An Individual Voluntary Agreement (IVA) is a formal, legal contract for a set period, usually five or six years.
To finish your IVA sooner and have the remainder of your debts written off, you need to talk to your IVA firm, say how much you are offering and where the money is coming from. Your creditors will need to approve this offer.
How much you should offer as a Full and Final (F&F) settlement depends on your situation and why you want to end your IVA early.
Contents
How do you settle an IVA early
This is how it works:
- you tell your IVA firm what you want to offer;
- your IVA firm puts your proposal to your creditors as a “variation” to your existing agreement, some firms charge for doing this;
- the same offer is made to all your creditors and they vote whether to accept it.
These offers take time – often a couple of months.
5 situations NOT to make an offer
You may hate the IVA, wish you had never started it, be desperate for it to end… but there are some situations in which an early settlement is not your best option.
When you are in the last year
The closer you are to the end of the IVA, the less point there is in settling it early. It can be a lot less stressful to simply sit back and make those last 7 payments.
When you mainly want the IVA off your credit record
This doesn’t happen after an early settlement – your credit score will not improve. The IVA marker remains on your credit record for 6 years from the start. Settling it early will not make it easier to get a new tenancy or a mortgage in most cases.
When the IVA payments are too high to be affordable
Here you should be to get the payments reduced – see Help with IVAs if you can’t pay because of the cost of living. So talk to your IVA firm. Do this first – then IVA may be manageable and if you still want to settle it, it may cost less.
When you can’t afford to make any IVA payments
There are two other options that could be better for you here.
The first is to ask the IVA firm to propose to your creditors that your IVA should be completed now, not failed, “on the basis of the funds paid to date”. See this which looks at when this is a reasonable thing to ask for.
The second is to let the IVA fail and opt for another form of insolvency – a Debt Relief Order or bankruptcy. Here your debts are cleared and the money you are being offered by a relative could help you have an easier next few years. if you have other debts outside the IVA, this will also get those wiped as well.
When you have other debts outside the IVA
It may be that you are getting behind with the energy bills, rent or council tax because of the IVA payments. Here it would be better to get your IVA payments reduced and any money from a relative could be better used to clear these other important debts.
First look at what you are likely to pay at the current rate
You can’t try offering 40% and then increase it to 50% and then to 75%. Assume you can only make one offer, so get it right the first time.
The first thing is to work out how much you would pay into your IVA if you carry on making the monthly payments. So, how many months are left until your IVA finishes? If you have a house with equity, add on the 12 months that your IVA is likely to be extended for.
Then multiply your current IVA payments by that number of months.
For Example – say you are 28 months into a 5 year IVA, so there are 32 months remaining and you pay £200 a month. If you don’t have a house with more than 15% equity you will be paying in either 32 x £200 = £6,400. With equity in your house you can expect to be paying 44 x £200 = £8,800.
Then consider if you have a good reason to offer less than this
Case 1 – you are struggling with your IVA payments
In 2022 this will often be because energy bills, petrol and other prices have risen a lot. But it could be due to more individual factors such as illness, splitting up with your partner or reduced income.
Here your first thought should be to get your IVA payments reduced, or your IVA completed, see above. But if they won’t work. if your IVA is in danger of failing your creditors may be prepared to accept a lower offer to complete your IVA early.
In this case, you should stress to your IVA firm that if your settlement offer is not accepted, you are going to be unable to continue with the IVA. So your creditors have a choice between accepting your IVA settlement offer and the IVA failing.
The creditors will be interested in whether your problems could be temporary and if your IVA could realistically continue. Evidence of your circumstances may help get your offer accepted:
- a new Income & Expenditure form showing you have very little spare income because of increased bills and prices;
- a letter from your doctor or a hospital appointment letter;
- copy of recent payslips;
- a recent estate agent’s valuation showing there is little or no equity in your house can also clarify the position.
With this evidence, your creditors may agree to accept a lower full and final settlement than your remaining monthly payments.
What might be acceptable depends not just on how much there is still to pay into your IVA – the total amount of your debts is also relevant. If your IVA was only offering a low return to your creditors, then they may not agree to this being reduced much.
Case 2 – you just want the IVA ended
If you aren’t struggling, you probably have to offer close to the total of the remaining IVA payments.
Here the reasons why you want to end the agreement early don’t really matter – you may want to emigrate, retrain for a different career, move in with a new partner or just be sick of the whole thing and want to start with a clean slate.
But from your creditors’ point of view this is all pretty irrelevant: they simply have to choose between taking your offer of £x,000 now or you carrying on with the monthly payments.
So on the example given above, they would be unlikely to accept £3,000, may be prepared to take £5,000 immediately and would be very likely to accept £6,000. If there was some equity in your house, then you would probably have to offer more to get it accepted.
Case 3 – you have a windfall payment you can use
Lump sums and an inheritance need to be discussed with your IVA firm. There is normally a clause in your IVA which means that windfalls over £500 have to be paid into your IVA.
Here you don’t have a choice. This isn’t an early settlement offer because the money has to go into your IVA:
- when the amount that will be paid into your IVA is more than the total of the debts in the IVA plus the IVA fees plus statutory interest on the debts, your IVA will be completed early.
- if it isn’t large enough for that, your creditors will expect you to carry on with the normal monthly payments.
More unusually, sometimes a windfall payment doesn’t have to be paid into your IVA – this could, for example, be compensation for a personal injury. Here it is your choice what you want to do with it, so you can make an offer to settle the IVA early if you want. Or you could just let your IVA continue and keep the money.
Or it could be your partner who is getting the lump sum – that doesn’t have to go into your IVA. You could just carry on making the normal payments or you could offer to settle the IVA early, probably having to pay close to the remaining monthly payments as in Case 2.
Case 4 – your IVA firm suggests you take a loan
If you are more than halfway through, your IVA firm may say you may be able to get an “early exit loan”. You need to think carefully about this offer, as the loan may be expensive (eg about 30% interest) and it prolongs the time you are in debt.
See IVA early exit loans for details, including the alternative, cheaper ways of improving your credit record after an IVA.
IVA settlements are unpredictable
It’s impossible to say for certain whether your creditors will accept an offer. Someone with a lot of experience will sometimes be suprised when a good offer is refused. Other times surprisingly low offers are agreed.
If you don’t mind putting details of your situation on the internet, then the IVA forum may help. You can post anonymously and get replies from people who work for IVA firms or who have had an IVA.
Where is the money coming from?
Your IVA firm will want to see evidence about the source of the money you are putting forward. It won’t matter if this is coming from a relative or a friend. This could include evidence about the identity of the donor, perhaps a copy of their passport or driving licence, and proof that they have the money, such as a copy of a bank statement.
If you were just given £5,000 by your dad as a generous Christmas present, then your IVA firm will want you to pay this into your IVA and still carry on with the normal monthly payments. So it’s important to say you will only get this lump sum when your proposal to settle the IVA early is accepted.
Be careful! And check the details!
There are two situations where you have to be very careful and get the settlement agreed first:
- you must NOT take any money out of your pension until you have confirmation that your creditors have accepted your offer. If you take it out before this, it could be claimed as a windfall payment and you would still have to carry on with the IVA! See IVAs and Pensions for more information.
- if the money is going to come from selling your house, make sure you read Sell my house to end my IVA early. You need to get the settlement amount agreed BEFORE you start to sell your house.
If your IVA firm agrees to put forward your proposal, you should make sure you know the exact details of what is being proposed.
“My IVA firm won’t put my F&F offer to my creditors”
If you only have a few months to go, it’s not arguing about this. It usually takes 2-3 months to get it all organised and approved by your creditors. If you are near the end, your IVA firm is just saying it’s simpler to make the remaining payments.
Make sure you have set out in writing exactly what you are proposing and why. If your IVA firm says it can’t be done or the offer isn’t enough, ask them to explain why. Insist on having this in writing.
If you think your offer is a sensible one and your firm is being unreasonable, put in a formal complaint.
What if the offer is refused?
If your creditors reject the proposal, you have to carry on with the normal monthly payments.
You could talk to your IVA firm about whether a higher IVA settlement offer might be acceptable now. Or if you could make the same offer in another six months or a year, which will give your creditors more money as they will have had the additional payments.
If you simply can’t carry on with the payments, then it may be that your IVA has to fail. See Your option when an IVA fails for what you can do then.
Should I sell my house to end my IVA?
Lower IVA payments because of inflation
More than a third of IVAs fail
NB_confused says
I am 14 months from completing my IVA, and during that time I have had a few bonuses which were declared and I paid 50% of them to the IVA as requested. I saved the other half of my bonuses so that when the time came that I only had that amount left to pay, I could submit a full and final offer to finish the IVA early enabling me to leave my job which is causing me major stress and anxiety and go self employed. I don’t feel I can do this whilst still paying my monthly payments as I know I will not be earning as much so my final income and expenditure will show the decrease in earnings. I have now been told by creditfix that I can’t use my own money to make the full and final offer, and I’d have to pay the whole remaining debt which obviously I can’t afford, I literally have the amount of the monthly payments remaining saved. Is this correct? And if so, if I carry on paying my monthly payments out of my savings will there be problems at the end of my IVA next year because of the decrease in earnings?
Sara (Debt Camel) says
could submit a full and final offer to finish the IVA early
So to be clear you are proposing to pay the total of all the remaining amounts. Is your IVA 5 years? If you have a house they may want an extra years of payments?
How long is there to go in your IVA?
