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  • FIRST POST
    MurrayMint
    IVA's - equity release in 4th year
    • #1
    • 21st Oct 08, 2:06 PM
    IVA's - equity release in 4th year 21st Oct 08 at 2:06 PM
    Hi,

    This is a question I added to someone else's thread on DFW, but it was suggested I post here for advice:

    If you've agreed to an IVA of say 50% of debt plus fees of £X, in year 4 of the IVA, if you had the equity, could they force you to remortgage for the remaining 50%, so in actual fact you would have paid 100% debt plus £X fees??

    I'm struggling to understand how this part of an IVA works, there doesn't seem to be any clear guidance about this. :confused::confused::confused: What if you can't borrow the money - how do you release the equity? How should you repay the secured loan (equity release) if you couldn't afford the debt repayment? Do you have to borrow it from any sub-prime lender willing to touch you and therefore pay high interest?

    Thanks for any answers!
    MM
    PROUD TO BE DEALING WITH MY DEBTS
    Light Bulb Moment Jul 2008 /
    CCCS DMP started Sep 2008 / DMP Support Thread Member # 224
    Debt Free Day Aug 2032, Feb 2018, Jul 2032 Feb 2023
    July-08 Unsecured Debts £40,499 / Nov-09 Unsecured Debts £38,945
Page 1
  • Rylynn
    • #2
    • 21st Oct 08, 2:41 PM
    • #2
    • 21st Oct 08, 2:41 PM
    I believe they can make you sell the property to release the equity. Are you already in an IVA?
    Some Days are Diamonds Some Days are Stones,
    Sometimes the hard times won't leave me
    BSC 162
    Banktupt 22 Oct 2008 at 10am!
  • MurrayMint
    • #3
    • 21st Oct 08, 5:05 PM
    • #3
    • 21st Oct 08, 5:05 PM
    Hi,

    No I'm not. I'm not in a position to yet. But was thinking about it is a year's time maybe.

    I thought an IVA was an agreement that you would pay the creditors an agreed % of the debt (plus the legal costs of setting up the IVA) at a fixed monthly rate over 5 years. So why, in the 4th year, can the rules change and the creditors insist that you pay a higher % of the debt?

    Is it because the IVA is based on your circumstances at the point the agreement is made, but if you circumstances change then it can be renegotiated - including increased income and/or increased assets (home equity)? But if it can be renegotiated in the creditors favour, why can't it be renegotiated in the debtors favour if the circumstances worsen?

    It seems like a huge gamble, when an IVA should be a secured and trusted legal agreement that sets out to reach the best compromise for both the creditors and the debtor.

    :confused::confused::confused::confused::confused: :confused::confused::confused::confused::confused: :confused::confused::confused::confused:
    PROUD TO BE DEALING WITH MY DEBTS
    Light Bulb Moment Jul 2008 /
    CCCS DMP started Sep 2008 / DMP Support Thread Member # 224
    Debt Free Day Aug 2032, Feb 2018, Jul 2032 Feb 2023
    July-08 Unsecured Debts £40,499 / Nov-09 Unsecured Debts £38,945
    • peachyprice
    • By peachyprice 21st Oct 08, 5:08 PM
    • 17,342 Posts
    • 39,484 Thanks
    peachyprice
    • #4
    • 21st Oct 08, 5:08 PM
    • #4
    • 21st Oct 08, 5:08 PM
    If the equity in your property is to be included I beleive this has to be stated at the beginning, so you'll be paying so much her month plus your equity in year 4.

    If you get to year 4 and cannot raise the equity they can add a 6th year to the IVA.
    Accept your past without regret, handle your present with confidence and face your future without fear
  • Rylynn
    • #5
    • 21st Oct 08, 5:16 PM
    • #5
    • 21st Oct 08, 5:16 PM
    Right having been in and IVA I can say that if the terms are written on day of approval by creditors and it says no change in payments, then if you lose your job, have a pay cut, get ill you cannot renegotiate, I know as I have had mine fail due to illness, although they put it on hold for 18 months hoping I would get well enough to be back in work.

