can also see why the IP might be getting curious as to this £7k in savings (which I assume is now gone to your brother, rather than sitting there).  Your IVA payments are based on income minus expenses — there should be no room to accumulate substantial savings.

The cleanest solution, if you can get friends or relatives to assist, would be a full and final offer, based on all remaining payments — so the £5.5k mentioned.  This would be giving creditors more than they signed up for so might well be acceptable to close the whole arrangement down.

[Paul]

Slight worry is they may see the 7k as anasset you have moved to avoid paying it over?? Given the level of debt in the 1st place it seems a rather large amount to have managed to accumulate!

I can only echo Foggy, be honest with your IP over the money and see if they would accept a F&F offer if you can borrow from friends or family,remember you will have to show where the money came from.

Out of interest what company did you use and how were you directed to their services,I’m assuming a middleman who has done you no favours in the first place! Been in the situation so fully understand the grabbing of great sounding options when they fall in your lap!!!

Best of luck

Paul

[Lulu]

totally supportive of both Paul and Foggy advice here – speak to your IP explain fully, be open and honest and see what happens

[Toe]

I haven’t been pressed any further over the savings/funds since the initial inquiry and it came from an annual review officer and not my IP a month ago now. If asked again I could maybe say the funds were sent to my brother to cover rent which I haven’t been actively transferring since the end of May when I moved out of my old room and back into my family home. When you say be open and honest if I say I’ve transferred it to my brother so he can put a deposit down surely that’d be interpreted as a preferential payment and put me at risk of an agreement failure. My first increased payment is due to go out on Monday. Following that I think I should begin proceedings over offering the 5.5k for a F&F settlement, this would be coming from my Mother. Following the settlement I’d pay her back but of course they don’t need to know that and it’ll be purposed as a ‘gift’. As the 5.5k, as Foggy mentioned is more than my creditors agreed to originally receiving and the fact it’ll be paid upfront and not over the course of another 3.5yrs surely that puts me in a good position for it to be accepted. That seems like a better way to deal with my current situation than being subject to further increases down the line and being in a position where I pay all debts and fees on-top which could total 10k+.

Thanks for your replies and advice thus far, any further guidance is greatly appreciated.

[Foggy]

It would be far easier,  going forward, after a successful F&F.  Yes, put it forward as a gift and mention that it is for the purposes of a F&F only and if the offer is refused the donor will be retaining the funds.

Not only will the creditors be getting more than they originally signed up for they will not be spending money on processing many, small, payments over the next few years.

Best of luck.

[Toe]

Do you think it’s best to present this in writing in the form of an email? I’ve seen a mock up format of such whilst searching the forum before. I’ll do my best to find it again and draft up a version that I will send over to Bennet Jones. (That’s the company my IVA is with to answer the question previously asked by Paul).

[Author]

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