NB_confused says
Yes it’s 5 years, with 14 months remaining on my Iva and I am renting. I was proposing to pay the remainder of what my payments would be for these 14 months which I now have saved from the 50% I was allowed to keep of my bonuses but creditfix are saying I can’t use this money to pay it, as if I was paying it myself I would have to pay the whole amount of my debts which obviously I could never afford to pay (my iVA is writing off 58% of my original debts)
Sara (Debt Camel) says
I guess they are reasoning that if you have to carry on, there will be a couple more bonuses and they will get to keep half of those…
Can I ask how much you are paying each month?
I hate say it, but you will be a lot better off if you can just stick this out for the next 14 months as your IVA will complete and you will have the money saved to see you through the early part of self employment, which can be rough.
NB_confused says
It’s already confirmed no more bonuses because of the pandemic, so I’d definitely only be paying that set amount. Honestly if I carry on in this job I will end up in another mental breakdown which is why I got into debt in the first place… my IvA was started because my partner died and in the midst of a mental breakdown in the aftermath HSBC kept offering me more and more loans and credit cards… I spent not even knowing what I was doing half of the time and I really can’t ever get like that again 😭
I am paying £161 per month
Sara (Debt Camel) says
So your income for the last year already shows no bonuses – is that right?
NB_confused says
My last bonus was in December last year, so should I wait to show my payslip for December with no bonus before offering the full and final?
Sara (Debt Camel) says
That may help. Unless you have anything in writing from your work which says there won’t be any bonuses this year?
LJ says
Hi Sara,
Just following up on the advice you gave me back in May.
To recap, I was in an IVA paying £170pm started Jan 2018 but became unemployed and because of my disability (I’m disabled) I would struggle to find another job accommodating to my needs.
My parents who lived abroad offered to gift me £1500 as a full and final and suggested that I move over to them as things mentally were starting to get me drown and the IVA I could no longer afford was like a noose around my neck and I didn’t want it to fail and be back to square one credit file wise incase I ever decided to come back to the UK.
You suggested I contact my IVA company and request it was completed with funds to date due to my circumstances.
Well I made that application even though the IVA company were looking at lowering payments and extending things, but I stuck to my guns and my variation was accepted by all of my creditors effectively freeing me and wiping everything (totalling 68k).
I can’t tell you how happy I am and without your advise I would have still been in a mess and mental health wise, well I might have not even been here anymore.
I just want people to read this who are struggling and not be scared or worried and if you are truly having difficulties etc it seems to me that creditors are accommodating to your changes in circumstances even if some IVA companies appear not to be.
A million thank you’s.
LJ
Sara (Debt Camel) says
That is very good news.
Lucy says
Hi, I am half way through my IVA and currently paying £356 a month! I was originally paying £236 a month but then had a pay increase so they upped it £120 a month even though my pay increase was £100 a month more so now I am £20 down. That aside, I would really like to get this paid off next year as me and my partner want to start a family and with this on my back its too much stress and I dont want to wait another 2 and a half years to start a family. He has some savings of his own and would like to gift me enough to settle my IVA early. How much would I have to offer for it to be accepted? My original debt was around £14k currently I have paid £8040 total and paying my current payments of £356 for the remainder would be £10680!!!! I was thinking to offer £6000 but is that too low? My income is £1750 a month and this is already very high monthly fee but the company I am using dont seem to care really so I just want it gone. Any advice would really help.
Sara (Debt Camel) says
did you ask why your payment went up so much? What about your expenses, have they gone down? Or have they increased?
Lucy says
Hi Sara, nothing else has changed and my IVA company are the most unhelpful so haven’t really given me any Info. They emailed something but it didn’t make any sense and they never reply for over a week so I just don’t bother. At the end of the day I’m making payments and it’s about doable so I’ll continue but I want to know what I would need to put them to settle. At the moment I have 30 months left at £356 a month so Thats 10680. Would I need to offer the full amount? What would be the best to go in with that would be agreed?
Sara (Debt Camel) says
As the article above says, offering the sum of the payments is normally a good idea unless you can argue that the payments are too high and should be lower. Apart from the strange £20 extra, your energy bills may be going to increase? If you could get your payments down by say £50, that would save you £1500 on the offer you make. But it’s up to you.
Lucy says
Thanks Sara that’s really helpful! Yes I will check in with my energy bills etc and then send that over to them and see what they say!
Thank you!! :)
Derek says
Hi
I have a question about final payment and finish IVA early. On 1 October I called to Ebenegate how that process looks and they told my I have to pay&ofer credits £6080/my parents will give my that money/ but now I called to them yesterday and they said now is £6800 for early payment . Wy the change the total for final payment. My IVA is 6 years £12240, £170 per month and I paid x40 already £6800. I can offer 32×170 £5440 plus fee £300. Do I can contakt with my supervisor about thys.
Sara (Debt Camel) says
You can offer what you want, it doesn’t have to be the full amount. I don’t know why they say you need to offer more but it is your right to ask that your offer is put to your creditors.
Derek says
That I should inform them for example. “On 1st March I would like to finish My IVA early and I can offer to my creditors £5000 for final payment”. How to contact with my supervisor because that call center is not really professional and I not trust them. Maybe because we using different English-speaking.
Sara (Debt Camel) says
That isnt going to work if you told Ebengate before that you parents will put up £6080.
£6080 seems like a reasonable offer – you can ask why you are told it hasd to be more. If they perist, say more is not affordable and you would like the offer of £6080 put to your creditors.
Derek says
Hi
No I don’t told them I will pay that £6080 only ask how mach a have to pay if I want finish IVA on that day and they calculate 34 payment left x £170 whot left £5780 plus £300 fee. That means on next 6 months if left for my pay aprox 26×170 £4420 I still have to pay them £6080?
Sara (Debt Camel) says
Are the current £170 repayments unaffordable?
Derek says
Ok everything is sorted I sent email to my IP Peter Jackson and he agreed to make existing balance offer £5570. Ebengate just contact with my now and then happy to go ahead with that.
Sara (Debt Camel) says
well pushed.
Derek says
Hi
My today I made final payment for my IVA. Was accepted by creditors 4th January. I feel free from IVA now and I so glad is over. Thenk you Debet Camel as well for any advice. 😁
Neil says
Hi I have completed 5 years of paymnets into my IVA, it was originally debt fee direct then aperture now Jarvis who are debt movement or whatever they are called
I was never approached about equity release until about a month before I had completed 5 years.
They have used a company called select partnership re equity release and they have suggested a second.mortgage for the sum of 16k for 11 years which totals around 27k
My original debt was 33k I have paid 25k over 5 years with ppi of around 3.5k added in also.
My mortgage is a joint mortgage and the other party has said no with regards to adding 27k of further debt.
The original IVA agreement mentionedd that my supervisor has the discretion to add the additional 12 months of paymnets on but now Jarvis are saying it has to go remediation and a further 2 or 3 years could be added.
How is a government backed scheme supposed to help people out of debt potentially can double mine?
And the customer service is shocking at Jarvis. Don’t call when they say they will cut you off etc etc.
Sara (Debt Camel) says
So a lot of questions
– what are your current monthly payments? are they affordable? will you need to reduce these because of energy/petrol/other price rises?
– how old are you? when does your current mortgage end? what are your current mortgage payments?
– how much is your house worth – do you agree with the value being used in this calculation?
Neil says
Hi Sara
I am 44
Current mortgage payment £480 month for another 14 years.
Current repayments with the IVA were £417 a month.
I have paid every month for 5 years.
House value is.probably accurate. However other person in mortgage doesn’t want to remortgage or have a secondary mortgage/loan added on for £16k which after the 11 years of paying this at a cost of over £200 a month will total 27k.
My original debt was 33k and I’ve paid back 28.5k over the 5 years and the rest of the 16k is fees added on by whichever company from the changes that keep happening
Badly sold at beginning was told that it would be 5 years. Or 6 at the very most.
Sara (Debt Camel) says
I make that a wince-making 11% interest. That rate may also be variable.
ok, so is the £417 a month affordable? or would you need it to be reduced? (I am looking for reasons to challenge this. Apart from the fact you were never told about this)
How large is the current mortgage? and what is the house worth?
Is anything large coming up in your life in the next few years? next 11 years? (Looking for reasons why a secured loan is a very poor option for you.)
Neil says
The £417 has been affordableish for the past 5 years however has left things tight. It was a case of pay it for the 5 years and then it’s done.
The mortgage is around 80k and worth around 130k
The next 11 years… Where do I start . 2 x 18 birthdays, 2 x 50th birthdays, 2 x children and university payments etc. We were hoping to move in a few years to a bigger house as the kids get bigger. V small box room. And don’t really have any money to save it have the niceties.
If I had paid back the debt without an IVA after this 6 th year I would have paid it back in its entirety. It’s the fees that have been added on by whoever has added them on that are extortionate over 30% of the original debt value.
Sara (Debt Camel) says
your current mortgage – is it on a fixed rate? when does that end?
You can’t argue that you cannot afford the secured loan repayments because of birthday parties… you are currently getting child benefit? any other child-related benefits?
Neil says
It’s not a fixed rate no…
It’s a tracker
My mortgage is joint and the other party has refused to remortgage add debt to the mortgage that isn’t theirs.
Therefore does the extra 12 months clause not commence now automatically as Jarvis are saying they need to have a variation meeting. And this could take 2-3 months.
When I took it out I was told 5, potentially 6 years and then it would be finished.
