IVA & Equity Release: Remortgage v Secured Loan

Depth_Charge

UpToMyNeckInIt wrote: »

On a lighter note, I wonder if us homeowners in IVAs could sabotage any property valuation, to make ourselves less likely to be accepted for such a rip-off product nearing Month 54. (Assuming you have enough equity (and especially if you are borderline), and a ruthless IP).

An obvious one is to make you place look as undesirable as possible to a potential buyer, adversely affecting any valuation. I got chatting to an Estate Agent (next door neighbours sold up last Year), and he reckons it’s amazing how an untidy / overgrown garden and messy house can apparently affect a house price by £thousands. (Very relevant – next door’s place was a tip).

This got me thinking: Even removing kitchen cupboard doors/draw fronts and hiding them in the loft for re-fitment later (maybe deliberately re-hanging one or two, leaving them hanging unevenly off the hinges). My guess is that this will fool the average 20-something-year-old estate agent into thinking 'new kitchen required', and valuing downwards accordingly. Same applies for removing bath panels, and letting bathroom cleanliness deteriorate to 'student house' standards. (Not nice I know, but a means to an end).

Anyone with children and a screwdriver should have no difficulty in achieving the above combination!!! Just how disgusting you want the place to get is entirely up to what you can stomach.

All of the above measures are of course easily put right for nothing after you are out of danger.

Also, for example and theoretically, I suppose you could take out a SMALL as possible payday loan (say £200-£500 – make sure you have permission from your IP to use the £500 credit clause), then be 'accidentally on purpose' a day or two late paying back an instalment or two, racking up some more nice red recent crosses on your credit file.

Even sub-prime lenders have lending criteria, and many may consider you ineligible for their product if you have 'missed a loan/credit card payment is the previous 6 Months' (to quote one provider), regardless of how much equity you have.

OK, so you rack up a few quid in penalty fees/interest, but still preferable to securing credit card interest rates (or a new 8%apr sub-prime mortgage) against your property.

Then your IVA provider would have no option but to just extend the IVA for another Year instead (or conclude it at Year 5 if you've done a really good job in trashing the place!!!).

Not wishing to make light of the subject, but just a thought or two.

Rant over for today!

Hi

Very interesting read.

I know its a rant and no doubt tongue in cheek.....

Buts its not the answer:)

FiatFan_2

Depth_Charge wrote: »

Hi

The point of the cost of maintaining the home is hugely relevant in an IVA or any other debt solution for that matter as is motor vehicles.

Health, safety and a right to a life have to be paramount especially where children are concerned.

Its ridiculous to have concerns on these type of issues where someone has entered a debt solution be it formal aor informal, absolutely ridiculous and indefensible in my opinion.

Just my takes again

I agree with you, where UpToMyNeckInIt is suggesting manipulating the house valuation by minor vandalism, I'm suggestion your house may look run down anyway due to lack of funds to repair/maintain things.

Depth_Charge

UpToMyNeckInIt wrote: »

The whole 'profit' argument is a valid point here:

IP's are supposed to be 'honest brokers' - acting in both the customer's & credotor's interests. I don't like the idea of IP's "creaming off" their 15% of 'additional realisations', but it is a clause in many IVA contracts. It is an insidious position for IP's to be put in by the creditors. It is open to abuse by the unscrupulous and greedy (minority I'm sure), within the IP profession.

The bottom line in all of this is that the IP should be enforcing the proposal as it was signed up to. If the equity clause specifies re-mortgage or 12 months then that is what happens. If it just says, for instance, introduce available equity (by any means), then secured lending or the sale of body parts will be expected --- and, more importantly, the debtor will be aware of such a provision and prepared for it!!!

As DC touched upon: The whole point of an IVA is that there should be an end point (as is the case I'm sure for the majority). However, looks like some IVA customers may ultimately end up turning unsecured debt into secured debt, and then you are saddled with it.

Whilst I hope it would not happen, if I thought that come IVA Year 4 (time to get a remortgage), my IP would be likely to say:

"You have been unable to get a Remortgage and although I could extend your IVA for 12 months where you will then be Debt free as per your contract I thought I would do your creditors a massive favour so I've found you a secured loan with a sub prime lender at 15% apr and you will now be Debt Free in 10-15 Years".

I would, in addition to considering legal action for 'breach of contract', and making formal complaints, do everything in my power to make sure I do not qualify even for the most generous of lenders.

Being self-employed, I am sure I can engineer a poor trading year etc. The employees amongst you could ease up on the overtime, reducing your income. Small price to pay if you then get rejected for the loans, saving thousands of pounds in interest and further payments.

However, I suppose the balancing argument to all this, is that the resulting additional monthly payment is capped at 50% of your current IVA monthly payment (with any remaining IVA payments reduced by the same amount), making it 'affordable' - despite the high 'credit Card' interest rates that may apply to the secured loan.

Very concerning indeed: If I wanted to enter an agreement with my creditors where the goalposts can be shifted, and it would take 15-20 Years to pay off my debt, I'd have gone for a DMP!!!

Those companies already eyeing up the 'mis-sold IVA' claims market, are going to be busy in a few years me thinks.

Hi

Some good and interesting stuff in here I will give you that, very good and a touch clever in parts too.

You never know, the infamous and now defunct 'IVA Council' and the like may be plotting a return, some say these type of outfits never really went away.

They were never my cup of tea mind, fly by nights just interested in a quick buck never go down well with me.

My opinions

Depth_Charge

milliemonster wrote: »

Dc I agree wholeheartedly with your post, we lost all our equity and at the start of our iva our mortgage equalled the value of our property, I'm keeping everything crossed it stays that way as having taken out secured loans in the past that have always started off at a fairly reasonable interest rate they have only ever gone one way, up and up irrespective of what happened to base rates/ labor, they would then just use the excuse 'market forces' I would be incredibly uncomfortable if I was forced to take out a sub prime secured loan to release equity in year 5 that could potentially increase our debt over the coming decades and potentially end up causing unaffordibility anyway.

If this was told to me at the start that a secured a loan would have been expected, I would not have gone down this route, I took an iva to become debt free in 5 yrs and not to be further saddled with more debt forever

Hi milliemonster

Thank you

Interesting post

Best Regards

UpToMyNeckInIt

The companies I was thinking of were law firms - hopefully not a bunch of cowboys either.

(I believe the IVCC were taken to the cleaners to the tune of £250,000 by one IP, for being defamatory and claiming that they were a 'non-profit' organsiation, whilst charging £1,000 to IVA customers for the privilege of going bankrupt. Not my cup of tea either).

We'll see what transpires I suppose.

Depth_Charge

UpToMyNeckInIt wrote: »

The companies I was thinking of were law firms - hopefully not a bunch of cowboys either.

(I believe the IVCC were taken to the cleaners to the tune of £250,000 by one IP, for being defamatory and claiming that they were a 'non-profit' organsiation, whilst charging £1,000 to IVA customers for the privilege of going bankrupt. Not my cup of tea either).

We'll see what transpires I suppose.

Hi

Yes, I think it went something like that, it all happened years ago now, surprised you are up on the subject of the IVA Council:)

I came across many of their 'flyer' letters and a few more similar 'outfits'including one such that was hoping to charge approx £3000 to make someone B/R if I remember correctly - I did it for free

Hell of a lot of people used them and the like and went from IVA to B/R though.

Did the money go to charity, I cant quite remember now:)?

Like you say, we will see what transpires and what will be...will be.

I heard a snippet early today that if true could make things interesting in the long run

My take again