Final Month of IVA - Dilemma

mulder68

Hi

I am new to this site. Found it whilst looking for advice about my IVA.

My IVA started in August 2006 which means this month is my five year anniversary. I had a bit of a mix up relating to bonus payments received from work a couple of years ago which means I need to make two additional payments into my IVA because I didn't declare the bonus at the time it was made to me. Therefore my IVA is due to cease in October.

However, there is a clause in my IVA that says I must release equity from my property in the final year otherwise I may be asked to continue monthly payments for a further 12 months. As you will all no doubt know, obtaining a remortgage whilst in an IVA is extremely difficult, in fact it is impossible.

My IP (Debt Free Direct) asked for a mortgage statement and have now asked if it is alright for them to put a third party in touch with me to see if they can assist. I agreed.

The third party is a company called 'The Select Partnership' and they have said they could provide me with a secured loan of £8,000 (£10,000 including fee's) which could be used as a full and final settlement to pay of pay creditiors and end my IVA. The repayments on the loan would be £173 per month for 10 years. Yes, 10 years! I would therefore be paying back a total of £20,760! Obviously I don't have to accept this loan but I am not sure if it is a good idea to take it or not? One thing that did concern me is that the Select Partnerhip knew how much my original debt was but they quoted me as having paid off only £8K of the debt. I pointed out this was clearly wrong but it makes me question a lot of things.

Some background on my IVA.

Initial debt £50,938
Proposed dividend 50p in the pound. Plus equity release in final year.
Current monthly payment £568

Total payments to date. £25,490 plus two future payments in September and October. £26,626

So my options are take the loan from 'The Select Partnership' and settle my IVA (assuming the creditors will accept the 8K F&F) then perhaps in a year or two from now, I can genuinely remortgage and payback the loan out of the equity release. This would give me £395 additional income per month but would mean I have an outstanding loan.

Continue to pay £568 to my IP for a further 12 months which will complete my IVA and leave me debt free in 12 months.

I am also in a position at work at the moment where my job is in the balance. As far as I am aware my job is secure but somebody else has been recruited to take up a lot of my responsibility. This is affecting me pretty badly as I feel like I am being managed out of the business and there could be a case for constructive dismissal. It depends on how I proceed. Obviosuly if I were to lose my job for any reason I couldn't make either of the monthly payments to the loan or the IVA. I think I would have less problems were I still in the IVA than having a secured loan over my head.

Sorry for the long post but I am really struggling to make any decision and hope somebody can give me some advice?

Cheers

Mulder

jonjamie1970

I dont know anything about IVA's or Bankruptcy etc but I do know that they cannot force you to take a loan where you are paying but a massive interest rate and effectively setting yourself back another ten years. Particularly if you are worried about your job it would seem madness. You need to discuss the remortgaging of your property with your advisors.

dancingfairy

I can't see what real benefits the secured loan would give you? it's more than you would pay if you paid an extra year AND it's secured on the house AND it's tying you in debt for 10 years - it seems madness.
How much equity is there in your house and is it solely owned by you or is it jointly owned by a partner? If there is little or no equity then you wouldn't need to worry about an extra years payments anyway. You only have to pay a proportion of the equity especially if it's shared with someone else.
I've got a feeling that it's something like a LTV of 80 -85% and therefore you owe the difference between your current mortgage and 80-85% of the house, so if your house was worth 100k and you had a 50k mortgage then you would have in theory 30 -35k equity, If the house was jointly owned then your share would be half of that so 15 -17.5k. I'm not 100% sure how it's all worked out but my understanding is that it is worked out something like the above.
I'm sure if you post more details about the house value, whether it's jointly owned and the mortgage value some kind person will tell you what kind of equity you will be looking at. You can then make a more sensible decision as to whether an extra year of payments would be a fair proposal or not. If there's is very, very little equity or none then as far as I am aware your IVA would end, if there is some equity you would propose 1 more year. Modern IVA's have a clause about remortgaging and what to do if there is no equity etc. Some IPs are therefore using this as a basis to apply to older IVA's where some people signed up to a certain amount of equity release. What was your proposal - was it to provider a certain amount of equity or just to attempt to remortgage or what?
df

dancingfairy

I presume also that if you did lose your job then you could use the redundancy money to try and negotiate a fair end to the IVA? It would be worth speaking to your IP about your concerns in this area as well.
Oh and make sure it is actually someone senior who knows what's what and not some juinor person trying to fob you off.
Best of Luck
df

mulder68

Hi thanks for the replies.

My mortgage is 100% mine and currently stands at 61K. The value of the property based on the recent purchase price of the apartment property next door is £103K

Therefore I theoretically have £42K equity in the property. Which I would release if I could.

spaceman5

mulder68 wrote: »

Hi

I am new to this site. Found it whilst looking for advice about my IVA.

My IVA started in August 2006 which means this month is my five year anniversary. I had a bit of a mix up relating to bonus payments received from work a couple of years ago which means I need to make two additional payments into my IVA because I didn't declare the bonus at the time it was made to me. Therefore my IVA is due to cease in October.

