IVA questions...

Mrs_Madrigal

Hi everyone, newbie here!

My partner and I are currently in joint IVA. Here are the details -

Total owed to unsecured creditors when proposal accepted: £28,000
Offer of payment: 60 x £210.00, commenced Jan 2011.
We are now month 41 into the IVA and are completely up-to-date with our payments.

Question - If we were in a position to borrow money from family or friends what are the chances our creditors would accept an offer of £4000 now in an attempt to completely pay off the IVA? This is roughly the amount still left to be paid by way of monthly contributions.

If our offer is not accepted our thoughts are turning to the procedure regarding valuation of our property to assess if there is any available equity. In recent months houses close to ours have been selling for around £100,000, and we have just received our annual mortgage statement from our provider showing a current balance owing of just under £65,000.

We have been informed by our IP any re-mortgage will be based on 85% loan to value. So taking this into account, and assuming we are at month 54 now, the example calculation they have given us is as follows:

Value of property- £100,000
85% loan to value- £85,000
Mortgage Redemption- £65,000
Equity- £20,000

Based on the above example, we would be required to re-mortgage for £20,000. Question - Is this correct?

We are also considering selling our house and moving into the rental market. Our IP have told us that if we go ahead any equity released (currently £35,000) would be expected into the arrangement as this is realising the asset. Question - is this also correct?


Any advise/suggestions would be much appreciated.


Anna

Anondebtadvisor

If that is what it says in your IVA proposal it will be correct. Do you have a copy of the proposal and chairmans report?

You should get your property valued on a "forced sale basis" not market value and this should bring your equity down considerably.

longtermplanner

Mrs_Madrigal wrote: »

Question - If we were in a position to borrow money from family or friends what are the chances our creditors would accept an offer of £4000 now in an attempt to completely pay off the IVA? This is roughly the amount still left to be paid by way of monthly contributions.

Unlikely because this would be ignoring the equity issue.

Mrs_Madrigal wrote: »

We have been informed by our IP any re-mortgage will be based on 85% loan to value. So taking this into account, and assuming we are at month 54 now, the example calculation they have given us is as follows:

Value of property- £100,000
85% loan to value- £85,000
Mortgage Redemption- £65,000
Equity- £20,000

Based on the above example, we would be required to re-mortgage for £20,000. Question - Is this correct?

It doesn't sound wrong, but as anondebtadviser says check your T&C, they really can vary! And is the 100k optimistic?

We are also considering selling our house and moving into the rental market. Our IP have told us that if we go ahead any equity released (currently £35,000) would be expected into the arrangement as this is realising the asset. Question - is this also correct?

It's not wrong, however it isn't the full picture. You can't pay off more than the total origianl debt + IVA fees. You have paid c £8400 to date, Has there been any PPI reclaimed?

Mrs_Madrigal

Hello Anondebtadvisor and longtermplanner - thank you very much for your replies.

As well as the £8000+ which we have paid back in instalments our most recent IVA annual report (dated 29/01/14) mentions funds of £6582.17 have been received from various PPI insurance refunds.

I understand the PPI recovery company would take their cut from what they managed to get back, plus there would be IP fees etc but if we did manage to sell our house for £100,000 taking all of the equity - £35,000 - did seem too much?


Do you agree?

UpToMyNeckInIt

Hi Mrs M,

Some great advice there.

Is there any particular reason you want to end the IVA early rather than letting it run its course?

as the others have implied: You will usually need a good reason (like impending, significant drop in household income) for a full & final offer to be considered.

Why do you want to sell the house? That is a huge decision, and my first thought is that in an apparently National 'booming' housing market, you might want to further consider the long-term implications. Once you are off the property ladder, it will be mighty difficult to get back onto it.

You should not worry about equity release: Read the wording of your IVA: Most modern arrangements require you to 'attempt' equity release via remortgage.

If you cannot get a remortgage, your IVA will be extended for another 12-Months. Based on customer accounts I have read on the various forums, this seems to be what happens in the vast majority of cases. (Unless you are with DFD of course, who will probably try pushing a secured loan on you).

Good luck whatever you decide to do.

Mrs_Madrigal

Hello UpToMyNeckInIt - thank you for your post.

It's great there are so many people willing to help with our queries.

Both my partner and I are in our mid-fifties with no one to leave our house to when the time comes. It's an old house in need of update/repair which we are unable to afford while paying off the IVA. As things stand right now we have about 12 years left to pay on the mortgage, but for roughly the same monthly amount we could rent a much more modern property within walking distance of work. There wouldn't be any major repair bills to worry about either - just pay the rent each month.

Any equity we do receive from the sale of our house would sit in the bank in case of a 'rainy day'.

That's why we are rather concerned that according to our IP our creditors would take ALL the equity if we did sell - leaving us with nothing from the sale.

I have queried again the amount of equity we can expect our creditors to take, taking into account what we have paid back + PPI refunds - IVA fees with our IP, but have yet to hear back. As soon as I do I'll post their response.

Thanks again,

Anna

UpToMyNeckInIt

...I see your logic now.

I think, if the IP is going to take all the sale proceeds anyway, if I were in your situation, I would try to 'grin and bear it' until the IVA was repaid. (Of course, I don't know what property conditions you are having to endure, so that may be easier said than done).

Chances are, that you will be unsuccessful in equity release, so your IVA will most probably be extended by 12-Months instead.

That takes you to 6-years after the start of the IVA, at which point your credit file recovers. This in turn makes renting much easier when the agent/landlord wants to credit check you.

You should then be able to sell up, and hopefully do so with a little more equity than you have now.

All the best.