DFD comments on proposed IVA variations

DFD are asking many of their IVA clients to agree to a variation in their IVA terms and to sign a Deed of Arrangement. I commented on this in a post on 7th March, raising various questions that I felt clients should get clarified before they decide whether to agree to the proposed variation.

I asked DFD if they would like to comment before I published that post, but they couldn’t get back to me by our agreed deadline. Yesterday, three weeks later, DFD sent me comments on that post. They have asked me to quote them verbatim, so you can download the document here. As there are 6 pages of details, I am only going to mention a few points here and I suggest that you should read the full document.

“Property obligations will not be reopened”

Some clients receiving these variation documents have completed all their IVA payments or passed the ‘equity release decision point’ and are making additional IVA contributions because they were unable to remortgage. I was most concerned whether these particular clients might find that the equity release decision would be reopened if they agreed to the variation, because of the 2014 protocol’s reference to secured loans.

DFD have provided welcome clarification on this point: “Where obligations in respect of property have been complied with before the variation to terms takes place, no further action is necessary. In other words, once dealt with, property obligations will not be reopened.”

So that is clear. If you have passed the equity release point in your IVA and it has been accepted by DFD that you could not remortgage, this decision will not be revisited if you agree to the proposed variation.

There are two sets of variation documents

DFD say they have sent out two different sets of variation documents. I have only seen one set. It isn’t clear to me how the sets differ and whether this is substantive. DFD have pointed out that my reference in my previous post to “clause 3 (indemnity)” is only correct for one of the sets.

What are the benefits?

DFD state that a single set of terms will benefit everyone. I agree with this as a general approach. However, for someone who is already in an IVA, the question is what specific benefits will accrue to them by agreeing to vary their existing terms. DFD refer to “multiple benefits” but do not list these; it may be difficult to give broad brush generalisations. You could ask DFD if they could detail what the benefits would be for your specific case.

You are encouraged to contact DFD with any queries

My original post stated: “I cannot give you advice on whether to sign these documents:  I am not a lawyer; the documents I am looking may not be identical yours; I do not know the terms of your IVA; and I do not know anything about your financial circumstances.”

DFD would like to emphasise that every IVA can be different. They encourage you to contact them directly to discuss any queries that you may have, on 0844 826 0625 / email customersupport@debtfreedirect.co.uk ; or consult a 3rd party independent qualified legal/insolvency advisor.

In my previous post I said the suggestion that someone in an IVA should take independent legal advice is unrealistic because of the cost. I still think that is the case, however desirable it would be in theory. I would suggest that you could consider going to your local Citizens Advice Bureau. CAB would be able to write to DFD seeking clarification on specific points. For the avoidance of doubt, I can only discuss generic issues and I do not give advice on individual situations.

What do you think?

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