........niece accumulated a lot of ongoing debts...........12 months ago took advice from Citizens Advice Bureau and signed? up to a Northern Ireland based company who manage all her finances - I think this company may have full control over her dealings with her bank. She is on the IVA list. (not sure what that is) Now she wants to pay off the debt to the company - debt £4,100 - she has offered them £3,500. The debt cannot be paid directly by her as all her finances are under the Company's control. Other family members and myself will pay this amount and she will reimburse us when she gets back on her feet. How do these companies work - is it possible for niece to get records of exactly how much she has paid them and how much they have paid those she owes money to? How is a final settlement figure arrived at? Is it negotiable? Thanks.
An iva is an individual voluntary arrangement. The company will propose this to all her creditors and collect one monthly payment from her, top slice their commission and make pro-rata distributions to each creditor. The arrangement is rubber stamped as a binding legal process and usually lasts for 5 years. It will be registered on her credit reference file, as will the late payments/defaults that preceded it. You don't say how old the iva is or the level of debt and how many creditors or the name of the company involved. CAB usually refer to stepchange a charity who are more user friendly. The overall debt seems low and some iva companies are a bit hasty to sign people up. There have also been instances of companies holding back payments and doing what you suggest and pocket some extra cash on top. In the first instance, I would contact stepchange for some advice, it may not actually be in her interests to break the iva but then again, she may have been ill-advised to enter into an iva. There is no settlement figure involved, just five years payments. They should not have any control over her bank account
thanks Darfield138 have accessed Stepchange and my niece will contact them -- what we would like to know is has she been treated fairly - (we were unaware of her financial difficulties until recently.) She had three youngsters under 4 - a 4th on the way and a disappearing husband The iva was put in place in 2020 - she hasn't said what the actual debt was. She did say that there was no point in her working overtime because it would go straight to the company - I get the impression that they controlled her banking activities ?? When the settlement amount is reached that amount mustn't be in her account - as I'm co-ordinating this the money will be in my account. The Company want a copy of my Bank Statement to show I have the funds, also a copy of an Utility Bill showing my name and address. A settlement figure of £3.5 K suggested - a lot of money but not mega-bucks. Again, thanks for pointing us in the direction of Stepchange
Hi Mate In theory any extra money she earns above the amount of the IVA payment she should tip up, so yes no point earning overtime but that doesn't imply they have control of her bank account which an IVA doesn't entitle them to do standard practice to want your bank balance, i'd edit first five digits of acc no out. Utility bill is standard, they are part of the regulated sector so have to comply with money laundering regulations to id you Personally, you've made offer but nowt stopping you trimming it down, offers i've seen previously have usually been around 30% reduction of outstanding debt, so around £3k might succeed. Bit difficult to say if IVA was right for her without knowing more of her circs, Stepchange might have made a non formal debt management plan for such a relatively small amount, an iva is a form of insolvency. It stays on the insolvency service public website whilst its current and for three months after. It also stays on credit records for six years from 2020 but i suspect she would have had bad credit history anyway. The only other thing to bear in mind is that if she has other debts, not wrapped up in the IVA, these aren't covered and could be liable to be repaid. A bank/ex-landlord etc would likely leave her alone if she had an IVA but on seeing one settled might think its game on to come after her, so be certain no more debts before settling IVA
Does she own her own home? Work in a job that doesnt allow bankruptcy? Because she may be better off with a DRO or bankruptcy.
No specific advice because I haven't got a clue about anything like that but I work with a couple of people who are in similar levels of debt and my advice in general is tell her not to check her credit rating all the time. I think that checking it can actually have a negative impact on it but judging from my workmates it actually can have such a bad impact on them mentally anyway. If their rating goes down they get depressed, if it goes up they get giddy and end up taking on more debt. Easier said than done but once she's sorted out tell her to live within her means for a few years and try not to even think about her debts or her credit rating or anything. Also I'm sure you already have but tell her not to worry. She's already been in the **** and managed to survive it just about. She's now coming out the other side and has family like you helping her so ANYTHING that happens now is a positive.
A debt relief order A debt relief order has some pretty restrictive criteria and you can't get one once you've entered into an iva. I would say bankruptcy is a last resort and not suitable for the amount of debt involved. There is a fee for filing your own petition and you'd still face a three year payment plan if you have an income, even though your debts are wiped after one year. BUT, you could also lose rights to any assets you could claim on making the order, eg ongoing insurance/ refund/ bank charge claims and it would follow you like a bad smell for life. Mortgage and insurance companies ask the question about bankruptcy at any time. Although it drops off your credit rating after six years, it's on the London gazette for ever, so a solicitor will check when you're buying a house with a mortgage as would an insurance investigator if you made a claim and had given a false answer
