Please don’t take this as legal advice, but we’ve been doing some thinking about modifications and how they should be treated.
We think that the first stage has to be to decide whether they are modifications at all. If you receive something purporting to be a modification that does not modify the arrangement then we do not think it is a modification at all. For example, if your proposls say that you will only draw £90 a month in supervisor’s fees and someone proposes a modification capping your fees at £100 a month, then that is not a modification as the terms of the arrangement have not been altered. You have to be really careful before treating a "modification" in this fashion, but we think we have a point.
We think that the next stage has to be to reconcile the modifications with each other, which will again result in some of them being eliminated. For example, if you have a particularly mean modification that you have to accept capping your nominee’s fees at a virtually uneconomical level, any other modifications that cap your fees at a higher amount are not modifications and can be discarded. As above, you have to be really careful, but we think it works.
Finally, if there are modifications that are not really modifications and verge on an abuse of process, try opening a dialogue with the agents, either directly or through R3, to get them removed or amended. They may not budge, but I cannot see any IP in the country failing an arrangement because he did not give an agent a copy of the chairman’s report by email within four days.
With that approach in mind, we’d like to praise some creditors and have a gentle dig at some others. First of all, we would like to offer a big pat on the back for Mike Sargeant and the team at KPMG for their “if it is tougher than our modification we’ll go along” wording. Meetings would be much quicker and less costly to run if all creditors adopted this approach.
Second, an equally big pat on the back for Chris De la Salle and the team at Eversheds for making a couple of dodgy modifications more workable in practice. They listened to reason, amended their standard modifications and we like them as a result.
However, big raspberries to Egg voting through GT for refusing to give ground on conflicting modifications, even where the conflicting modification is tougher.
Likewise, rude noises to all at Lloyds TSB if the recent R3 bulletin is correct about their attempt to reject IVAs and push people into unsuitable debt management plans that just serve their interests.
Finally, at the risk of coming to the attention of HMRC generally, we’d like to appeal to Dick Ivory and all at VAS to adopt something similar to the KPMG wording in place of their strict adherence to “R3 terms unless amended by us” wording so that stricter modifications than theirs can be used.
To quote Martin Luther King, “I have a dream”...ours is that all creditors and their agents will, by the end of August, have amended their modifications to allow stricter modifications to take priority and taken out the sort of silly modifications that they would not enforce through the courts if the IP ignored them anyway!