Sara (Debt Camel) says
I suggest you tell Debt Movement that you would like a variation proposed to your creditors that you make another 12 months of payments. Tell them this is what you were told would happen when you started the IVA, you would never have agreed to a process that lead you to have an expensive variuable rate secured loan at the end of the IVA. Say you feel you have made large contributions over the 5 years and that paying an extra year is fine but what is being proposed is unfair.
Neil says
Hi. Yes that is what I am hoping for to be honest. In your experience is it likely to be successful? And if not where do I stand?
Thanks for your advice by the way. I wish I would have known about these forums at the time of considering an IVA
Sara (Debt Camel) says
Most of the cases I have seen have been successful but most of them have some reason to argue that the current payments are unaffordable, which you don’t seem to have. So I haven’t seen many people in your situation… it may well depend on how firm you are that you are being treated unfairly and whether you are prepared to push for a 12 month extension to be put to a vote of your creditors.
Neil says
Does my supervisor have the discretion to do that without a vote from creditors or does it have to go to variation to decide on the extra 12 months. I don’t really have another choice considering my partner has said no to re mortgage?
Sara (Debt Camel) says
you would need to read the IVA documentation to be sure about that.
Neil says
I have, it says the supervisor has the discretion to increase for 12 months but doesn’t really identify on what grounds, I’m guessing for payment breaks etc…
I’m hoping they accept the 12 months.
Hindsight is a wonderful thing…
SG says
Hi Sara
Happy New Year
I started an IVA in January 2019.. after twelve months payplan extended the term by 12 months as the monthly payments were reduced for 6 months due to income changes.
For past 2 years normal monthly payments have been made.
I am now able to access funds from my personal pension.
In August 2021 I owed £8400 in my IVA.. I have offered £8000 to settle the IVA early.. payplan are still to present my offer to the creditors ( the balance would be slightly less than £8000 now)..
What if any is the best way to expedite the offer to the creditors as Payplan are now increasing my monthly payments after the annual review
Sara (Debt Camel) says
when did you present the offer to Payplan?
do you feel the increase in monthly payments is affordable? does it take account of the fact that your energy bills will be going up? and National Insurance and council tax in April?
Ashley says
Hi, I have 20 months left of my iva paying 330 per month. I have a family member offering to clear my iva. I don’t own my property. What do you think the likely hood of creditors accepting 6600 to get my iva cleared? Or any suggestions what would likely be accepted? Thanks
Sara (Debt Camel) says
Can you afford the £330 payments or are they too high?
Ashley says
I can afford the payments. I just want out of my iva so I can save for a deposit for a mortgage. I also want to do more hours at work but I don’t see the point while in an iva as they will just take 50 percent of any extra earnings.
Sara (Debt Camel) says
ok if the 330 wasnt affordable it is better to try to get that down. But as it is , then 6600 may well be acceptable – talk to your IVA firm
Ashley says
Hi Sarah. Do you know if I offer 6600 and it’s accepted. Do they add on any fees on top of this? Or would the total final amount be 6600? Thanks
Sara (Debt Camel) says
That depends on your IVA firm – they should explain this.
Angeldust12 says
An update on my IVA. I started my IVA last May 21 and was paying £150 a month. My rent was increased in November by £100 a month and a friend offered to pay £8000 to finish the IVA. The company I’m with for the IVA called a creditors meeting to either accept the £8000 or lower my monthly payments to £50. They have just accepted the £8000 which was paid yesterday so now I am debt free I am so relieved.
Ashley says
That’s amazing. Can I ask how long was the process from you making to the offer and it being accepted and your iva finalised?
Angeldust12 says
I made offer end of November and had creditors meeting 4th January they accepted the offer and friend made payment on 6th January and just had a phone call to say they are just draughting final report and should get certificate in 6 to 8 weeks
Ashley says
Did your friend have to send proof that they have the funds in their account? I just find it strange they are asking for a print out of my friends bank statement?
Angeldust12 says
Yes they had to send a bank statement and proof of ID and a letter stating why they wanted to pay our IVA off.
Stromman09 says
Did they have to speak to to your friend directly or do they just get you to send that evidence
amy says
Hi
My total debts for Iva was £17,000. It got reduced to £12,000 but because I had an unexpected payment I understood that I had to pay the whole £17,000. The payment I received was for £24,000 and I was already 3 years into Iva and had paid £9,000. So in total I have paid £34,000. I thought this would be more than enough to pay my creditors in full and any fees but I have just been told that I am short by £2,000. So the fees have cost me £19,000. More than double my original debt. How can this be. Does this seem right? It seems very excessive. I’m with credit fix. I have asked them to explain it to me but I just don’t understand it.
Sara (Debt Camel) says
It got reduced to £12,000
How? Do you mean you made £5000 of payments? or that a debt was cancelled / reduced?
because I had an unexpected payment I understood that I had to pay the whole £17,000
what sort of payment was this?
Amy says
No the £12,000 was what I was going to pay back as reduced offer before I had the payment. Then when i received the payment I had to pay back the whole debt of £17,000.
I had made £9,000 of monthly repayments then I received £24,000 from provident ( one of my debtors) for compensation for misselling loans when I couldn’t afford it.
Sara (Debt Camel) says
was the 12k agreed with Creditfix/your creditors?
Amy says
Yes that was the amount agreed. It was agreed I would pay £215 for 4 years. I received this unexpected money in April last year so made final payment for closure. I was told closure would take up to 6 months. It’s now been 9 months. I rang them on Friday to see how much longer it was going to take and then that’s when I got told that it’s in the final stages but im £2000 short because they took their fees and also a company took £9000 to look for ppi, which there wasn’t any
Sara (Debt Camel) says
also a company took £9000 to look for ppi, which there wasn’t any
huh?
That is outrageous.
I suggest you send in a formal written complaint (email complaints@creditfix.co.uk) saying you want a breakdown of all the amounts relating to your IVA final settlement.
Amy says
Ok i will do that. It doesn’t sound right to me but I didn’t know what to do about it. Thank you for suggesting that.
Angeldust12 says
Surely you should never have to pay more than your debts?
Sara (Debt Camel) says
plus the IVA fees which can be high, but not that high… and sometimes 8% interest on the debts as well.
IVAs can turn into seriously expensive options for some people.
Arsalan says
I am on IVA of £120 a month for 50 months, i am a home owner, rest left £6000. My friend is going to help me as a gift of £5000 in mid august. Do you think they are accepting lump sump or its totally a luck.
Thanks
Sara (Debt Camel) says
are the £120 payments affordable at the moment?
the 50 months – does this include the extra years of payments if you can not remortgage?
Arsalan says
No i didnt add any extra year at the moment. Yes £120 is affordable at the moment but my job contract expires in end of April and plus i have other job since october and pay is nearly same only 200 more. My wife she was helping me before but she is not helping me anymore so tight budget.
Sara (Debt Camel) says
“£120 is affordable at the moment but my job contract expires in end of April and plus i have other job since october and pay is nearly same only 200 more.”
I am confused. Do you have two jobs at the moment and one is ending? Come April will you have a job and will it pay more than the one you had at the start of the IVA?
How large were the debts that went into your IVA?
Who is the kind friend that will give you £5000? Will you have to repay this? with interest?
Arsalan says
No i only have one job, previously i was working in care home and since October 2021 i changed the job and i have only one job at the moment.
My IVA started in June 2021 for 60 months at £120 in total £7250. Next renewal would be around in June 2022. By then i would have paid 12 months and rest left 48 months at £120.
I am thinking to pay £5000 lump sump my close friend wants to gift me as paying of clearing debts.
Sara (Debt Camel) says
So the best thing is to wait until mid august and not think too much about this now. Before then you are likely to lose your job and will have to find another one. Your energy bills and council tax are likely to be going up in April As will National Insurance for when you find a new job.
It may be that £120 a month isn’t affordable bel and you need to ask for this to be reduced. That would then mean your friend probably has to pay less.
If after 6 months break you can’t find another job, or it is at a lot less money so you cant afford anything, then your creditors may be prepared to accept less than £5000 as otherwise your IVA will fail.
Angeldust12 says
Pretty similar situation to mine. I just wanted the IVA finished as I had a rent increase, plus gas and electricity increase the company I’m with gave 2 options to the creditors accept £8000 as full and final payment or lower monthly payments to £50. They chose to take the £8,000 happy days so all in all it cost £9000 as I’d already paid £1000.
Ashley says
Can i ask since you have cleared your IVA have you recieved your completion certificate. If so how long did it take. Thanks
Angeldust12 says
Still waiting for completion certificate 5 months later apparently they have to get a full and final debt I owed DWP and as yet DWP have not responded to phone calls or letters. The IVA company have gave them 6 months to respond and then they said I will recieve my certificate so they have until June so I’m praying I receive it next month
Arsalan says
Thanks so i will need to wait and pay them until august.. my renewal is due in june as i started iva in june 2021 might be 2 months earlier they will renew lets see ..
Sara (Debt Camel) says
well first see what happens if you lose your job – tell them then and they should let you have a pause for 6 months to let you get a new job.
Ashleigh says
Hi! I have been in my IVA since October 2019 I have 32 months left and £3072 left to pay. I really want out of my IVA as I am fearful that I won’t be able to keep up with the monthly payments. My grandparents have offered to take out a loan of £2000 to settle the IVA. Is this likely to be accepted and will the IVA company care if the money gifted is from a loan?
Sara (Debt Camel) says
Can you say some more about your current situation? Are you renting or buying? Do you have a car, if so how much is it worth?
