IVA and 85% Equity Worry

Cestrian100

Hi,

I am currently living with my partner and I personally have had a mortgage approved to purchase a house. We are using the equity from the sale of my partners property - however, she is in an IVA and she has real concerns about having her property unlocked for the sale.

She owed £25,000 and has been paying £100 per month for 3 years. The equity in her property is just short of £57,000. She has been informed recently by the IVA people that she still owes £25,000 as all her payments have been their fees and nothing to the creditors. However she is willing to pay back the £25,000 in full from the sale of the house but she is worried about them taking 85% of her equity.

Now I believe that the 85% thing is a maximum percentage they can take, and is not something they are entitled to, I could be wrong, but 85% of £57k is £48,500 and almost double what she owes. Surely that is not right.

Can anyone put our mind at rest here with this situation, has anyone been in a similar situation?

We require £18,000 of that equity to put down as a deposit, and we believe we are being fair by paying back the debt, as we have also read ways of not paying that all back. Should we be punished for being morally correct?

Any advice would be hugely appreciated.

sourcrates

I would be very careful here, it may be productive to run this past national Debtline.

May be better to allow the IVA to fail, and then settle later.

Cestrian100

Well she has a solicitor speaking to them as she is trying to get them to release the house so we can exchange on the new one.

It seems very unreasonable to expect double of what she originally owed. I went through an IVA myself some years back and I had no such issue - but then I didn't own property at the time. It seems and correct me if I am wrong, that this IVA company are taking advantage of home owners. Paying back a debt is fine, paying a fee to some company to essentially correspond with creditors is stretching fine, but can be accepted, but taking money which does not belong to them is not fine.

I'll advise her in the morning to speak with her solicitor again and hopefully reason can be met.

We've been through an awful lot to get the house we want and it would be devastating if this hurdle is the one that prevents us.

Thanks for replying.

Cestrian100

Solicitors never came back to us today.

But I guess we are just looking for confirmation one way or the other.

I find it so hard to believe that if you owe £25k and your equity is £57k they can't take 85% of £57k, they can only take what you owe, bare in mind she has already paid 3 years worth of £100 per month.

DorisTrousers

DO NOT let the IVA fail, creditors can Bankrupt her.

She will be expected to repay the full £25k, plus statutory interest at 8% p.a. (unless excluded at the beginning) plus all I.P. costs incurred so far.

Back of a fag packet calculations put that at £31,500 for the creditors, plus I.P. fees, probably another £3,500 or so.

That is what she signed for, and you are unlikely to get any solicitor that would win any argument to the contrary, but it does look as if you will probably still have enough for your plan.

PrettyKittyKat

The 85% loan to value to relative to the debts owed. In an IVA you do not repay more than 100% of your debts plus the fees. Your partner needs to ring her IVA company and ask for the 100p the the £ figure (ie how much more needs to be repaid to pay back everything). She will then need to arrange for this amount of money to come from the sale to pay the iva before any money is due to her. She needs to discuss with her IvA company how this will be done so they will consent to the property being sold - it may be that her solicitors needs to confirm in writing that they will send the required amount via bacs to the IVA company then the remainder to your partner.

Do not let this IVA fail, the creditors willbe advised that she was selling her property and receiving a large amount of equity (as presumably they know if you have been trying to get them to release their interest).

immoral_angeluk

The question here is what is specified in her IVA agreement, and what is her Insolvency Practitioner saying? Speculation is a bad idea, so don't presume anything. Speak to her insolvency practitioner.