A reader has sent me copies of the documentation that Debt Free Direct (DFD) are asking him to sign to change the terms of his IVA. It includes:
- a Deed of Assignment, which relates to PPI reclaims, and
- a Variation in IVA conditions to adopt the 2014 Protocol.
DFD has over 24,000 IVAs outstanding so this could be a common problem.
*** UPDATE – DFD have replied with detailed comments on this article. See below ***
Deed of Assignment
At the moment DFD and other Insolvency Practitioners are delaying issuing a completion certificate after you have made your final payment until PPI investigations are complete, which may take some time. The Deed of Assignment gives DFD the power to collect any PPI refunds resulting from your debts, even if they are paid after the completion of your IVA. So signing this documentation should mean that you get your completion certificate sooner.
The document appears straightforward. Clause 3 (indemnity) means that you should not be out-of-pocket at all, which would include any tax implications from a refund.
The Deed of Assignment says: “I advise you to seek independent legal advice before signing below”. It is not clear why this is only on the Deed of Assignment, when the implications of the adoption of the 2014 Protocol (see below) may be considerably larger for some people. In my opinion, it is not reasonable to expect people in an IVA to be able to afford to take legal advice. If DFD thinks legal advice is required, then it should be offering to pay for this advice (in the same way that an employer pays for an employee to take legal advice before a compromise agreement is signed).
IVA variation – the 2014 Protocol
It is clear that DFD are proposing that the full 2014 Protocol is adopted, including its change to the equity release clauses. This is highlighted in DFD’s cover letter: “if you are a property owner, the terms of the equity release are changed” and the booklet setting out The Standard Conditions for IVAs states in Annex 6: “Remortgage includes other secured lending such as a secured loan“.
This is the standard new provision that has been brought in with the 2014 IVA Protocol. By itself it doesn’t mean that DFD intend to invoke the secured loan provision, but as DFD have highlighted the equity release changes and not said that they won’t invoke the secured loan provision, my working assumption is that they will use this if possible.
My previous article on the 2014 Protocol pointed out that, for some people, secured loans may be both easier to obtain and more expensive than a remortgage, so this change has the potential to be significantly detrimental to some people with IVAs.
Additional explanations of the secured loan change are required
In my opinion, summarising the effect of the equity release changes in the cover letter as “affordable and fair” is not helpful. Instead DFD should mention the secured loan provision in the cover letter and explain more about how it might be used:
- People who have not yet reached the equity release point in the 5th year of their IVA should be given comparisons of how a secured loan as compared to a remortgage might affect them.
- People who have been unable to remortgage (including those who have completed all IVA payments) need to be told if agreeing to the Variation means that this decision will be revisited.
Some recipients are saying that the documents are difficult to understand. One document is out of date and a separate letter explains that “any references to ‘Standard IVA Protocol 2013′ should be read as Standard IVA Protocol 2104; any references to terms and conditions 2012’ should be read as Protocol terms and Conditions 2014; Any references to ‘Standard Terms and conditions issued in July 2012’ should be read as Standard Terms and Conditions Issues in January 2014.” As there are material differences between these documents, this seems to me to be confusing and undesirable.
Do you have to agree to these changes?
No. You don’t have to sign the Deed of Assignment nor agree to the Variation of IVA Terms. If you do not, your IVA will continue on the current terms. It may be that you will have to wait a while after making your last IVA payment to get your completion certificate, but you may feel that this isn’t important for you.
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. In other words, I hope you find this article informative but it is not legal advice and the conclusions that I draw may not be appropriate for you.
That said, if I was asked to sign these documents, I would be happy to sign the Deed of Assignment. But if I had a house I would not agree to the variation of my IVA terms unless DFD were prepared to assure me in writing that I would not be required to take out a secured loan.
Can you only sign the Deed of Assignment and not the Variation?
I don’t see why not, but really only DFD can answer this question.
Can you change the Variation so that the 2013 Protocol is used not the 2014?
I suspect not. Using the previous version was the way DFD originally drafted their changes. After you agree to a variation DFD have to get your creditors to agree, so at present they are sending schedules of IVA clients who have agreed to the relevant creditors. This would be much more complex if some people have different variations given the large number of IVAs involved.
REPLY FROM DFD
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. 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
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.
IVA & Secured Loan – how to complain
IVAs last 5-6 years – what happens in one?