Ashleigh says
Hi Sara! I am a private tenant and I do have a car worth about £4-5k. It was agreed that my car wouldn’t need to be sold at the start of my agreement as I need it for work. The cost of living has increased so much since I started the IVA, however the company I am with are never forthcoming to reduce monthly payments, but are always quick to increase them at my annual review even though evidence shows that I can’t do it.
Sara (Debt Camel) says
I think your first move should be to make a complaint and ask for your monthly payments to be reduced.
I don’t like the idea of grandparents who are not well off having to take out a loan to setle your IVA. And £2000 is less than your remeining payments, so it would be more likely to be acceopted if your monthly payments were reduced.
Who is your IVA firm?
Ashleigh says
The firm is CreditFix
Sara (Debt Camel) says
ok, then put a complaint in writing, email is fine. Say that your expenses increases have not been taken into account at your annual reviews and that the monthly payments are unaffordable.
Hannah says
I have exactly 1 year left of my IVA, my parents have offered to pay a settlement fee so I can get a headstart on saving for a mortgage one day.
My remaining payments for the final year equal £5500 I was advised by my IVA firm that I would need to offer more than this to make my creditors more inclined to accept. The most my parents would pay is £6500, I was advised this would be a good offer.
Can you advise if its worth me settling it early? As it will cost more. Am I free to open savings accounts etc? I also have a help to buy account open from years ago prior to IVA but its empty. Am I free to start using it to save if I settle early? Will it benefit me is the overall question? Thanks.
Sara (Debt Camel) says
I don’t see that you will gain anything by this. Your nice parents can just give you the £6500 as a gift after the IVA has been completed.
You should NOT be saving up large amounts while you are in an IVA. Once your IVA has completed you can – open new accounts or use the LISA.
As a matter of practicality it will often take 2-3 months to get a settlement offer agreed and then the IVA firm has to close it down whioch can take a bit longer. This isn’t really going to save you much time at all. I can’t see it is worth £1000!
Also if your expenses for the year go up (energy bills, National insurance, council tax etc – all in April) you can also ask for your IVA payments to be reduced.
Hannah says
Ok thanks for your advice.
So just to confirm my last payment will be Feb 2023. Then the iva will still appear on my credit file for another year (6 years intotal) so, when can I start saving? And open savings accounts? After my last payment 2023 or when the iva drops off my file 2024?
Thanks
Sara (Debt Camel) says
you can start making serious savings as soon as you have the IVA completion certificate. Depending on the efficiency of your IVA firm and how simple your case is, this can be 1-6 months after it ends.
Some banks may not let you open an account with the IVA showing. But this isn’t normally a problem people encounter.
Also read https://debtcamel.co.uk/repair-credit-record-iva/ about cleaning up yopur credit record when an IVA has finished.
PS well done – the end is in sight!
Hannah says
Thanks so much.
After hearing your advice I agree settling early for an extra £1K but not gaining much time isn’t worth it. I think I’ll stick it out paying monthly for one more year then start saving for the future as soon as I recieve my completion letter.
Shall I need to let my IVA firm know I won’t be submitting a final settlement offer after all? And I’d like to continue paying monthly for the remaining one year?
Will they chase me for the settlement offer as I’ve discussed it with them etc. ? I am worried now as I’ve come so far I do not want my iva to be failed.
Thanks.
Sara (Debt Camel) says
I suggest you tell them having talked to your parents you don’t think they can afford £6500 so you will just carry on paying. They can’t chase you for money you don’t have if you are making the repayments.
Jason says
Hi, I’ve been on my IVA program for nearly 2 years now, paying £201 a month, the duration is 5 years, starting with a £18k debt and will be settled if I stick to the 5 years with a total of £12k being paid and the rest written off. We’re currently renting but my fiancé is desperate to get on the property ladder, she has £25k in savings, I have saved in 2 years £6k. We can save between us a month £1.5k. She wants me to end the IVA so we can get on and try to get a property, she is willing to top up my £6k to what we think is remaining currently on the debt to creditors about £14k. How likely are creditors going to take an early setttlement and would they be willing to take less? What would happen if I went direct to the creditors and not through Iva to settle this? And what fees would Iva.org likely to add for early settlement? Thank you
Sara (Debt Camel) says
So to answer your questions first, and then explain why it may not matter…
What would happen if I went direct to the creditors and not through Iva to settle this?
You can’t do this.
How likely are creditors going to take an early setttlement and would they be willing to take less?
If you say you want to end our IVA early, that would mean paying the debts in full, plus possibly 8% statutory interest for two years, plus the IVA firm’s fees which would be a lot more than the minimum of £3500 in this case.
Instead you can say that your girlfriend is making an offer in full and final settlement of your IVA if it is accepted by your creditors. She could offer the full amount of your remaining payments.
That would very often be enough. HOWEVER how have you managed to save up 6k? What happened at your first IVA review? Have you had a large pay increase? It may be that you should be paying more at the moment and your next review will say this… Offering a settlement now will not stop your next review – it will probably mean it is done right away.
BUT the even bigger problem is, even after your IVA is settled and the debts are repaid in full, you will still be unable to get a mortgage from a high street lender until the 6 years is up and the IVA drops off your record. The only mortgage you could get would be from a bad credit lender at a high rate of interest and would need a significant deposit.
Shelley says
My Iva balance is £13,000 but original owed was £19,000,if I received inheritance of 20,000 would they take the 19,000 off me
Sara (Debt Camel) says
If you inherit that much you have to repay all your debts in the IVA in full, plus possibly 8% per year interest on those debts plus your IVA firms fees which are likely to be much more than £3,000
Danielle says
Hi myself and my husband entered into a joint iva august 2019 we have made x27 payments at £192 and then it was increased to £210 which we’ve made 3payments my sister is getting married in July and she has said what is left she is happy to give to us to use to make a full and final payment I don’t understand how this works I’ve worked out we have £6300 left to pay and by august there should be £4830 left to pay I don’t want to waste time so what would be best amount to offer if she has anything left after her wedding?
Sara (Debt Camel) says
can you afford the £210 payments? With energy bills and national insurance and council tax all going up in April?
If you can’t, then your best option will be to try to get the payments reduced now or in April. This will reduce the amount that you may have to offer in settlement.
Angeldust12 says
So what we did as our rent was increasing in December we contacted the iva company explained the rent was going to be going up by £100 a month but our friend had offered to give us £8000 to end the iva so they arranged a creditors meeting and gave them 2 options take the £8000 or drop the iva by £100 a month and they accepted the £8000.
Sharon says
I’ve been paying £638 since Jan 2018 and will soon hit month 54 so I’m going through the necessary faff of looking at releasing funds through remortgaging my home. I’ve got £80,000 equity in my home but obviously nobody is going to lend. A broker has scoured the market and nobody is interested, so her will be writing a report to the IVA practitioners to notify them.
I’m keen to bring the IVA to a close ASAP and plan to offer £5655 to settle, rather than do an extra months.
Month 54 is June 2022, and I’ll offering the settle to figure then
My extra 12 months would start on Jan 2023
Do I still make payments July 2022-December 2022, if the settlement is accepted?
Sara (Debt Camel) says
Are your current payments of 638 affordable? With your energy bills and other expenses going up?
At month 54, you would normally have to offer about 18 months to settle – the 6 remaiming months plus 12 months in lieu of releasing equity.
Unless there is reason you can argue the current payments are too high, it’s pretty unlikely an offer of about 9 months would be accepted.
Sharon says
Yes, my offer would be for £5655 for the 12 months PLUS the remaining months of the year.
What’s your view on this?
Sara (Debt Camel) says
So that is about 2k less for the 12 month extension – these things can never be guaranteed, but I don’t see why your creditors would want to accept it unless you can show you can’t afford the current payments.
Holly says
Hi,
Me and my partner are both in an IVA, I’m currently paying £304.20 and he’s paying £353.12 per month. I have 28 payments and he has 26 payments remaining.
My parents are offering to gift us £16,000 to finish the IVA early, with our outstanding payments we would pay £17,698. Is an offer of £16,000 likely to be accepted.
We are struggling with our payments due to the cost of living increasing, we recently had our annual review but they were reluctant to bring the payments down even with our increases and said we needed to find ways to cut down on our bills which is difficult when everything is increasing.
Sara (Debt Camel) says
Can I ask if you have a house with equity?
Can your parents afford this amount – they too will have rising bills?
Have your payments ever been reduced by your IVA firm?
Holly says
No we are currently renting,
My parents have recently sold their home so will have the funds available.
Our current payments are an increase of what was originally agreed. They have increased and decreased but never below the first agreed amount.
Sara (Debt Camel) says
Was there a reason you opted for an IVA rather than bankruptcy in the first place?
You could go back to your iva firm – who is it? – and say you understand they can reduce your charges by 15% without asking for creditor approval and you really need this now as your bills and prices have risen and there is nothing you can cut back on.
If you can get the monthly payments reduced to a more reasonable level, your parents would have to pay less as an offer to settle.
Sharon says
Would the sharp rise in energy costs, and a faultless record of payments for the duration of 5 years not count for a good enough reason? Im a single mum, and my payments were set pre-Covid, pre-Brexit when life was less costly and complicated. Is there no benefit to the creditors to have it all in one sum, and guaranteed?
Sara (Debt Camel) says
I can’t say what your creditors would approve and what they would reject. All i can do is make comments about what may happen. Sometimes there are very odd decisions in IVA early settlement – good offers are rejected, bad ones are turned down.
