IVA extension??

boxer3

We are now in the final year of our IVA. We have a mortgaged property which we bought before entering into the IVA. I was hoping someone could answer the following questions. As I understand it our creditors will request a remortgage at the end of the IVA in an attempt to take any equity from the property. However the property is worth 20k less than we paid for it. Bearing this in mind I've read the following on another IVA website:


'So what are the normal ‘IVA equity rules’? Well, as part of the IVA protocol, an IVA which includes a property with equity that cannot be released at the appropriate time during the IVA because of there being insufficient equity, or there are no lenders prepared to offer a re-mortgage due to their set lending criteria or the costs of re-mortgaging are prohibitively expensive, the IVA will be subject to an extension of 12 months to the IVA’s repayments term. These extra payments will be taken in lieu of the unreleased equity.'


Can anyone tell me if this is the case, and will we be required to pay another years contributions into the IVA as there is no equity in our property to satisfy our creditors?

Also if this is the case does all negative credit info still come off our files at the end of the 6th year (assuming we contact the creditors and credit ref agencies as ive read on here) - or would the extra year of payments mean it would be 7 years before we could attempt to clear our bad credit refs?

I've read lots of useful info on 'money saving' and it's great to feel you are getting some impartial advice from people that have already been through the 'IVA Mill'

Many thanks in anticipation of some useful advice!

shelene

im under the impression that it is usually another year of IVA payments, thus 6 years i total, im just entering my 3rd year and expect it to be the same for me.

not sure on the credit ratings though

Charco_2

It depends on how much equity we're talking here... but you SEEM to be saying there is NO EQUITY (or even negative equity) so that would mean NO EXTENSION! The extra year is instead of you being forced to remortgage or otherwise address your equity, if you have no equity then you have nothing to address.

Furthermore the equity you would have to address is based on 85% of the value of your home. No money lender will give you a mortgage for more than 85% (or possibly 90%) of the value of your home so when calculating the amount you would be expected to release from your home it is based on this amount!

(If your home is worth £150,000 then you multiply that by .85 = £127,500.
If your mortgage is more than this then you've no equity if it less than this then you have equity. If your mortgage is £120,000 then you have £7,500 of realisable equity)

debtinator_2

If you cant get a re mortgage for what ever reason your IVA will almost certainly be extended by at least 12 months.

Did they explain this to you clearly right at the beginning? Judging by your questions now it would appear to be something you were not aware of.

Charco_2

I would say actually that he is rather clued up on the whole matter...

However since it looks like they are in negative equity there will be no need to remortgage or release equity as there is none, and therefore no extension!

debtinator_2

Sorry Charco, don't agree with you on this one,

Most IVA proposals allow for an extension if the debtor cant re mortgage, even if that is because they have no equity. It will be at least another 12 months for boxer3.

The sad thing is that whilst it's true to say that this information is included in the proposal, luckily for the IP, most debtors fail to spot it.

Charco_2

This is simply wrong!

1. The OP has shown that he does have knowledge (fairly detailed knowledge at that) of how equity will be addressed at the end of the proposal. Also, when an initial meeting is held with a client the issue of equity and the need to address it for the benefit of the creditors is discussed - i dont think too many people are ever surprised by the fact that if you have money you'll be expected to pay it (be it in cash, equity in the home or a savings scheme maturing).

2. If there is no equity in the home then there is nothing to address with a one year extension... it really is as simple as that!

Boxer3 - if there is no equity in your property then you have no need to extend your IVA... If your IP says you have to extend the IVA then challenge him on it and name and shame him/the company on here.

Mad_girl

debtinator wrote: »

Sorry Charco, don't agree with you on this one,

Most IVA proposals allow for an extension if the debtor cant re mortgage, even if that is because they have no equity. It will be at least another 12 months for boxer3.

The sad thing is that whilst it's true to say that this information is included in the proposal, luckily for the IP, most debtors fail to spot it.

My IP confirmed, if I have no equity at the end of the term they WILL NOT extend the IVA by another 12 months.

Choo_Choo_4

debtinator wrote: »

Most IVA proposals allow for an extension if the debtor cant re mortgage, even if that is because they have no equity. It will be at least another 12 months for boxer3.

If there is no equity then obviously a debtor couldn't remortgage.
If there is nothing to release or realise then how can an extension be requested - this would just be wrong!

debtinator_2

OK, well it's just an opinion.

We will have to wait and see what happens to boxer in the end.

If it turns out I'm wrong then I'm sorry boxer.

If it turns out I'm right well................

Charco_2

You'll not be right................

However Boxer, if it turns out your IP brings it up with you then stand your ground because your IP will also not be right!

Check your paperwork