Asking for equity out of Parents home 18 months after IVA....

Kpowell911

Hello Guys, a round 8 years ago for various reasons, my Mum and Dad were in a sticky situation financially and Entered an IVA with Debt Free Direct.

The Total debt was around £50k I believe, and they came up with a payment plan that worked out at £500 for 60 months, thus paying around £30k back. They are now in their 60s, both working full time (which isn't sustainable but needs must), but there is equity in the house, which they kept through out this, although the mortgage is due to go till they are 72. The IVA ended in September 2018 and we thought that was the end of that. Please note, I said 2018 not 19. As far as they were aware this was the end of that.

Fast forward to fairly recently. Dad has had a letter/few missed calls from Apeture who appear to have taken over Debt Free Direct. They are now requesting he re mortgages or attempts to in order to release some equity to pay them some more. No figures have been discussed as weve been unable to contact them due to the offices being closed for COVID-19. We knew nothing about this, and do not recall signing anything suggesting this was the case back when the IVA started with debt free direct. We were unaware Debt Free Direct had been taken over..... A quick google suggests that this maybe common practice, but this process normally starts 6 months BEFORE the IVA has been completed, not 18 months after it has been completed? It appears Apeture have asked a company called 'Select' to take over this.

On Apertures site its quite clearly stated:

"Under the terms of your IVA, if you are a homeowner and have equity in your property, you may be required to re-mortgage six months before the end of the arrangement and pay the money released from the re-mortgage into your IVA."

It then goes on:

"Re-mortgaging to release equity to pay into your IVA is not restricted in the same way as taking out a new mortgage would be. However, it may still be difficult to find a mortgage company who will lend to you while you’re in an IVA.

If you can’t re-mortgage, or if it would be too expensive to do this, you may need to make extra monthly payments into your IVA, increasing the term by 12 months. You can also get a third party to provide money for this"

I cannot find anything in the original Debt Free Direct Paperwork to suggest this

Bit at a loss of what to do, my poor mum's worried sick, and can't really contact any one of CAB during the lock down

Anyone got any thoughts?

Thanks

sourcrates

Hi,

Yes it is standard practice in most IVA`s.

Debt Free Direct entered administration on 1 September 2017, and were bought by
Aperture Debt Solutions, shortly afterward.

The delay will have been caused by DFD`s demise and subsequent re-birth under aperture.

Try not to worry, its unlikley they will be able to re-mortgage, so could just be subject to a further year of payments, there is no harm in sending a formal written complaint to aperture venting your anger at the time delay, given the ages of your parents etc, yu can also ask them to accept all payments to date as full settlement of the account, or, if they can find a sum of cash from somewere, ask the to take that instead.

Your choices are flexible to some degree, don`t be afraid to negoatiate with them.

Kpowell911

Thank you for the reply. I've dug through their paper work, and can see there is a figure of £4700 floating around for equity release, however this was never discussed, but alas IS in the paperwork. It appears to have a date of Sept 2017 when it should have been paid, but we've heard nothing. Its looking very likely that by the time COVID-19 is over, its going to be nigh on 3 years late from the original 2017 payment date. 

I can completely understand that its just 'business as usual' for Aperture, but its such horrific timing that two people in their 60s, with underlying health conditions receive this 'news' during COVID outbreak, and theres no real way of sorting it at the moment?

IF the figure of £4700 is to be correct, and they want them to re mortgage, my concern is that they will use a 'specialist' who will have a horrendous APR and they will be forced to accept the new mortgage condition? IS there a limit to how much they can take. I think my Dad was doing a lot of overtime back then to cope with the £500 a month out going, and my mum is on a lower rate of pay, I'm not sure them extending the previous IVA agreement for 12 months is possible.

I do however appreciate that debt is debt and it needs paying back, but I genuinely feel they've gone from being behind and in debt to well known and to some extent trusted debtors (HSBC, Halifax, Nationwide) to some unknown (Aperture, Select and whoever these 'Mortgage Specialists) are. Pretty scary.

mwarby

You say it ended in 2018, did your parents ever get a completion certificate?

sourcrates

Worst case scenario is if they don’t like what’s been proposed, they stop paying altogether and the arrangement fails, they would still have options to pay back any remaining balance by informal means.

Bankruptcy won’t be sought, despite what you might of read.

Sometimes things have to be taken in hand, and they have the option to do that, if it’s the right thing for them to do. 

Kpowell911

mwarby said:

You say it ended in 2018, did your parents ever get a completion certificate?

Nope, until I looked into this, I didnt know it was a thing. 

mwarby

I would guess the £4700 is an estimate from the start of the IVA as to the amount of equity that could be released. Obviously this amount will change over time, as the property and mortgage/secured loan landscape changes. It's possible that the amount will be greater(until 100p in £ and all IVA fees are repaid) or less(including £0) than the estimate. Given the covid stuff  I can't see many banks being keen to lend

Kpowell911

mwarby said:

I would guess the £4700 is an estimate from the start of the IVA as to the amount of equity that could be released. Obviously this amount will change over time, as the property and mortgage/secured loan landscape changes. It's possible that the amount will be greater(until 100p in £ and all IVA fees are repaid) or less(including £0) than the estimate. Given the covid stuff  I can't see many banks being keen to lend

That concerning as there is more equity in the house now Id imagine. He attempted to release the equity to sort the debt back in 2012, but was unsuccessful, hence the IVA which appears to have been a mistake!

However, needs dealing with just a bit helpless at the minute with COVID

mwarby

Having equity and being able to release it are 2 different things

most IVAs only require that a certain level of effort be taken to release equity when it’s affordable and sensible to do so (there is a cost to doing so, not a lot of point in trying to release say £1k).

If the equity can’t be released it’s normal to have 1 year of extra repayments to compensate 

it’s also worth remembering that when the IVA was taken out it’s possible that your parents weren’t far from bankruptcy, had they been forced down that route they’d very likely have lost thier home