Iva / citizens advise

miaoww

Hi, 
I currently have an iva with step change but my son has just left school and this going to have a massive impact on my payments as my income has reduced with a job change also, but now I've no idea how much impact it will gave on child benifit and tax credits. I would like to try to remortgage to a better rate and clear the iva if possible - can this even  be done?
I don't have a local citizens advise centre - do they do a live chat option or do I just need to call them? 

mwarby

If your circumstances change you should be redoing and income and expenditure with step change to work out what you can afford.

Most IVA agreements ask you to remortgage at 5 year point to raise money towards debts, so an offer to do that to clear the IVA won’t be very attractive. You also need to consider the affordability of a bigger mortgage 

I would discuss with stepchange first, and then seek further advice elsewhere if you can’t reach a satisfactory agreement with stepchange

thevdm

Technically you can make a full and final offer to clear an IVA, if you were to have such an offer accepted then you could re-mortgage to pay it. As it'd be a full and final settlement you wouldn't be required to re-mortgage at the 5 year mark. I'd have a good think about how affordable it would be though as you don't want to get out of the IVA and then end up in a different debt situation which may force you to go bankrupt as the house would likely be lost in this situation.

mwarby

Miaoww how long does your IVA have left to run ? 

Generally the creditors would be looking for the number of payments left x monthly payment, depending on how much equity you have/they think you have they’ll be looking for something of that. There’s no guarantee that an offer would be accepted, it comes down to whether the creditors feel it’s a better deal for them

As your income and expenditure have changed you need to get this reaccessed, so that the offer is based on affordable monthly payments not none affordable ones. 

I think it would also help if you knew you could remortgage, as your up and creditors will take a full and final much more seriously if you have secured the lump sum. Many get their lump sum from family which is attractive as it’s both secure and new money(ie it’s not something they could get anyway if they let IVA run)

sourcrates

Your son leaving school, and the resultant drop in tax credits, was something that should have been planned for, the change of job perhaps not so predictable, there is a certain amount of leeway your IP can give you in terms of reducing payments, but any shortfall must be made up usually by extending the arrangement.

If the your new budget requires you to make a permanent reduction in the amount you pay, then a creditors meeting must be called in order to vote on the new proposal.

Unsure if a re-mortgage can be applied for at the stage you are at, you need to speak to your IP about this.

IVA`s are usually only good for people who have a property to protect, and also have a stable income, otherwise this is one of the problems you encounter.

mwarby

I’m not sure it true that a shortfall will always be made up, I’d imagine if due to overspending or poor budgeting the shortfall may need to be made good.Certainly the IP normally has a condition which allows the to vary by 10% or so.

If it needs to go to a meeting of creditors, the creditors don’t have to approve, so proposal has to be good, but there are rare instances were an IVA is completed based on payments to date(if circumstances have changed so much that there no prospects of being able to continue payments). It all depends on what can reasonably be offered vs failing IVA and going bankrupt