Ben says
I’ve had a letter as well from DFD but I’m only in 3rd year of IVA and I don’t have a house. They want me to sign an assignment and a variation. It says I should take legal advice but I’m hoping I don’t have to do that and its ok to sign?
Debt Camel says
hi Ben, the article above has some things to think about, I cant tell you whether to sign, you could ask your local Citizens Advice/
Mick says
DFD have a vested interest in promotin g secvured loans. They offer secured loans, or at least appear to act as introducer/agent for secured loan provider(s) on their website, as one of their solutions to debt problems. There is therefore a vested interest in DFD actively promoting secured loans to people in IVA’s (or coming to the end of them) – money money money. The way they are going about is in my view deceitful and underhand and should be investigated by the appropriate regulator(s).
snapperlyn says
I received the same letter also but did not return it, it said to obtain legal advice which costs money and my IVA is completed in September so didn’t want any new T & C’s at this stage.
Jill b says
I completed 5 yrs of my iva in dec 2013. I though that’s was it and I was free as I never missed a payment even though my hrs were cut from work from 40 to 28hr. In February this year I was sent a load of paper work with this new change to the T & C for which was so complicated to read you needed a degree in law. I rang DFD to explain I was finished my iva and why would I have to sign the agreement and return it to them. I was told it would speed up my completion certificate from the PPI claims, so stupidly I signed the form and returned it. I am now been contacted by a company called select to take out a loan to settle the outstanding amount I owe because I can’t re mortgage. I can’t get to speak to anyone at DFD to ask how much they want from me, I’m just been told I still owe £7700, this could take me another 3 yrs to pay off so I am still not free of my debt and I thought by entering in to an iva it was to get me debt free and get my life back on track, how wrong was I. Can someone please give me some advice on my options as I don’t know where to turn.
Debt Camel says
hi Jill,
this is the sort of problem that I was worried might happen. I can’t give advice on your particular situation, as I don’t know what your original IVA said.
I think you should go to your local CAB and ask for advice. Take with you your original IVA documentation, the pile of DFD paperwork you were sent. Explain that you didn’t understand the paperwork and you feel you were misled by the phone call with DFD into signing it because the implications of the secured loan were not explained to you.
Nelly says
Hi there,DFD have put us in the same position a company called select have been in touch asking us to take a secured loan out with them for£12,000 @ 22%over seven years
Nelly says
Sorry for another post,when we had the new amendment sent to us about the changes we felt pushed to do so and was pointed out more so thatit was for ppi claims so stupidly we sent it back agreeing to it now I believe they got us by the short and Curleys.any info would be gratefull thanks
Debt Camel says
hi Nelly,
22% ouch! See https://debtcamel.co.uk/ivas-complain-secured-loan/
sheila says
Hi
My IVA has just come to an end and I have spoken to DFD to day and they said to cancel my direct debit, they have asked my about re-mortgaging my property, I have told them that the guy I spoke to said that I wouldn’t get a re-mortgage. They have been sending me emails to change my T&C but I never agreed to this. Can they do anything else?
Debt Camel says
Some IVAs have a provision that if you can’t remortgage you have to make another 12 months payments. If you haven’t changed your T&Cs, they shouldn’t suggest a secured loan. There may be a wait until they get the PPI sorted before you get your completion certificate.
Sam says
Hi
My partner has had the same thing. Last payment made 19 months ago and now they are sending someone to do income and expenditure review. My partner signed the variation of terms last year to speed up the process as PPI was also being investigated. He has been told today by DFD that there is no way he will have to pay any more, that tomorrow is just a process they have to go through the close the IVA and that tge IVA will be closed in a few weeks once they have this info. The PPI will not hold up any certificate (altho they said all along that it has been the reason for the 19 months delay!!) and even if the PPI is not sorted a completion certificate will be issued in the next few weeks. He’s been advised to chase after tomorrow’s meeting.
Does all of this sound about right?
I’m furious with the way it’s been dealt with to date!
Debt Camel says
Hi Sam, I am not surprised you are furious – 19 months is horrendous. Read this article https://debtcamel.co.uk/iva-completion-certificate/ which says you should put in a formal complaint if the delay gets to 6 months… I think you should do this immediately, not wait any longer.
I am puzzled by your saying DFD are ‘sending someone’ – do you mean they are going to visit your partner at home? That sounds an unusual and rather expensive thing for them to do if this is a routine check and they don’t expect to get any more money from it. I hope I am wrong here, but definitely get that complaint in.
