Relocating and Worried about IVA - would Bankruptcy be the same for us?

Maida

So, we were really under pressure to do something about our situation and the IVA seemed to be the best option at the time, but unfortunately we didn't shop around.

Our arrangement includes a second property which we were renting and receiving enough to pay the secured loan we took on that property. However our IVA company advised us to hand the property over to the bank so that the secured loan becomes unsecured and it therefore automatically added to the IVA. Which seemed to make sense at the time.

We also have another property which we live in, they allowed us to keep this, BUT the details of the IVA say that we have to remortgage 6 months before the end of the IVA. Leaving at least 15% equity and the monthly payment should not be more than 50%. If there is no equity then the IVA can be increased by up to 12 months. It says that if the amount is less than £5K (to be released), then then there would be no need to extend the term of the IVA.

So does this mean that we could end up tied to them for another year after the IVA is supposed to have ended? If this happened, at 5 yrs 6 months, would we need to remortgage again? I fee like we could be in this thing forever. Would bankruptcy be a better option since we are losing the other property anyway or is this better?

In terms of relocating, we want to do this in a couple of years but are worried about whether or not an IVA / bankruptcy will cause problems for us abroad when getting a mortgage etc.

Maida

Just to add, they said we are not to sell the house we live in without their permission - which is fine. But why are they asking us to sign the title deeds over to them? Is this even legal? makes me think something's not quite right.

judojub

Hi Maida.
It is a common clause in most proposals these days that in the final year of your IVA, if you have equity in your home then you must try to remortgage to release that equity. If there is equity in the home but a remortgage not possible (most likely) then the norm would be to extend your IVA for another 12 months. After this your IVA would conclude. They will not keep asking you to try and remortgage! You need to check your proposal and speak to your IP if necessary. In mine, if there is no equity or under 5k then the IVA will conclude after the 60 months.

As for relocating. You will most likely have had a restriction placed on your property throughout the term of your IVA. This simply means that you can't sell your property without your IP knowing about it as they will be interested in any equity. This restriction will be lifted once your IVA concludes. Your IVA will remain on your credit file for six years from the date of acceptance of your IVA. You would need to set about cleaning and rebuilding your credit file in order to obtain any kind of credit in the future.
Not altogether sure how you would stand with moving abroad. People have done it whilst in an IVA but you would need to speak to your IP about this!

Maida

Thank you for your response. If I wanted it to end early, for example I am a full time student and my husband is considering going back to University - could we do this even though they want us to remortgage in a few years?

judojub

How long have you been in your IVA Maida?
An IVA can be concluded early, this would normally happen by way of a third party offering you an amount to make a full and final offer. The offer would need to be as near to your original dividend as possible and you would normally need a fairly good reason for wanting to offer these funds, such as ill health, redundancy etc. If funds were made available via a third party then your IP would call another creditors meeting and it would then be down to the creditors as to whether or not they would accept the full and final offer.

judojub

Ooh just to add, the only other way your IVA would conclude early is if you managed to pay back the full amount of your debt plus fees. Remember that throughout the term of your IVA you will always owe the full amount of your debt.

Maida

Not very long unfortunately but there are a lot of changes happening right now - including pregnancy. We haven't informed the IP yet, but we will as soon as we figure out how to deal with things. Most likely we will not be able to keep up payments and we are considering offering some money to settle from family. How does this work? Is the IP obliged to take our offer to the creditors, regardless of the amount? We are offering just under 50% of the actual amount we have to pay and at the time I think we would have paid just over 13 months or so.

Do they have to vote and if they are voting, is it 75% of the total number of creditors or the actual amount? Looking at our IVA we had 24 creditors - many of them are small amounts and votes came from the Insolvency exchange even though they were through different companies (HBOS, RBS etc), only one did not vote and another refused our offer, those had different addresses and were not from the insolvency exchange (I don't know if this makes any sense). We really think settling might be the best way forward - I also have major expenses for Uni next year which we warned the IP about but he just said we would review the payments etc. I am not sure if it will work and my husband's University is overseas so we don't think we will afford the payments.