Help in the last year of our IVA, Cant Remortgage, Forced to sell?

alanpwebb

Hi there,

Be are in the last year of our IVA (both my partner and myself are in one) due to finish on 8th Aug

Being a little naive we were keen to get it sorted out and get our creditors off our back.

We are now in position that is scaring us. We have been sold that we have to re-mortgage or sell the house to pay the remainder. Re-mortgaging isn't an option, we only have 17% (Approx £35k) equity in our property meaning the mortgage is 83%, and we will not get a mortgage to raise the remaining. As for selling the house, well its just something we really don't want to do.

My Partner is paying back £1.00 in the pound and I am paying back £0.88 in the pound, but there will still be a short fall of approx £24000 (jointly) at the end of the 5 years.

Can any one help us out and give us any ideas where we can go from here or any other options.

The sleepless nights have now started again at the thought of losing our home!
Thanks Alan

Charco_2

Try not to panic - that's the first bit of advice!

It's generally agreed that the point of an IVA is to avoid losing your home. However you will have to at least try to attempt to release equity in your property.

This means you will have to try to remortgage - stand your ground if asked to sell though because this is not a reasonable option!

You will have to check the wording of your IVA proposal - who is your IVA with BTW?

The wording can be important because it can be the difference between how much you are offering to TRY to bring into the IVA and how much your are PROMISING to bring into the IVA.

The general standard is though that you:
1. Attempt to remortgage: this will require paper proof that you have applied for (and been rejected for) TWO remortgage applications - one generally isn't enough but sometimes it can be.
Then
2. You calculate the amount of equity you reasonably might have to release
(this means getting a valuation of your property - a drive by valuation or a valuation of a similar property that sold or is for sale in your area is generally enough)
Get a valuation and multiply it by 0.85 (this is because no mortgage company will lend you more than 85% of the value of your home... even 85% is overstating it but that is the general figure agreed. Subtract your current outstanding mortgage and this is the amount of equity you could theoretically relelase and would have to address for the IVA.
3. Can you address the equity? Remortgage might have failed but could a friend or family member help you out with a lump sum? (We should all be so lucky!)
Finally you might have to extend the IVA - Payplan often try to extend by two years but you shouldn't rush to agree to that. If you have no other way to address the equity then you could offer a one year extension - you make 12 more contributions at your current agreed rate and end in August 2012 instead of 2011. (This is generally much cheaper than remortgaging anyway!)

If you have no equity to release however (remember to calculate on 85% LTV) then you can insist that your IP puts forward a variation to your IVA to end the IVA in August as agreed without having to extend...

alanpwebb

Our IVA is with a company in Brighton Called Jeremy Knight. (not a very helpful company I must say!)

I have spoken to an estate agent and out house is worth approx £190 - £200k Our mortgage (interest only) is £162k this is a 85-83% LTV. Verbally we have been told there is no way we will get a re-mortgage based on this.

The wording on our agreement regarding this is as follows "Our House will be sold or re-mortgaged at the end of year 5 at which time sufficient funds will be raised as is necessary to ensure my creditors receive 100p in the pound(for my partner) and 80 p in the pound (for me)"

My Parents have offered us £12000 if we need it, but the amount that will still be out standing is approx £24000.(jointly)

Do you this an extension for another 12 months will be accepted. Our current monthly payments are £368 (jointly). If they would accept this in lieu of equity?

I know out IVA doesn't end till August, but would like to get this sorted.

Any further advise would be great.

dancingfairy

Hmm - I don't know but I'm sure Charco will come back to you as he is the man in the know so just giving this a wee bump for you.
df

Charco_2

I was ruminating on this one...

The wording of the original IVA doesn't leave a lot of scope unfortunatley. Not much wriggle room as it falls into the PROMISE category I mentioned above!

However!