    Okay also you mention paying for it to be set up, you dont pay in advance with Payplan or you did not when I took mine on in 2005, they take their money from what you pay in each year.

    I paid in Just over £5k and my creditors on its failure got just £1300 between them all!

    Have you considered Bankruptcy?
    Some Days are Diamonds Some Days are Stones,
    Sometimes the hard times won't leave me
    BSC 162
    Banktupt 22 Oct 2008 at 10am!
    • RAS
    • By RAS 21st Oct 08, 5:30 PM
    • 28,012 Posts
    • 48,418 Thanks
    RAS
    • #6
    • 21st Oct 08, 5:30 PM
    • #6
    • 21st Oct 08, 5:30 PM
    Hi

    First please read martin's IVA Guide here http://www.moneysavingexpert.com/loa...-iva-guide.pdf

    And second, please please only conside ran IVA if CCCS advise you to take one. They are a debt charity and offer IVAs only because they would rather see them well run than see people fleeced. They estimate they are only appropriate for 3% of their clients.

    There contact details are here http://www.moneysavingexpert.com/loa...help-plan#help
    The person who has not made a mistake, has made nothing
  • Rylynn
    • #7
    • 21st Oct 08, 5:53 PM
    • #7
    • 21st Oct 08, 5:53 PM
    I agree with you RAS, they seem so simple and easy but they are not for everyone as I found out. And I did read Martins guide but 3.5 years after going into one, had I had that information at the time I would never have entered into it.

    Get some advice, Nat Debt Line are great.
    Some Days are Diamonds Some Days are Stones,
    Sometimes the hard times won't leave me
    BSC 162
    Banktupt 22 Oct 2008 at 10am!
    • debt doctor
    • By debt doctor 21st Oct 08, 7:36 PM
    • 3,937 Posts
    • 5,558 Thanks
    debt doctor
    • #8
    • 21st Oct 08, 7:36 PM
    • #8
    • 21st Oct 08, 7:36 PM
    Hi,

    Payplan insist that you release 75% of the equity in your property ( the equity at the time you take the IVA out or the equity in year 4 whichever the least )

    They have agreements in place with lenders that if you can keep to 4 years IVA payments then you are a 'good risk' so the loan is guarenteed.

    So be very very careful of IVA's - you could end up paying back 100% of what you owe, and not only be sadled with 5 years repayments but also on going equity release loan costs for many more years.

    I would say never even think about an IVA unless one or more of the following apply to you;

    You are in a job that you cannot remain in if you are BR.

    You have substantial equity in your home and cannot raise the funds to buy the OR's ben interest.

    You have been strongly advised against BR by a debt charity debt specialist for some other substantial reason.

    I dont like IVA's - can you tell ?:confused:

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • Deep In Debt
    • By Deep In Debt 21st Oct 08, 8:01 PM
    • 7,697 Posts
    • 11,230 Thanks
    Deep In Debt
    • #9
    • 21st Oct 08, 8:01 PM
    • #9
    • 21st Oct 08, 8:01 PM
    DD, I hate IVA's with a passion! So glad I didn't get one.
  • MurrayMint
    Thanks for all the replies. It's funny, because there's a whole IVA forum elsewhere that are really pro-IVA, but DFW is so anti-IVA. I'm undecided... but I think anti. I've read Martin guide loads of times, but the anecdoctal advise seems to vary so much. I think it's crazy to be in an IVA, with the seriousness of the consequence if it all goes wrong, but potentially end up paying 100% plus fees.

