please help me - really dont know what to do

patchy987

hi

ok so we have just started our 4th year of our iva and have it written into our iva that we will pay the sum of 10k by way of remortgage .

now when we started the iva this was not a problem, we had easily 30k equity in our house, fast forward to now and we have no equity due to the drop in value.

now i have been reading about what should happen in this instance and seem to find mixed answers,

i have had a letter today asking me to put forward proposals to get the terms of our iva amended by creditors advising us to offer an extra 24 months payments.

i really dont think i can cope with another 3 years (1 left plus additional 2) and am hoping someone can help me with some advice.

if it helps, our original iva was for 50p in the pound and the proposal they are suggesting would pay 35p

FoggyBrain_2

Hmmm -- I am sure "someone wot knows" will be along shortly -- but I was under the impression that IF equity was available, but you couldn't release it ( as is often the case) the IVA would extend by another year (NOT 2!). However, if there is no equity the creditors should release you from this clause without an extension.

patchy987

i have found that quoted on a number of forums but for some reason there is no definite answer.

i really hope someone can help me with this as i feel like i cant cope.

i have just spoke to my iva company who claim that they are saying this because the creditors wont accept lower than the 35p in the pound, but im sure i have read about people who have 25p as their iva so dont get this at all

Charco_2

First thing, to clear up the discrepancies in views as to what happens regarding equity... it depends!

(I hope that helped!)

The general theory and practice are as normally described on this forum and as mentioned by FoggyBrain... however, the practice and theory change over time so it depends on what the process was when your IVA was started four years ago. There have been changes!

So check the wording of your IVA, if you have promised a lump sum that you now cannot provide (lets face it mostly due to the economic fiasco the world currently finds itself in... thanks bankers!) then you are going to have to alter the IVA. This requires a variation meeting (much likie the meeting at the start of the process) where you propose to alter the IVA and hope that your creditors agree to it.

(UNLESS you can somehow come up with a lump sum from family or friends or bank robbery etc)

If your original IVA is worded in such a way that it promises a specific dividend or a specific lump sum then you'll have to change it. You're looking to take something away from the original proposal so it's likely you'll have to offer something else in return... offer ONE year! It's fairly normal to extend the IVA by a year in exchange for not releasing equity (existant or non-existant).

It's not up to your IP to tell you what the creditors will and wont accept... of course your IP will have a fairly good idea but he cannot prevent you from offering what YOU want to offer. You could offer no extension but I'd think it's unlikely that they'll accept.

Charco_2

Ha ha, you'll like this... just spoke to a colleague (and he is better than me) and he got quite annoyed.

Are you with Payplan by any chance!?

He reckons you should go back to your IP and demand that they sort it out or you will be bringing this to the attention of their regulators.

Four years ago the minimum dividend a creditor would accept was 25p... you would have cleared this easily and so there was no need to tie you into a proposal promising specific amounts of equity and that was ultimately unworkable from the start. Of course you have to offer to the relase the equity and repay as much as you can afford however you didn't need to specify to "bump up your dividend". This would be considered bad practice. Sometimes an IP would be required to specify, if a dividend was going to be particularly low, to try to increase the pot but it was unecessary here.

Insist that your IVA variation is for your IVA to end normally. Try to get a (rejected) remortgage offer or two and a valuation of the home and show that there is no equity and that it's only fit and proper for your IVA to end after five years...

Remember that those two years extension means two years fees to your IP (Payplan?) so it's in their interests to extend. You could of course offer three or six months extension til the loose ends are tied up... but certainly push mnore for what you want, it's the creditors you need to agree, not your IP!

patchy987

Charco wrote: »

Ha ha, you'll like this... just spoke to a colleague (and he is better than me) and he got quite annoyed.

Are you with Payplan by any chance!?

He reckons you should go back to your IP and demand that they sort it out or you will be bringing this to the attention of their regulators.

Four years ago the minimum dividend a creditor would accept was 25p... you would have cleared this easily and so there was no need to tie you into a proposal promising specific amounts of equity and that was ultimately unworkable from the start. Of course you have to offer to the relase the equity and repay as much as you can afford however you didn't need to specify to "bump up your dividend". This would be considered bad practice. Sometimes an IP would be required to specify, if a dividend was going to be particularly low, to try to increase the pot but it was unecessary here.

Insist that your IVA variation is for your IVA to end normally. Try to get a (rejected) remortgage offer or two and a valuation of the home and show that there is no equity and that it's only fit and proper for your IVA to end after five years...

Remember that those two years extension means two years fees to your IP (Payplan?) so it's in their interests to extend. You could of course offer three or six months extension til the loose ends are tied up... but certainly push mnore for what you want, it's the creditors you need to agree, not your IP!

are you serious (professional opinion or just guesswork) and no its not payplan.

i can guarantee there is no equity in my property at all and really feel they are being unreasonable , they seem totally unprofessional ablut the whole thing to be honest,

if you know this in a professional capacity would you mind if i pm'd you my info so you can give me some advice on exactly what i should offer

debtinfo

The very first thing to do is look at the original IVA what does it say about the £10,000 and what does it say if you cat release this, If it doesent give a get out clause then if it cant be paid then the IVA could fail (or have a proposed ammendment accepted), if it does give a get out clause what does it say

patchy987

the exact wording is as follows.

i recognise that creditors will view the equity in my home as a valuable asset. my husband and i therefore propose to make a payment of £10,000 into the arrangement in satisfaction of any claim by the supervisor or creditors to this equity. this payment can be made by a third party, raised by way of remortgage or by any other suitable means. if necessary i will make the payment by way of continuing monthly installments after the fifth anniversary of the arrangement and the duration of the arrangement can be extended by up to 12 months for this purpose.

Ivoryfalcon

Hi Patchy,


Your equity clause shows quite clearly that the arrangement can only be extended by 12 months to address equity but is unclear as to what happens if there is no equity. I don't see how anyone could have any claim on equity that is not there so this may mean that creditors will not expect you to pay any extra under this clause if you have none.

Does your proposal guarantee a minimum dividend? if there is no minimum dividend I don't see how anyone can force you into paying extra into the IVA, your creditors may like you to but if there is no provision for this in the arrangement then you may not have to extend at all.

I have just been through this very issue and have had my equity clause removed in a variation meeting a few days ago. This was due to the fact I have no equity available.

Listen to Charco, a very helpful and knowledgeable poster, Charco's posts certainly assisted me - Thank you

FoggyBrain_2

What I find worrying here is the specific mention of a definite sum ---- this seems to show no intent to relate any sum due to the amount of equity, nor, indeed, seems concerned by the possibility of no or negative equity.

debtinfo

FoggyBrain wrote: »

What I find worrying here is the specific mention of a definite sum ---- this seems to show no intent to relate any sum due to the amount of equity, nor, indeed, seems concerned by the possibility of no or negative equity.

Exactly my thoughts, it doesent say a percentage of the equity it says an exact amount or 12 months more payments. 2 years that is proposed is obviously pushing beyond what is written in the agreement, i would put it to them that 1 year is fair 2 years is not