Full and final offer – creditfix help?

[Sally]

Hey all,

I am looking for some advice about my current IVA.

I took my IVA out in 2023, and have paid so far 1900 @ 100pm.

My previous yearly review was earlier this year, and I sent bank statements over and advised increased income to 25.5k per year.

At the time, they tried to increase my monthly repayment to £150, however, due to rent and other costs I advised I could not afford this, and the amount has remained the same since.

A few months after this, my partner and I tried to move flats, as our tenancy was ending, but due to my IVA (and the estate agents not telling the landlord until last minute of my IVA even though I had declared it before we even paid the withholding amount), we were left homeless, so had to move in with my partners family.

Since then, I’ve been promoted at work internally (September), from 25.5k-32k, and have an informal agreement with my partners parents to put money away each month and pay this back to them in a lump some when we move out.

I have been struggling with my mental health, and have buried this as a result. However I am now very stressed out about the pay rise I have received. My partners family have offered to pay my IVA off for me, which I have 4100 left at present.

I have been reading forums here, and it seems like when you get a pay rise your repayment will increase, but this does not mean your duration decreases?

basically I need advice on what to do. And what is the best way to approach this. I am incredibly stressed right now.

If they offer 4100, I understand they will ask for bank statements from myself, and will then see the increased income and savings.

 

[Foggy]

If your monthly payment increases due to increased income or decreased expenditure this merely adds to the dividend creditors get. It does not decrease the IVA term unless you mange to repay the full original debt, plus fees and possible statutory interest. During an IVA you do not only “owe” the agreed repayments — you still “owe” the full original debt — this is only written off at the end.

I do not fully understand the arrangement you have with your partner’s parents regarding the sums you are putting aside in lieu of rent, as you are intending to pay this to them as a lump sum when you move out.  By retaining these amounts you are increasing your disposable income rather than paying this to the parents and claiming it as an expense for board and lodgings in the way you would for rent.  If it were me, bearing in mind I am not a professional financial advisor — I am simply someone who has been through their own IVA — I would transfer the accrued “rent” to the parents and start making regular monthly payments.

You also need to advise CF of the pay rise — this will come to light anyway at review, either for the F&F offer or early next year at the annual review and you could be faced with a back payment.

I imagine they will need to do a full review and arrive at a new monthly IVA payment. Then a F&F offer would be based on (at the moment) 41 times that new amount.

Options seem to be:

1. Make an offer of £4100 as a F&F and hope they do not do a further review. If they do carry out a review they will not be happy and you could be in breach of the IVA.  Or:
2. Sort out a regular rent / board and lodge payment to partner’s parents, transfer the “back rent” and come clean about the recent pay increase and, hopefully, CF will come up with a new monthly payment upon which you can base a F&F.

Emphasise that you have been struggling with your mental health / stress levels whilst trying to recover from being made homeless, due, in part, to being in an IVA which is why things have become a little muddled of late and you are trying to sort things out.

 

[Lulu]

Hi – Foggy’s advice would mirror mine. You do need to inform them of your increased salary but please don’t panic over it. You won’t be alone I am sure and won’t be the last person to not to have informed.

Pay your partners parents the rent each month so that your bank statement shows your true outgoings. That way you will be able to demonstrate against your new income your true income and expenditure.

Propose their offer of full and final and explain this won’t be available to you should the offer be declined. Explain to them that your own mental health is suffering and causing added pressures on you and your relationship.

I found honesty was always the best way when in our IVA and was often surprised at the support we were given and understanding.

 

[Author]

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