But here, for what it is worth, are my thoughts on your questions:
“Would the sharp rise in energy costs, and a faultless record of payments for the duration of 5 years not count for a good enough reason?”
A rise in energy costs is a very good reason why the current payments may not be affordable. That is what I suggest you should concentrate on now, because if you could get the payments reduced by £100 a month, then you have to then pay less to settle the rest.
A faultless record of payments – sorry that is what your creditors expected would happen. It’s the norm. It isn’t a reason to accept a lower settlement amount.
Im a single mum, and my payments were set pre-Covid, pre-Brexit when life was less costly and complicated.
Does that mean they have been hard to manage? It is a pity you have not gone back and asked for them to be reduced before.
Is there no benefit to the creditors to have it all in one sum, and guaranteed?
yes, but with only 18 months to go, the benefit is not large. If you were making the payments offer after a year or two, then the benefit of a guaranteed lump sum is much greater.
SO what I am saying is, have a look at how affordable the current payments are. because that is your best reason to get a low settlement accepted, and if the offer is rejected you need the payments to drop.
If the current payments are affordable, and will remain so after April’s hike in energy bills, council tax, national insurance etc, then the offer you are thinking off looks low to me. But talk to your IVA firm about it.
Pam says
I have an IVA which should finish in August. Now they want me to release equity which there will be equity to release. My IP has said they want £15000. My debt was only just over £18000 and I have paid over £9000 back. Can you tell me if they have a right to ask for this amount.
Sara (Debt Camel) says
They are entitled to ask for an amount that will repay all your debts in full – possibly plus 8% interest per year, it depends on the terms of your IVA – and their own fees.
Of course this is very unfair as you would probably never have agreed to the IVA at the beginning if you would have thought this could happen… the point of the IVA was to get you out of debts, not add a big chunk of secured debt.
So what can you do to challenge this… how much are your IVA payments at the moment? Are these affordable with energy bills, petroil, broadband, mobiles, food prices etc all going up?
How old are you and how long does your mortgage have to run?
Pam says
At the moment just about affordable but new gas and electric payments not known yet. Payment is £278 a month. I’m 53 and mortgage has 17 months left. My partner never signed an RX1 form either. Should I has for a copy to see what they do.
Sara (Debt Camel) says
When you started the IVA , did the IVA firm talk to your husband at all? Did they tell you it was likely or unlikely that you would have to remortgage?
What have you been asked to do – get a quote for a remortgage? or talk to a firm who give secured loans?
It’s important that you have a good go now at working out how much your IVA payments needs to be reduced to to be affordable. Because any remortgage can only cost half as much in a month as your IVA payments are, so if you can get the rest of your IVA payments down. you decrease what you may have to may to any mortgage/secured loans of for the next 12 months if your IVA is extended instead.
So sit down and work out how much all your bills are going up this month. How much has your food shop gone up? Petrol?
If your mortgage is a variable rate, that will have gone up.
Then talk to National Debtline on 0808 808 4000 and explain that you need to work out an income & expenditure form to show your IVA firm.
PS sorry I missed your reply until now.
Pam says
The mortgage we have now is fixed. I did a expenditure form a month or dso ago and only had around £20 left. So at the moment don’t know what my gas and electric will be.
Sara (Debt Camel) says
Are you on a variable rate energy tariff? What is your current direct debit and have they suggested you increase it?
Apart from energy, most people are seeing increases this month to their mobile, broadband, water, council tax contracts. If you have a car, then petrol must have gone up. And food a bit.
Pam says
Yes they are on a variable rate and hoping to find out in next couple of days what they will be. The other bills have not gone up too much but will use the £20 that’s left.
Sara (Debt Camel) says
what is your current monthly energy payment?
SG says
Hi Sara
So finally settled my IVA after 3 years with Payplan
Very confused
HMRC we’re in the IVA ( it was a joint debt)…
No payment was made from payplan to HMRC
HMRC have now moved the debt in full to CCCS
Is this usual for HMRC or have Payplan mislead me
Sara (Debt Camel) says
I think you need to ask Payplan what is happening, I am reluctant to guess but would be interested to know what the answer is.
Angeldust12 says
I am having the exact issue my IVA was settled in January and I keep calling to see what’s happening to be told they are waiting on department of work and pensions as we owed them money. My IVA company issued them with a 28 day deadline which ceased on the 16th March and they still haven’t responded. I phoned IVA company back up after the deadline to be told they had extended it because if they close the account without a response from DWP they will then chase the money owed to them which I’m completely confused at as they where part of the IVA. I have now been told they have 6 months to respond so no chance of getting my certificate till at least June and the IVA company have the settlement money in their account waiting to pay creditors.
Pam says
Electric £49 and gas £69.
Sara (Debt Camel) says
Then very roughly that is likely to go up £60-65 a month because of the April price rises.
I do think you should talk to National Debtine to get them to work through your I&E with you.
then you should ask your IVA firm to immediately reduce your IVA payments by this amount.
And at the moment the expected rise in October is about 30% so another £55 a month. That would have to be taken into account when looking at what you could afford from them on. Point that out to the IVA firm as well.
Luke says
So I wouldn’t ever get an iva and I am in kne for another 32 months. If you get one be prepared to never get a pay rise as they take that and also double your debt if you get a better salary. My total debt before my iva was £6879 I got told today after paying for 2.5yrs its 14k??? How tf is that possible as they claim to reduce debt! Absolute mugged off
Sara (Debt Camel) says
Have you asked why the debt has gone up?
An IVA for as little as £6879 was probably a big mistake. Else if you expect your salary to rise.
Lucy says
I had £6.2k worth of debt to 6 creditors consolidated. Total including Creditfix fees was £9.8k. I am paying ~£170 pcm and have 31 months remaining (approx £5376 left). My partner would like to offer the creditors £4.2k (savings) to clear the IVA. Is this likely to be accepted?
Sara (Debt Camel) says
is the £170 a month affordable at the moment? This changes your options.
Lucy says
.Yes it is, but I’m concerned as I have received a pay increase so I am aware they will dramatically increase my monthly payment. None of my debt was written off at the start and I will end up paying almost double the amount of my original debt.
Sara (Debt Camel) says
The offer may be accepted but usually the IVA firm will do a final review before they close the IVA and that may well turn up that you should have been making larger payments.
Arsalan says
I am on IVA and i have 48 months remaining of £120. I have a review this mo nth, recently wife lost job and i am on 1
£19600 salary a year. Which is hard to survive with all the rising bills, now looks like IVA payments are going to be hard for me in future months, my mother in law is happy to help me paying gift to IVA as a lump sump of £5000. But not sure if they are going to accept it or not.
Sara (Debt Camel) says
Do you have a house with equity to protect? or any other assets?
arsalan says
yes house on mortgage.
Sara (Debt Camel) says
then getting a lump sum accepted is likely to be your best option.
(If you didn’t have any assets, then it would probably have been better to let the IVA fail and opt for another debt solution such as a Debt Releief order.)
Have you looked at whether you can get any help through benefits? I’m suggesting this istead of settling the IVA, but it sounds as though things will be very difficult for you even if the IVA is settled.
arsalan says
Thanks i have email them my documents and they will review it and let me know wheater to lower my monthly payments or accept the £5000 full and final. Will keep you posted the matter.
Arsalan says
I have given my Income and expenditure where i am earning only £1600 and expenses are £1546 a month.. currently i am paying £120 as fuel, electric, gas and food bills gone higher my expenses gone higher now, now thats what i can afford to pay to them may be £50 a month…. Is that something they would consider?
Sara (Debt Camel) says
I think they are unlikely to accept as little as £50 a month. Have they come back to you about this? It was a month ago?
Arsalan says
No just fill the form and gave them today.. either i can afford to pay £50 or my brother willing to gift £5000 for settlement so lets see where the boat goes.
Arsalan Iqbal says
My full and final offer accepted for £5000.
Nicola says
Hi I started my IVA in February 2017 paying £117 every month. It will finish in February 2023 a total of 6 years. My father who is terminally ill has offered to pay this off for me which would total £936. I phoned my Iva company today. I was told it would be £1300.45. If the creditors accepted this. Do you think they would?
Sara (Debt Camel) says
Are you struggling to make the payments at the moment?
Do you know how they calculated the £1300?
Nicola says
I have been struggling to pay. So my father has been helping me pay for a few months. I lost my job last year when my mum died. As my dad offered to pay my debt off So I’m not struggling each month. .
Sara (Debt Camel) says
oh such a difficult time with your mum dying and now your dad.
My gusss is the IVA firm has added on some fee to get to the £1300. I think the creditors would often accept this if you explain that you can’t pay the payments and otherwise the IVA would need to fail.
Are you sure your dad can afford the money? You don’t want him owrrying about his energy bills and food etc. There are other options for you if he can’t.
Martin says
I currently have a basic account with Nationwide, I have debts with Halifax whom I believe are connected. Is my Basic account likely to be frozen?
Many thanks
Sara (Debt Camel) says
Bank accounts are frozen when you enter a DRO. Sometimes a bank will close your account but as you have a Nationwide basic account that isn’t likely. There is no connection between Halifax and Nationwide.
Sarah says
I am in month 34 of my IVA paying £90 per month. So I have 26 months remaining (36x£90=£2340 remaining to pay)
I have made an settlement offer to my creditors of £2,370, how likely will this be accepted?
The settlement will be from my Dad who has agreed to pay.