    My DMP is with CCCS and they suggested looking at an IVA after 6 months, because it would take me 23 years to pay at current levels. I think the DMP route, with some secret money raising and F&F sett's as often as possible is probably the best route. But it's so hard... I still struggle to change my head space. I feel like a alcholic still only on step 3 or 4 of the 12 step plan! I think it will take years to adjust.
    PROUD TO BE DEALING WITH MY DEBTS
    Light Bulb Moment Jul 2008 /
    CCCS DMP started Sep 2008 / DMP Support Thread Member # 224
    Debt Free Day Aug 2032, Feb 2018, Jul 2032 Feb 2023
    July-08 Unsecured Debts £40,499 / Nov-09 Unsecured Debts £38,945
    • mother hen
    • By mother hen 29th Oct 08, 12:26 PM
    • 457 Posts
    • 76 Thanks
    mother hen
    Murray mint can you tell me which is the other forum you referred to I'm trying to get an overall balance of this iva situation as we are due to get our call this week to begin the process?
    thanks
  • Rylynn
    http://myvesta.org.uk/forum/technical-iva-questions-f16/missold-iva-t2310.html

    Okay it is a LONG read but read it all, as the last paragraph may say an awful lot to people wondering should they go into and IVA, this has been written remember by someone professional in the IVA industry.

    I found this very good reading, and again think I was missold mine.

    I also think that may be one of the sites being talked about here, although it does not seem to be PRO IVA to me and what I have read so far over there.

    I agree with others here and have to say I would NEVER have entered into one had I had this site and taken better advice than the pamphlet simply handed to me at the CAB as they were too busy to see me!

    If you stand to lose your job due to not being able to work there if you got BR okay, your credit rating with IVA and BR is shot to hell and one thing I do know is no one has a crystal ball, 5 years is a long time, anything can happen, and with BR the day the judge stamps that BO you are free of debts. It cannot fail 3 months down the line if you are paying into and IPA and lose your job, which would happen with most IVAs.

    I have said it before, every case is different, but read that link as I think he puts it very well as to who should and should not consider an IVA. Which from reading it, is the majority of people.
    Some Days are Diamonds Some Days are Stones,
    Sometimes the hard times won't leave me
    BSC 162
    Banktupt 22 Oct 2008 at 10am!
    • mother hen
    • By mother hen 29th Oct 08, 3:06 PM
    • 457 Posts
    • 76 Thanks
    mother hen
    ok thankyou
    • Deep In Debt
    • By Deep In Debt 29th Oct 08, 7:36 PM
    • 7,697 Posts
    • 11,230 Thanks
    Deep In Debt
    Perhaps one of the many reasons why I chose not to go the IVA route. I have just under 5 years left until I pay off my mortgage which has always been affordable. I didn't want to release equity in my property to put me into debt again and take me into retirement (yes, I am that old - although I was only 20 when I got my mortgage so that makes me feel better, sort of!)

    So to me, it just seems having an IVA is not necessarily the "quick fix" that they make it seem. You may be unsecured debt free but are saddled with probably a high interest mortgage for 25 years.
  • MurrayMint
    Murray mint can you tell me which is the other forum you referred to I'm trying to get an overall balance of this iva situation as we are due to get our call this week to begin the process?
    thanks
    Originally posted by mother hen
    Hi Mother Hen,

    The forum I was thinking about is http://www.iva.co.uk/

    Hope you make the best decision for you - it's not an easy choice is it!

    MM
    PROUD TO BE DEALING WITH MY DEBTS
    Light Bulb Moment Jul 2008 /
    CCCS DMP started Sep 2008 / DMP Support Thread Member # 224
    Debt Free Day Aug 2032, Feb 2018, Jul 2032 Feb 2023
    July-08 Unsecured Debts £40,499 / Nov-09 Unsecured Debts £38,945
    • fiveyearplan
    • By fiveyearplan 29th Oct 08, 8:22 PM
    • 10,058 Posts
    • 9,947 Thanks
    fiveyearplan
    I also believe that your credit file is almost as bad with an IVA as it would be for bankruptcy and you will be on the Individual Insolvency Register too.

    Mortgage free by 2014


    • mother hen
    • By mother hen 29th Oct 08, 9:20 PM
    • 457 Posts
    • 76 Thanks
    mother hen
    thankyou..
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