IVA F&F Advice Needed

neilo1978

I started my IVA in 2009 and it was *amazing* how good it felt to be able to sleep without the constant worry of people knocking on the door.

However, circumstances have changed for me, and I am keen to end my IVA early with a F&F offer, with funds coming from my girlfriend. The threat of redundancy is becoming more real and I would only get statutory redundancy money. The logic is that once the F&F is accepted, I would be able to sell my property (that I currently rent out) that has some equity in it, to then repay my girlfriend the funds she used.

My property was included in my IVA, with an approx. 11k of equity. I have 60k outstanding on my mortgage. An identical flat has just gone up for sale for £94k. I think realistically, 80k could be expected for a quick sale.

So my questions are:
1. Is there a flaw in my thinking? I have been told (by a flaky source) that 12 months after the F&F is accepted, any money can be clawed back into the IVA. Is this correct?
2. Would the fact that I live with my girlfriend be an issue? I basically pay her rent so we dont have any joint accounts or anything. I don’t want to create any kind of financial tie between us that will have an impact on her. None of my financial issues are anything to do with her.
3. Would there be another option of selling my property and using the proceeds to settle my IVA myself?

Thanks in advance.

techno1029

This could be a sticky one. I am no expert but ususally in the last year of IVA your IP would expect you to try to release equity in your home anyway. I was lucky ( or unlucky) that the equity in my home was mimimal so was not worth looking into. I would mention though that if your girlfriend does offer the money it is a gift and 'you would not be paying her back!!!!' cough cough...think a lots depends on how much your iva is and how much you have already paid....its a numbers game at the end of the day. Good luck.

neilo1978

Thanks for the response techno

I don't suppose you, or any other lurkers, know about the 12 month thing? I just want to make sure that *if* we go ahead as planned, I don't end up worse off.

Any words of wisdom or experience would be greatly appreciated.

UpToMyNeckInIt

Hi neilo1978,

Tricky one this, and you will need to run it past your IP for a definitive answer.

To answer your questions, in my opinion (as an IVA customer & property owner):

1. Once your F&F is accepted AND once you have your completion cert. I believe any funds released are yours to keep.

2. Depends what you mean by an 'issue'. If you have made her address as your official address, in time it is possible that your credit file will become 'associated' with hers. This may then impact on her abaility to get credit etc.

3. Other options: Well there are many. Do you have a 'protocol compliant IVA? (contains the provision to attempt equity release up to 85% LTV, with option to extend IVA for 12 Months if you cannot get a remortgage). Personally, I would suggest keeping your flat as your address because you are unlikely to be able to get a remortgage for any sort of equity release into the IVA anyway.

Also, your IP may well take the view that, as you have no Mortgage to pay and are splitting costs living with your girlfriend, that you can increase IVA payments (AND nab any released equity from the property sale, dependant upon the level of debt & IP fees).

Furthermore, if you sell-up, pay any released equity into your IVA etc, and then (sorry to put a downer on things), what if you split with your girlfriend - where does that leave you? Homeless? ...Then try passing a credit check when you want to rent - you may struggle.

Just some things to consider.

Good luck.

neilo1978

Thanks for the reply UpToMyNeckInIt

My property is 100 miles away and rented out (with the permission of my mortgage providers and knowledge of my IP) so my girlfriends address is also my address. I pay her rent each month so as far as finances are concerned, she is my landlady. When it comes to money, I do all I can to keep everything separate.

My IVA does include equity in my property as you described.

Forums like this are extremely valuable pools of info/opinions and views for people like me, that don't really have anyone with whom they can discuss an IVA and all that comes with it. Having to resort to an IVA isn't something I am proud of so I don't really have anyone to turn to bounce ideas off. Well, no-one that understands it from experience. So if anyone else has anything else to chip in, that would be greatly appreciated.