Sara (Debt Camel) says
Do you have a house with equity?
Are the £90 payments unaffordable?
Sarah says
No house, no assets.
The £90 is not affordable as it was initially £175 so requested that Creditfix reduce it back down to £90. There is only once creditor in my agreement, Max Recovery.
Sara (Debt Camel) says
well if they reject your offer they may have done you a favour – at that point talk to National Debtline about failing your IVA and switching to a DRO. Which would mean you didn’t have to pay any more… see https://debtcamel.co.uk/end-iva-change-to-dro/
Sarah says
Hi Sara,
Creditfix accepted my offer of £2,370 so in the stages of closing out my IVA which is great!
Thomas says
Hello Sarah, I’m currently into my remaining 40 months of my IVA, currently paying £105 a month, so if it stays the same I have around £4200 left to pay off my iva, I’ve recently come into £5000 from my granmother will, so I’m set to get £5000, monthly payments are affordable and I don’t owe or rent a home, if I were to offer them £5000 would that be suitable to get them to agree to ending my IVA early :)
Thank you
Sara (Debt Camel) says
Unfortunately this isn’t what happens in an IVA when you inherit money – see https://debtcamel.co.uk/inherit-dmp-dro-iva-bankruptcy/
M says
Hi Sara,
I am 6 months into my iva and it’s just not what I expected it to be. Feeling the tight constraints and like I’m always being watched for every penny I will spend. I haven’t told anyone I’m in an iva but want to pay it off as soon as possible. I’ve recently taken a new job and my salary has gone up by 39%. My expenses, rent and bills have gone by an almost equal amount. I am worried that because my salary has gone up considerably, they will try to take more for my monthly payment which is currently £121. I want to exit my IVA as soon as possible, can I do this by myself? No windfall or gift from others. If I try to save enough money to pay off my IVA can I do this? My IVA is for 5 years and a total of £7260. I’ve paid £726 so far. If I stay in my IVA for another 12 months I would have paid £2178. If I can save £3000 by myself in this time, could I offer this to exit my IVA early or do I have any other solutions to getting out of my IVA early without needing a gift from family or friends or a windfall?
Many thanks x
Sara (Debt Camel) says
My IVA is for 5 years and a total of £7260.
It’s wrong to say that your IVA is “for a total of £7260” – you are obliged to make the payments that you can afford. Which could total a lot more than £7260.
You need to tell your IVA firm about your pay rise and the expenses that have also increased. They will work out a new Income & Expenditure from this. If your expenses have gone up as much as your pay, then your monthly payment should not increase.
If I can save £3000 by myself in this time, could I offer this to exit my IVA early
Well you could offer but it’s very unlikely that it would be accepted. You being able to save money would suggest that you could be payibng more into the IVA!
do I have any other solutions to getting out of my IVA early without needing a gift from family or friends or a windfall?
How large were the debts that went into your IVA?
M says
Yes, I’m aware I may need to pay more and I have sent my increase in salary and expenses to my practitioner to review. I’m hoping I wont need to pay more each month. If i can live as frugally as possible for the next 12 months would this not be seen as an effort to pay the IVA off early?
I think the total debt was around £28k. I initially entered the IVA because my debt was effecting my mental health, I thought the IVA would provide some breathing space but it’s just more of the same albeit at a lower monthly repayment. My mental state is fragile and I am trying to find a solution to existing my IVA as early as possible
Sara (Debt Camel) says
If i can live as frugally as possible for the next 12 months would this not be seen as an effort to pay the IVA off early?
No it will be seen as a sign the ICA repayments are not causing you any difficulty so there is no reason why creditors should agree to take less.
I am afraid the least stressful thing may be to not try desperately to save up money but just to plod on and make the payments each month. As you say, they are lower than you were paying before.
Natalie says
Hi can somebody help me. I went into an IVA back in 2018 when I was young and vulnerable, I started off paying £80 a month which sounded amazing! Since then I have grew up and started earning a lot more money and moving on with my life. I am in the position where I want to move out with my partner and having this IVA is not helping. Since I took the IVA out back in 2018, 5 debts on the IVA this year have sent letters to close my debts in full with £0 balance. Because of this the debt I have on my IVA is a small amount of £3815.42. I have already paid £4828.80 and have another 18 months outstanding at £125.70 per month. I want to end my IVA as soon as possible and I am happy to pay a re-payment fee but not sure what to do as I have paid more than the original debt now?
Sara (Debt Camel) says
Is the IVA causing a problem because of the £125 repayments? Or because of the effect on your credit record?
Also how large were the debts going into your IVA?
Natalie says
No I can afford the re-payments and have never missed the payments or had a break. I mainly don’t want the IVA anymore as I am looking to finance a car however I need approval from my IVA to do this and this is a long process and I don’t really want to go down this route. Another reason is I was originally told some of the debt would be wiped but now I am paying back the same amount as the debt originally was due to the increase in wage. The original debt when I started my IVA in 2018 was £7459.24. However some companies have now wiped the debt hence the total amount of debt is £3815.42.
Sara (Debt Camel) says
I mainly don’t want the IVA anymore as I am looking to finance a car
Settling the IVA now will not remove it from your credit record and will not improve your credit score. If you want car finance, you will be looking at borrowing from the likes of Moneybarn at 49% interest unless you wait until 2024 when the IVA has dropped off your credit record.
I was originally told some of the debt would be wiped but now I am paying back the same amount as the debt originally was due to the increase in wage.
Either they lied or they left you with the wrong impression as this would have been explained in the small print somewhere and they didn’t make it clear to you. Anyone going into an IVA who thinks their pay may increase should have been told the IVA payments would also increase.
some companies have now wiped the debt hence the total amount of debt is £3815.42.
Unless the companies have told you that they have wiped the debt, it is more likely they have sold the debt to a debt collector who hasnt yet started reporting it on your credit record.
To settle this now, if someone could offer to pay 18*125=£2,250, that would probably be accepted. To settle the IVA in full, you would have to repay the starting debt plus the IVA fees which will be £3500+ – so you do not want to offer to do this.
karren says
my parents are willing to gift me £3000 to pay off my IVA but they do not want to show my IVA any bank statements of theirs!
can they just write a letter stating who they are etc or will the IVA insist of seeing how much money they have in their bank account (which i think is wrong)
they can also send ID to them such as a driving licence as they do not have a passport any more due to their age
any help much appreciated pls
Sara (Debt Camel) says
It is up to your IVA firm what information they require about where this kine6 is coming from – have you talked to your IVA firm about this?
Pamela says
I took out a IVA with creditfix in 2020, I have paid £3016 from the £7300 agreed with monthly payments of £125.
My boyfriend who is now my fiancé wants to pay it off for me, that’s lovely but I would’ve liked to pay it for myself. The only option being is to draw from my pension early to pay it off. I just want it finished now as I look to the future with my fiancé
Could you please advise me on which option would be best. Thx
Sara (Debt Camel) says
You must NOT take the money out of your pension unless Creditfix have agreed you can do this to settle the IVA. If you do, then that money is treated as a windfall and has to be paid into your IVA but it won’t settle it, you have to carry on paying.
Are the payments affordable?
Settling the IVA will not impose your credit score or make it easier to get a mortgage or a tenancy if that is what you were hoping.
Pamela Firth says
Thanks Sara
Yes they are affordable at the moment and my fiancé is already a home owner anyway but I do have a grandson who’s autistic who is needing more and more of my time as well as his mums so I am looking towards reducing my hours at work and tbh I just want the IVA gone now, I understand that my credit score will still not be good for a while.
I just wondered which solution to settle my IVA would creditfix be more likely to go for, I understand that I would have to have it agreed with them first before I drew anything out of the pension I have.
Thx
Sara (Debt Camel) says
I’m sorry I really can’t guess. I wonder if they might want you to take more from your pension…
Pamela Firth says
I have thought that myself but I if they accepted my offer of say £4300 before I took anything out my pension could they then legally demand to know exactly what i had drew out as a lump sum after they had accepted that offer ?
Sara (Debt Camel) says
Do you intend to take more out? Because they will almost certainly ask for your bank statements before they close the IVA down. If you intend to take more out, you need to tell them and get them to say in writing that you only have to pay £4300 into the IVA.
It may be simpler for your partner to make the offer.
Pamela Firth says
Yes I may because I want to help my grandson, if I drew more out could they make me pay for my original debt or is it now about paying the IVA?
Thx
Sara (Debt Camel) says
I cannot say for certain, or what is likely, to happen here. But I suggest that it sounds much simpler to get an offer from your partner put as a F&F and delay taking money from your pension until you have the IVA completion certificate.
Pamela Firth says
Thanks Sara
Are companies like creditfix allowed to demand my original debt amount ( the amount I actually owed to people) or does it have to be the agreed IVA amount obviously with fees etc ?
Sara (Debt Camel) says
There was no “agreed IVA amount” – this is a myth.
At the start there is an estimate of what you will pay and the % debt write off if your finances remain the same
But if your finances change (eg you income Increases, you inherit some money, you take money out of your pension, you sell your house…. whatever….) then you have to contribute more. Up to a maximum of the total debts in your IVA plus the IVA firms often extortionate fees plus sometimes (this depends on the T&Cs of your IVA) 8% per annum statutory interest on the original debts.
You always owe the amount of your original debts (less the small amount already paid to them so far by the IVA) until your IVA completes, that is when the write off happens.