However, there is a clause in my IVA that says I must release equity from my property in the final year otherwise I may be asked to continue monthly payments for a further 12 months. As you will all no doubt know, obtaining a remortgage whilst in an IVA is extremely difficult, in fact it is impossible.

My IP (Debt Free Direct) asked for a mortgage statement and have now asked if it is alright for them to put a third party in touch with me to see if they can assist. I agreed.

The third party is a company called 'The Select Partnership' and they have said they could provide me with a secured loan of £8,000 (£10,000 including fee's) which could be used as a full and final settlement to pay of pay creditiors and end my IVA. The repayments on the loan would be £173 per month for 10 years. Yes, 10 years! I would therefore be paying back a total of £20,760! Obviously I don't have to accept this loan but I am not sure if it is a good idea to take it or not? One thing that did concern me is that the Select Partnerhip knew how much my original debt was but they quoted me as having paid off only £8K of the debt. I pointed out this was clearly wrong but it makes me question a lot of things.

Some background on my IVA.

Initial debt £50,938
Proposed dividend 50p in the pound. Plus equity release in final year.
Current monthly payment £568

Total payments to date. £25,490 plus two future payments in September and October. £26,626

So my options are take the loan from 'The Select Partnership' and settle my IVA (assuming the creditors will accept the 8K F&F) then perhaps in a year or two from now, I can genuinely remortgage and payback the loan out of the equity release. This would give me £395 additional income per month but would mean I have an outstanding loan.

Continue to pay £568 to my IP for a further 12 months which will complete my IVA and leave me debt free in 12 months.

I am also in a position at work at the moment where my job is in the balance. As far as I am aware my job is secure but somebody else has been recruited to take up a lot of my responsibility. This is affecting me pretty badly as I feel like I am being managed out of the business and there could be a case for constructive dismissal. It depends on how I proceed. Obviosuly if I were to lose my job for any reason I couldn't make either of the monthly payments to the loan or the IVA. I think I would have less problems were I still in the IVA than having a secured loan over my head.

Sorry for the long post but I am really struggling to make any decision and hope somebody can give me some advice?

Cheers

Mulder

which works out to be £6816, which is a fair bit less than the £8000 this company are saying it will take to make a F & F offer, who in their right mind would agree to something like that, what would you gain, except your pocket being nearly £1200 lighter, it wont clear up you credit file any quicker, i would tell these pile of shysters to do one:mad:

kns_2

Why have they waited until a month before your IVA ends to do this.:eek:
Surely they should of mentioned this to you months ago

mulder68

Hi again

well I have been on the phone to Debt Free Direct this morning with reagrds my IVA.

In a nutshell they told me this.

Original proposal was to pay 44p in the pound back to creditors, this was taking into account an £8k equity release in year 5.

Original Debt £51,000
44p in the pound would return £22,400

Paid to end of IVA - November 2011 £25,721
less IP fees £10,818

Total paid £14,903

Shortfall to proposal £22,400 - £14,903 = £7,537

This is why DFD say I need to make a F&F settlement offer of £8,000

I said I was reluctant to put myself in a position of owing a 10 year loan and they told me basically that my creditors probably wouldn't accept a further years payments at £568 (£6,816) which will take a year to receive when they are aware I have access to an £8,000 loan which they would get immediately.

DFD also explained that the Select Partnership who would be providing the loan would seek to find me a mortgage product once my IVA has been settled that would be at a better rate than if I were to be offered a remortgage whislt in the IVA.

Apparently this is all designed to help me and my situation. Take the secured loan now, once the IVA is settled, remortgage at a preferential rate and pay off the loan.

It seems I don't have much of an option if my creditors are unlikely to accept an additonal 12 months payments.

Any advice would be welcome.

Thanks

FoggyBrain_2

First comment is "Sh*t, those fees are high !" I have a simialr debt and dividend and my fees work out at £1850 nominee fee plus £3996 supervisors fee. Total £5846.

Is there any way you could lay your hands on £8K ( kind relative ?). You could pay them back at the rate you are paying into your IVA and it will only take a few months more than a 12 month extension on the IVA.

I would imagine, also, but could be wrong, that DFD are getting a princely commission too ... maybe they could knock that off the fee they are charging you.

mulder68

I agree, those fees are high

made up as follows

Nominees Fees - £2,500
Supervisors Fees - £5,825
Office Disbursement - £533
VAT - £1490
Future Claims - £470

I wish I did have a friend or somebody who could lend me the 8K but unfortunately I don't.

I think my only option is the secured loan

notmyrealusername

As far as I know the creditors have no option but to accept the year extension if you cannot release the equity via re-mortgage. A secured loan is not a re-mortage, it sounds like DFD are giving dodgy advice there - I can't believe you're contemplating taking out a 10 year loan after 5 years in an IVA :eek:

Check your paperwork for the wording on equity release. Also try asking the Q here http://iva.co.uk/forum/ They are very knowledgable and many IP's post on there too so can give you an accurate answer.