3 Years into IVA and worried

flemomika

Good Evening,

I am currently almost 3 1/2 years into a 5 year IVA.
I am finding the payments just about affordable albeit a struggle.
My concern is that at the end of month 60, the arrangement says I am liable for a 12.5k payment to settle off and conclude the IVA.

This was done on the basis that the then equity in my property was circa 25k and I jointly own half with my wife who is not in the arrangement.

My IP keeps pestering me to get an RX1 signed, as this was inadvertently ommitted at the beginning of the arrangment.

The problem is a) there is definitely no longer that sort of equity in my house and b) my wife will not sign any form agreeing to half of the equity (should there be any) being used in this way.

I am worried about what to do.

Do I force a default now on the IVA and go bankrupt, or do I deal with this issue at the end of the arrangement in the hopes that the 12.5k can be renegotiated with my creditors?

The Bankruptcy thing worries me to death because of losing my property?

Please can anyone help who has had a similar situation,or someone with knowledge of the circumstance.

Kindest Regards, and Thankyou for listening.

Foxy-Stoat_3

You should talk to the IP and advise that your house has little or no equity due to the current or future market. You may have to have the IVA extended for another 12 months to cover the short fall. If it was part of the "legal" agreement that you should have the RX1 form signed, then techically you are in breach of the agreement.

Its not worth failing after 36 months as the fees will wipe all the hard work you have done uptill now and if your other half is refusing to sign anything now, trying to explain the fact that the house may be lost if you go BR may not be a nice conversation to have either.

If there is little or no equity at the end of the IVA or if you are unable to get a re-mortgage to release equity (ie the bank will still want at least 25% equity in the property to agree a re-mortgage) then you will still have to make up the shortfall by paying another year.

Did it get explained to you at the start that the IVA can be extended if the equity wasnt available.?

debtinfo

Not all agreements are the same foxy, especially older ones, the OP thinks that it was a set amount in the agreement not part of the equity, in her other thread i have asked her to root out the agreement but no luck so far

FoggyBrain_2

Older IVA's often set a fixed figure for equity based on equity at the time of drafting, as at the time they were drafted the property market was strong and on the rise and everyone was pretty certain that the equity at the end of the term would be in excess of the figure requested.

Many IP's have successfully petitioned for a variation to bring the older proposals in line with current thinking, ie: if there is little or no equity mid year 4, then the IVA concludes on month 60. If there is more than £5000 equity then you have to try to re-mortgage to release that equity ( which you will not be able to do in today's market), so the IVA is extended by a further 12 months.