You should now re-approach your creditors with a variation. Basically a "that was then, this is now" offer. You have maintained your repayments and due to circumstances beyond your control (recession) you are unable to release the equity required from your property. (You'll still have to show that you have tried to release the equity and that it was not possible... your variation is basically an instead-of offer... Instead of releasing equity you are will ing to offer ******)

It's this bit ****** which is tricky! ha ha

- If you offered a year extension you would pay in a further £4,400 or so.
- If you were forced to sell the house on paper you'd say you have £28k. (But knock off a chunk for a forced sale, some more for costs, relocation perhaps...) £12k from the forced sale of the property wouldn't be unlikely. (Coincidentally the same amount mum n dad offered you!)

But I wouldn't offer this!

You could offer the extension or you could offer a one off lump sum of £5/6k (thanks mum, thanks dad). Your creditors would see that you've made a reasonable effort and would be very likely to consider it.

So you now you just have to speak to your IP, Jeremy Knight. Don't let him disuade you from making an offer like this, he has a duty to put forward any reasonable offer you make!

alanpwebb

Thank you so very much. I am trying to arrange a meeting with the IP for Monday, although this is proving difficult as he hasn't to my emails and every time I call happens to be at lunch or in a meet and as yet have not received a call back!

I have printed you thread out and will take it with me as points to mention. Is there anything I can do if I don't feel they are acting our best interests?

Will let you know how we get on

alanpwebb

We have finally spoken to the IP (or rather his opo) and he has said basically 3 months before it's due to end get the house valued if there is no equity in the house then we might be able to extend for 1 or 2 more years. Or if the offer is still there from parents to make an offer of full settlement. But it will have to be a sensible offer for it does include fees for making the offer to the creditors. so they want to make even more money out of us!

I really don't feel that they are on our side. Any more suggestions or shall we just wait till May?

Charco_2

I wouldn't print this out.

Two reasons.

1. No IP would like that

and

2. You've mentioned that your parents might be willing to offer you £12k (but I think you should only go as high as £5k or £6k as your first offer to your creditors)

I 100% stand by the suggestions I've made here but it just looks better coming from you rather than you've gone behind your own IPs back to discuss it with another IVA company. Write the main points down in a notebook (which you can then use to take notes of what your IP says) and discuss it with him that way. No professional (i would imagine) would like the idea that their work is being second guessed or undermined. You can still arrive at the same conclusion - a variation of your proposal to end after five years with £5/6k lump sum offer in lieu of unrealisable equity or a one year extension.

Any reasonable IP will come to the same conclusion (although you can hint him in the right direction if needs be).

alanpwebb

OK, the situation just gets better! I have received an email from out IPs opo today and it has astounded us!

Having asked us for a rough figure of what we owe, it has come back that the total costs are £17400 (jointly) and that out debt has increased from the initial £51k to a whopping £63k. adding on the IPs costs this takes it to over £80000, when out inital debt was £51k. Can this be so?

This is the email received from the today:

"We have also attached an estimated breakdowns of the amount required to implement your Arrangements as at 24th January, which were discussed yesterday. There is a considerable shortfall in each case due to the difference in the total amount claimed by your creditors and the lower amounts shown in your statement of affairs, the costs of the Arrangements."

It just seems like we are hitting our head against a brick wall. None of this was explained to us in great depth, we were led to believe that all costs were to be paid by the creditors. We are also of the belief that some of the creditors have tried it on saying we owe more than we did originally, we could understand a difference of a couple of hundred quid, but £12000?

We are now both at the point of breaking and really don't know which way to turn?

dancingfairy

Gosh that's terrible for you. Hopefully Charco will explain what's what for you later but if they have broken any rules I'm sure you can report them to their governing body - doesn't help you though does it. I think I'd be sorely tempted to have a chat with one of the debt agencies about where you can go from here - hopefully Charco can straighten it out for you though.
Don't panic - at the end of the day it's only money and they can't throw you in prison.
df

dancingfairy

Hang on - I've had a thought - I believe you can buy your way out of an IVA - so you would have to repay all your debts, plus the IPs fees, plus some more charges(?) - perhaps this is what they have sent you - ie if you wanted to cancel the IVA this is what you would have to pay?
However this is not what you want - you want to know what would be needed to complete the IVA.
This is what it seems to be may have happened - I'm sure Charco will know more.
df