Help regards equity raise part of an IVA

Gone-fishing

I'm trying to help a family member who's in the fifth year of an IVA. They've made all required monthly payments since the start and are now being shunted into various mortgage/loan applications to raise a final amount for the creditors. I have only just found out about their IVA and had never heard of one before. From the research I've done it seems the equity raise part is normal for home owners, which they are. However there seems to be somewhat of a grey area as follows.

I gather initial attempts are made to re-mortgage but if these are unsuccessful, which I'm led to believe they generally are, then a secured loan is what they try and get people into. My family member looks to be in that second phase. Having already had a new mortgage application fail they're now trying to have him apply for a different loan type(?) with a higher interest rate.

The remaining debt owed is circa £15,000 and a cursory look at the new loan details see it would equate to them paying back just short of £40,000 (over 26 years). They've been told after two years they'd be able to re-jig the loan, shorten it, make overpayments, find a better rate etc. Although how that would work in practice I'm not sure as presumably their credit rating would be extremely poor.

I've read sometimes it's possible to refuse to go along with the secured loan and if it can be side stepped the IVA defaults to an extra year of monthly payments before the whole thing finished. That would equate to approximately £4,000 which is far better than the above figures and the timeframe to completion far better too. My question is what rights, if any, do they have to force the hand of the IVA provider into going the extra year route versus a whole new loan.

They have quite scant paperwork not helped by the initial IVA provider being taken over/changed to a different company midway through. This morning I've drafted them an email to the current company requesting copies of the original IVA proposal and agreement. I'm also going to have them start an advice request with StepChange.

Any extra advice or pointers would be really appreciated.

sourcrates

Hi,

Yes, IVA`s are mainly there for homeowners, but a quick glance at other threads on this forum tells you they are often mis-sold to a lot of non homeowners too.

In year 5 the options for homeowners are either a re-mortgage, or if that`s not possible, another year of payments, this loan option is a new kid on the block, which was not available when I did my IVA, so I can`t really comment on that, but its not a choice I would opt for.

You can be pro-active and insist on how you want to play this, you don`t have to follow what your IP tells you, you can choose which way to go here, they just have to be insistent.

fatbelly

So they're being offered an option that will cost them 40k to clear the remaining 15k.

Politely point this out and decline.

Let us know how they respond

https://debtcamel.co.uk/iva-secured-loan/
https://debtcamel.co.uk/ivas-complain-secured-loan/

Gone-fishing

Thanks for the replies. I agree with all that's been said. The current state of affairs seems immoral to me but sadly I think they may be legally contracted to continue embarking on this loan phase. I really do hope it can be swerved with some insistence and I'll certainly be trying that on their behalf.

I'll have a read through the linked pages which look promising and thanks again for your help.

Edit: I will update this thread as requested and hopefully it may go on to help others.
Edit 2: The links are great and have given me hope the pro-active approach suggested above may well yield positive results.