So you must not take money out of your pension unless your IVA firm has confirmed in writing that you won’t have to pay the money into your IVA OR that your Creditors have agreed to accept £x of this in settlement of your IVA and that any extra money you withdraw will not have to be paid into your IVA.
Beverley says
My son has an IVA, and the end of the 5th year will be in August 2023. He has received a letter about equity and remortgaging and we are both derperately worried about this. By his calculations, he has paid off the original debt to his creditors. He says by his calculations, he only has a balance of £2929.50 to pay, and will only have a balance of £325.50 outstanding in August if he continues payments of £325.50 per month. He has asked if he could borrow money from me to settle the IVA. When he phoned Creditfix, they were unable to tell him what the outstanding balance is, so we know what settlement amount to offer. We can’t understand why this is – he has called them 5 times all in all. Should Creditfix be able to give him a statement of his account as it stands at the moment?
I don’t know enough ivas, or in fact his particular situation. We don’t live close to each other, so we can discuss it all properly and look at docum
So, we don’t know how much to offer in settlement. if we follow a formula in one of your previous comments; 8 months to Aug 2023 plus 12 months instead of remortgage x his current payments of £325.50 = £6,510. But he thinks he will only have £325.50 outstanding. Help! We are both so ignorant about the whole thing. Creditfix have not been helpful at all, and we don’t understand the position. I can’t afford the amount I have calculated that they may ask in settlement.
He had mental health problems at the time (attempted suicide 4 times) it all happened, and I don’t think he even knows what he signed up for, or can even find any paperwork. He’s vague about everything, and just buried his head in the sand. Thought he’d just pay every month and it would go away in 5 years. This letter re the equity has woken him up and he’s frightened – as am I.
Sara (Debt Camel) says
he only has a balance of £2929.50 to pay
How did he work that number out?
(It’s going to be easier to answer your question if I know this.)
Beverley says
Hi Sara. Thanks for replying. He,’s now looked at everything he received and sent me this: I think it was £14,407.31. However they then split that down in to £13,714.99 of “total admitted creditors”. whatever that means. It’s also a bit confusing as they include £26 in the debt for an account that I was £26 in credit on and though I’ve told them this, they’ve never removed it. By the end of the first 5 years I will have paid £15,523. Then they did send one annual report in 2021, but they’ve only ever sent me one in 4 and a half years, so I don’t see how that’s annual. The fees then were estimated to be £4,359.90.
I’m very confused with it all. Creditfix are not helping him. How do we calculate how much do we offer in settlement? He pays £325.50pm and end of 5 years is in Aug 2023. He’s meeting with a firm for remortgage on Tuesday. Is he legally obliged to try to remortgage? He thinks he will have more than £5k in equity. We re both sick with worry. Thanks very much.
Sara (Debt Camel) says
Are the current payments affordable at the moment given price rises?
Will they be affordable after April 2023 when energy bills go up 20% and the £400 help with electric bills ends? Also probably council tax, broadband, mobiles etc going up then.
How much are his current mortgage payments?
Does he have a current mortgage fix, if so when does it end? If he doesn’t, what variable rate is he paying at the moment?
(These questions are relevant to what his options are now. And to what any settlement offer should be.)
Beverley says
Hi Sara my son said: i’m out of the fixed period, but on a discounted rate. so the variable rate is now 6.49%, but it’s discounted to 2.45% for me. the discounted period lasts until January 2024 and I get 4.04% discounted from the variable rate. They are about to go up to just under £402 a month next month
i spoke to creditfix and they seemed to be saying that my fees so far are £1,000 nominal fee and £1,700 supervision fee. but they have to send it off to one of the supervisors to check to be signed off before they can tell me for certain. then they can give an actual figure and a settlement amount. so i don’t know if they will find more fees to add on to that yet. my second annual review in 4.5 years was uploaded online today, probably only because i’ve started asking questions, and that estimates fees of about £4,500, but i’m not sure where that’s coming from if they’re telling me on the phone fees of £2,700. so i should have some between £1,700 and £3,500 to pay at the end of the first 5 years as will have paid off £1,000 more than the original debt amount by then. plus i don’t incur any fees from checking the possibility of releasing equity until they’ve broken all this down for me anyway. i understand better what’s happening now, i’m just in the dark about how much the fees will be and creditfix make it super difficult to find that out. so i don’t think i’ll benefit from going to the CAB at this point until they can tell me that. then when i know how much i will actually have to pay, i can start asking them whether it’s actually sensible to be releasing equity and going more in to debt for, from what i can tell, isn’t actually going to be that much left over to pay. but until creditfix can give me more information, it’s hard to be sure.
Sara (Debt Camel) says
£4,500 may well be a reasonable estimate of the total fees.
They are about to go up to just under £402 a month next month
And the Bank of England may well raise interest rates again on Thursday this week, the markets expect by another 0.5%. which may further increase the variable rate he pays.
As his discounted rate ends in Jan 2024, this is within the extra 12 months after his 5 year ends. At that point it is very likely that his curent IVA payments will become impossible. And so would end payments on a secured loan.
I suggest he points this out to the firm he has had to talk to about a remortgage today.
Also you haven’t answered my question about how affordable his current repayments are? How much have his energy and food bills and petrol and other things gone up this year? Energy bills will be going up another 20% from April.
The more he can get those reduced now, the less he can be asked to pay in any equity release and the less he will have to pay in the 6th year instead. So this would reduce what you may have to offer to settle the IVA.
Beverley says
Hi Sara. I understand what you’re saying about his expenditure. He hasn’t replied about that, apart from his review is due soon. He said that he has to provide details of income and expenditure, so its not a question of saying that all his expenditure has gone up in a vague manner. I think he is managing to pay everything at the moment, but I will confirm that with him. His vagueness about his expenditure has got him into this mess in the first place. What I don’t understand is the ‘8 year’ that you mention. Does all of this not end in the 6th year? I’m extra worried now about the 8th year! Sorry, I’m so ignorant about it all and don’t understand it fully.
Thanks for your help
Beverley
Sara (Debt Camel) says
that was a typo for 6th year… I will correct it so no-one else reading this is confused.
yes he needs to provide details of how his expenses have changed – that’s normal. But he will be very unusual if they haven’t gone up a lot this year. So unless he has had a major pay increase, he is very likely to be finding this difficult.
You need to emphasise to him the importance of looking at every expense. Mobile bill and broad band going up £12 in Arpil this year may not sound much but s means that if his IVA payments can be reduced by that amount, that will reduce the amount you have to pay to settle it by over £200. Then there is council tax, water, energy, food, petrol, etc
If Creditfix say they would ned to extend his IVA to reduce the amounts, he can say he will no longer be able to afford to pay anything from Jan 2024 when his mortgage will shoot up so he would like a variation to pay a reduced amount until that point at which time his IVA will be completed.
If you try to settle this now, you will be very likely to end up paying a LOT more than if he perists in trying to get his payments reduced first. And having to release equity should be ruled out because of the change in his mortgage rate in Jan 2024.
Arsalan says
Thanks @sarah my full and final offer has been accepted now and its paid to firm £5000 i am all clear now, just waiting for certificate.
Shelley says
Hi I’m.in year 6 . I have 6 months left . My husband has 6 months then an extention . My mum had offered to clear the debt .
They are asking for further payslips . ?
My husband got a new job in November last year. I was under the impression that once year 6 was confirmed that was it you can do over time etc without paying it in … why then are they needing payslips ?
Sara (Debt Camel) says
There is no point in offering a settlement to clear debts when there is only 6 months to go. These settlements take months to be approved as they have to be voted on by the creditors. It will be a lot easier if your mum simply gives you the money each month.
IF you can no longer afford the payments because of cost of living increases, despite your husband’s higher wages, you should ask for a reduction.
A creditor will often ask for payslips when a settlement is proposed to get an up to date picture of your finances.
Payments in the extra 12 months instead of releasing equity are often frozen but you need to check this with your IVA firm. If they want to take his extra income into account, you want them to also take higher expenses into account.
Shelley says
I’ve had a reply today from payplan as I’ve chased what’s happening with my offer .
They have said that they have contacted creditors but because the value of my house has increased they may ask for an extention? I’m already in the 6th year with only a couple of months to pay ? Can they request another extention. I though the max term was 6 ? I’m really confused . !
Sara (Debt Camel) says
So PP say you need to pay more because of the overtime etc?
Shelley says
When your IVA were proposed, you had no equity in your property.
-Due to increased house prices, using an on-line valuation, the mid-range figure for your property is GBP200,000.00
-Taking into account that you have maintained payment to your mortgage, it is estimated that you will have sufficient equity in your property to require a 12-month extension to the term of your arrangements.
-There is a risk that creditors could reject your lump sum offer as they will receive a higher return over the remaining term with a 12 month extension.
This is really confusing ? They haven’t did anything about overtime . They recommended lady year to me that I try and get someone to help us pay it off now I’m faced with barriers?
Sara (Debt Camel) says
do you remember why your IVA was set at 6 years not 5 initially? Did this have anything to do with the fact you would not be able to release equity?
Shelley says
Yes I wasnt able yo release any equity my mortgage company bought out Northern Rock so don’t remortgage or take on more so there was no chance of releasing equity so I did the 6th year of which I’ll have 6 months left
Shelley says
Thank you so much for your quick reply .
They did say the payments were frozen as he could do as much overtime as he wanted and could keep the money. He has been reluctant in the past. Instead he found a better job! Paypan said it would only take 28 days . I want to clear it off as my credit score will hopefully start to repair and I am in desperate need of a new car. If i gave no iva I may get a better hp or pop deal.