Sam says
I’ve been reading that article, thank you. We will definitely be making a complaint.
Yes. An ‘agent’ for DFD is visiting my partner at home to get all the information they need. I made him call again today to enquire why. They said it’s usual in order to complete the IVA and have advised to chase up the completion certificate afterwards.
Is there a possibility they will seek more money after all this time? They have stated today that that will my be the case and I think they would surely have difficulty after all this time!
We will be putting a complaint in no matter what. Thank you!
jayne says
I have an agent coming too, on Monday, they want 3 months pay slips, wage slips etc, my iva finished in September, I’m a bit unnerved by it.
Debt Camel says
hi Jayne, this is probably part of the standard IVA closing process and not something to be worried about. Come back if there are any problems!
Bilbo colemane says
I fail to see how a company that advertise that they will get rid of your debt after 5 years or 6 in my case and then asking for the person to take a loan out, surely this is taking the person back to being in debt !!!! i have paid 6 years and they have received 17k from me and now i have been told !!! that I need to take a loan out and if I dont the creditors will be chasing me for the 100% of what I owe, this whole six years has made me ill and to be honest i wished that I had sorted this with a charity run company !!
Sara (Debt Camel) says
Hi Bilbo – if you are being asked to take out a secured loan, you should read this article and think if you have grounds for a formal complaint: https://debtcamel.co.uk/ivas-complain-secured-loan/
lisa says
Hi again, I’ve been sent a letter from dfd which dead of assignment, about ppi after reading it a few time, I think its saying we have outstanding PPI, and as our Iva ended in July they want to close it, so I rang the company they use to get the PPI, they said all our PPI has been collected or closed in as there wasn’t and to claim, this was done in June, so why the letter ,please please help, I just want and end to it
Sara (Debt Camel) says
Hi Lisa, assuming your reading of the letter is correct, then it sounds as though DFD has made some form of error. You could phone them up and ask and if you don’t get a good explanation, put in a formal complaint saying their company says there was no PPI to reclaim so you want your certificate of completion. If that doesn’t work, then put in a complaint to DFD’s regulator, see https://debtcamel.co.uk/iva-completion-certificate/.
lisa says
Hi thank you, we have rang them and they said it doesn’t matter if you have any outstanding or not, they want the deed of assment to complete, we have said we want to complain, what do you think ?
Marc Taylor says
I have just completed my last IVA payment with DFD They are also asking me to sign a Deed of Assignment. My PPI claims have been finalised by Equity in Finance which are a third party to DFD They are asking me to phone EIF to confirm that my file has been completed. I have but why should I when I have paid them Admin Fees throughout the term of my IVA. As far as I’m concern my IVA is complete and I will be seeking legal advice through Citizen Advice Bureau, Financial Ombusmen and The Institute of Chartered Accountants. DFD are again trying to benefit out of an IVA arrangement but I will not be changing my Terms and Conditions
Joe says
I sent off a payment back in December in full and final settlement for outstanding IVA which was accepted by the creditors. I then received a letter last week from Equity in Finance telling me that I should sign enclosed documents to give them permission to chase any outstanding PPI claims. Feels a bit like being held to ransom. I also get the feeling that people should complain and get this company investigated. They do not respond to e mails or answer the telephone. Also they took my wifes disability allowance into account when doing their calculations. I consulted C,A,B, who are not impressed with this company. Have you noticed that they use two name Debt Free Direct and Customer Support at Fairpoint neither of which respond to correspondence. Keep you posted of any developments. Going back to CAB for legal advice.
Charlie BC says
I am having huge problems with this company. My final IVA payment was August 2013 and to date I am still awaiting closure. I have been put under huge pressure to sign the variation in terms and conditions even though I have complied totally with the arrangement and all I am waiting for is closure. I have been informed that there is one outstanding PPI payment that has actually been outstanding since 2011. HBOS will not offset the payment. Equity in finance have told me there is no chance of them collecting the PPI and they have confirmed that they have completed all of there avenues of inquiry. It seems now that DFD are trying to get the variation to the agreement accepted by the creditors and are not giving the creditors the full picture. I have also noted a huge increase in the fees charged by this company, over and above what was laid out in the initial agreement.. Definitely being held to ransom with no end in sight.