Northern Rock will only agree to IVA if..

twoflower169

we change our mortgage to interest only for the life of iva, which NR insist on a 6year iva.

We are using cccs, they said to us originally that they would have to canvass NR first as they are our majority debtor (we have together mortgage (30k loan on top of mortgage), so that was the result, we now have to decide if we are happy to do that, I suppose to carry on down the iva route we have no choice but to accept this.

Any thoughts?

Charco_2

Their demands do kind of seem reasonable, the notion of an IVA is that you ARE trying to pay back as much as you can so during the course of the IVA it makes sense that your creditors will look at your expenses - ALL you expenses and nit pick about various costs that they deem unreasonable. NOTE: It's a strange one though because if you stayed on capital repayment then in the fourth year valuation you'd be releasing that extra money to your creditors anyway from the equity in your property... as in it makes no real difference, pay now/pay later!

However, this 6 year IVA thing is something new they seem to be trying - and mainly NR too! However, while IVAs tend to run for 5 years, 6 years is not unheard of - infact, if you have equity in your property in the fourth year of your IVA it may be necessary to extend the IVA anyway to realise this in favour of your creditors.

How much of your unsecured debt does NR own? If it's 25% or more then you may have no alternative however remember that the proposal being put forward is YOUR proposal, your IP at this stage is just the inbetweener making sure both your interests AND those of your creditors are dealt with properly. If you insist that it'sa five year proposal then that's what should be put forward but if NR make up more than 25% of your debt then they'll just modify it anyway...

Did you speak to any other companies?

twoflower169

Thanks Charco, NR are 50% creditors so we wont have any choice on the 6year thing I dont think.

Yes we have spoke to payplan as well and they have said exactly the same thing.

I hadn't thought about the equity release thing, it will mean that unless the market goes crazy we wont have any equity, we are already 25k in neg equity since last valuation. Maybe thats why they are doing it so they get more money now, and lets face it, whats the chances of us getting a mortgage elsewhere after IVA, so we will have to stay with them!

We have thought that we should view the interest only option like we are paying rent for the priviledge of keeping are own home. Also as we still have 26years on our mortgage anyway so our plan is to keep the same amount of years at the end of iva and overpay even if it only by £50 a month, as we will have more money then.

Charco_2

That's a good attitude anyway and I suppose NR's demands are a little price to pay for getting your finances all back on track in the longer term!

Good luck!

Nick700

I'm afraid Northern Rock like extending IVAs to 6 years regardless of the amount of equity in your property. They just want to improve the amount of their debt they will recover. They also argue that as you have taken out a together loan which is usually over 20-25 years, that it is not right that you should be repaying a percentage of your unsecured debts back over a much shorter 5 year period.

If you do not wish to go with the 6 year IVA, bankruptcy is an option you could consider. Your IP should have already discussed this with you, it is unlikely that you will lose your home as you are in high negative equity and you could be discharged from bankruptcy with consequently your unsecured debts(including the together loan) written off in less than a year. However, you may still have to pay into bankruptcy for 3 years if you are deemed to have some disposable income. Going bankrupt is not a decision to be taken lightly, so it's best to talk to your IP again about it, as well as visiting the governemtn insolvency service website and reading their leaflets on it. The bankruptcy forum on here may also provide some useful support.

Lastly, your IP can only adjourn your creditors meeting for a maximum of 14 days from it's original date, so make sure you are not running out of time to make a decision! If you can't decide within that 14 day period, your IVA will be rejected and will have to be re-submitted to your creditors again.

Let me know how you get on.

Nick

twoflower169

Nick700 - Thanks for your reply,

We haven't actually had our creditors meeting yet, with are using cccs and they were canvassing northern rock as to whether they would agree with the iva as they are 50% of our total owed and so if they said no that was it.

Our IP has been fantastic and has gone through all options thoroughly, bankrupty is not an option for us for lts of reasons I dont want to go into, but as "easier", as that seems right now it just isn't a choice, and we do want to pay back as much as possible of what we owe, but being able to live too and not have to live off of £100 for shopping for the month plus nappies etc for our child, we just had a horrendous year last year whilst I was on maternity leave and it just got worse when I returned to work, and we just haven't been able to survive month to month.

We have decided to go with both of these conditions NR has asked for already and will keep you updated, we have a meeting on the 21st, and we are just waiting for our pack as well.

Thanks T x