Sara (Debt Camel) says
If the IVA ends before the 6 years it will still stay on your credit record until the 6 years is up. As will all the defaulted debts in it. Paying this early will not make any difference to your score… You will not get a PCP deal with an IVA on your credit record and HP will be very expensive.
Shelley says
The Iva was reviewed on 7th April 2017 .doesn’t that mean it is wiped clear 7th April this year ? Payplan said they work with companies who would be able to help people like me as I know I’m not suddenly going to go up to a great score. I know there could be a little delay with completion notices etc.
Payplan have said there shouldn’t be an issue paying it off as we are offering the whole amount. And with the cost of living crisis they are more likely to agree rather than take the risk of having further reduced payments . Psyplzn reduced it by the 15% they had control over in June last year do we wouldn’t be eligible for another reduction without a creotors meeting. My mortgage has gone up another 85 a month good is costing us a fortune I just want that £500 a month to live in comfortably . I can get a salary sacrifice car through work but they are not cheap so I have a back up plan if I struggle elsewhere . I just want this noose around my neck gone😓
Sara (Debt Camel) says
It will stay on your credit record until the completion certificate is issued which can be several months after the final payment. This can be up to 6 months after completion but Payplan are usually faster then that.
Have you checked all the debts in your IVA have default dates on or before April 2017? If not, do this now – you want them all to be dropping off in April 2023 whether or not your IVA has officially completed. See https://debtcamel.co.uk/repair-credit-record-iva/
“so we wouldn’t be eligible for another reduction without a creditors meeting. “
actually they can now reduce this further, by up to 50%. See https://debtcamel.co.uk/help-ivas-cost-of-living/.
With such a short time to go, it’s up to you if you would rather borrow the money from your mum or try to get the payments reduced.
Shelley says
You have been amazing thanks . My mum is just paying it off ..Happy 50th to me !
I was in a dmp prior to the IVA so all the default notices would have been at the time of the acceptance or possibly earlier.
They definitely said my husband could earn all the OT he wanted without having to pay it in so I just hope it stands for his new salary. Yes it is better but its made no difference to our living costs. It just makes up for the additional amount like others we are having to pay to live! He only got his job in November they are asking for our December payslips . I just find it odd given the fact we are in our final year with fixed frozen payments . I font want them saying we need to pay more .
They stated they contact creditors and give them 28 days to respond if they don’t hear anything back in that time they pay the money over to them and that’s it!?
Sara (Debt Camel) says
If they say he needs to pay more, then raise the issue of the mortgage increase. Hopefully this is just some admin by Payplan and this will all get sorted. Good luck.
Jackie says
Hi Sara,
My sister has over 5 yrs left on IVA, her payments are affordable and the amount left at her *current* monthly rate is a bit less than 8K. She recently started a new job with basic salary and a commission. From what I’ve read, she’ll have a periodic review which will adjust her monthly payments to what’s affordable re. her *basic* pay. I also read that since commission isn’t guaranteed, it’s not included during these reviews to calculate the new amount? However, any commission 10% over her base monthly pay is split 50/50 with the IVA provider and this extra is offset against her *original* debt total owed to her creditors, rather than the current remaining IVA amount?
1) Does this sound correct so far?
2) If so, would it make financial sense for her to save commission earnings over a number of months and offer to settle the IVA early based on whatever the remaining amount is (on monthly payments) rather than have the provider take 50% split of commission every time? The commission should be regular and substantial but obviously not guaranteed. Would future IVA reviews take into account any *savings* she managed to put aside from her remaining commission earnings?
3) Or would it make sense for me, her sister, to help her settle the IVA early by offering a lump sum as a gift? (And maybe get money back from her if things improve for her, but with no legal expectation of repayment).
Thanks a lot!
Sara (Debt Camel) says
1) possibly but it depends on what her IVA T&Cs say. what you have written sounds pretty common
2) sort of. The problem is that the IVA firm may assume when deciding a settlement amount that the commission will carry on at the same sort of level so the settlement would have to take that into account.
3) that could well turn out to be cheaper. The IVA firm may be more likely to accept it early when it isnt clear what the commission is likely to be.
Jackie says
Thanks for the quick reply Sara, it’s much appreciated. I didn’t consider that the IVA firm could consider a non-guaranteed commission as a factor in negotiating a settlement amount? I don’t think they’re allowed to use it when reviewing monthly payments are they, so I’m surprised that it can be a factor in early settlement. Particularly when the commission structure is entirely dependent on my sister landing a contract and sometimes she is put onto other work that doesn’t earn any commission. While it may well continue to come in regularly, it’s by no means guaranteed and it seems a bit unfair to take into account under the circumstances, when the IVA is reviewed on the basic salary. In any case, that’s given us some things to consider so thanks again.
Sara (Debt Camel) says
Then I suggest you go back to PP and point out that because your mortgage lender would not offer a remortgage, the IVA term was originally set at 6 years not 5, so why is a further year now being considered?
Shelley says
I have called them …looks like they’ve cocked up ! They thought we were in year 5 !
Sara (Debt Camel) says
Phew!
Shelley says
Well the variation meeting is booked. What worries me is the amount in fees payplan want to charge. If i was one of the creditors why would I accept when then want to charge £500 for both my husband and I for the pleasure of us paying it off? The lad on the phone said that can challenge it . Then another clause if they reject the offer they could file for bankruptcy! Omg ..!
Sara (Debt Camel) says
Fingers crossed for you that this goes through
shelley says
What’s your experience in these circumstances?
Sara (Debt Camel) says
Even an IVA firm that sees dozens of these a month cannot accurately predict the outcome. I don’t see enough for my guess to be worth anything.
Patrick says
Hi, May I ask for advice,too?
I have IVA since 12 months, sum of app. 20k
Paying £100/mo now. Annual revaluaion of my income is due about now.
As I secured better job 3 months ago with signifucal pay increase – some £1300/mo more.
Job is still in trial period till March, then should become permament.
How will this affect my monthly IVA payments?
Would be possible to ask a bank (one of creditors) for a loan and settle all this debts?
Sara (Debt Camel) says
This article https://debtcamel.co.uk/bonuses-pay-rises-iva/ looks at what happens when you get a pay rise.
As that says, a common clause in IVAs is “You will be required to increase your monthly contribution by 50% of any increase in disposable income one month following [your annual review].”
Of course your expenses may have gone up a lot in this first year – food, energy bills, petrol, etc. So they shoudl be taken into account. I suggest you set out in detail evey expense that has increased so you are prepared for your review.
But if they haven’t, then its likely your IVA payments will go up by about half of the increase so £650 a month. Which means that it’s likely you will pay your debts in full plus the IVA fees before the and of the 5 year IVA. At that point your IVA will end, but it will still stay on your credit record for the rest of the 6 years.
No you can’t get a loan to settle the debts – you would have to get premission from your IVA to firm to borrow over £500 and anyway no bank is going to want to land you 20k with your credit record.
I’m sorry but this IVA has turned out to be a very poor decision for you. In a debt management plan you could have repaid all the debts within a couple of years without any IVA fees being added and would not have an insolvency marker on your credit record.
Shelley says
Hi Sara
Sorry me again.
I’ve had a council tax bill today with an amount due if 187 ..says its an insolvency dividend ? I have never missed a payment . How ever I think in the first year of my iva it may have been included..it was such a long time ago o can’t remember. Do you think this is because they have been approached as I’m wanting to clear my iva early ? Thanks in advance…
Sara (Debt Camel) says
I have no idea. It isn’t relevant to the early set of an IVAbut receiving a request to vote on the early settlement may have meant someone looks at you your account.
Samson says
Hi, currently have £34k of unsecured debt which has spiralled. Salary decrease and cost of living increase has meant it’s been impossible to pay creditors the last couple of months. Currently considering my options.
Back living with parents, and from doing I&E it would appear that I have about £98 of disposable income available pcm after priority bills are paid.
I have no assets, little disposable income, not a homeowner. My parents have generously offered to help with a lump sum IVA.
On the face of things this seems like a good way of clearing a much larger sum.
What sort of offer would be reasonable on a £34k debt bearing in mind I am relying solely on the generosity of parents and couldn’t otherwise personally afford anything more than the £98pcm?
What are the potential pitfalls of an arrangement like this?
Many Thanks
Sara (Debt Camel) says
Are you happy to stay living at your parents for the next 6 years?
What are your priority bills at the moment, living with your parents? Does this include a car on finance?
Angeldust12 says
Me and my husband had joint debts and took out a joint IVA with debts of I think where around £80,000 we paid £100 a month due to lockdown then when cost of living went up not even had IVA a year when a friend offered to pay £8,000 lump sum to settle it was accepted that was a 2 years ago. I’ve heard horror stories of people that end up paying more back than the debt so trying to buy out is the best option in my opinion. 2 years on got accepted for a credit card solely used to build credit score back up.
Sara (Debt Camel) says
I think you got lucky. In the pandemic a lot of low offers were accepted for settlement. No one thinking of an IVA should assume this is likely.
But Samson is looking at a single payment IVA, these are rare and quite different from getting a normal IVA and then trying to settle it early.
Shelley says
Today my creditors agreed to accept my full and final payment. I cannot tell you how I feel right now . I have cried woth joy all afternoon at the thought of finally being debt free . Its been a tough 5.5 years but still the best decision I ever made . Thanks for all your advice and help !