Couple of IVA Questions

ByzantineByron

Hi All,

Will keep this short, I've been in an IVA for 2 years now (3rd year will commence next month after annual review). So far, so good. IVA was right due to exceedingly high debts and needing to keep my home but I have a couple of questions;

• I understand that I can only remortgage with the current lender, how long do I have to wait after the IVA ends to mortgage with other lenders?
• Most of my debts have been sold off to other companies, for what I assume to be lower amounts than the original debts, if I cancelled the IVA could I then engage those lenders to repay the lower amounts under a DMP?
• Finally, my IVA provider has called to clarify some extra info needed and it's been discovered there was no mention in the proposal form that after the 5 years it may be extended by 12 months if I cannot use equity release. They are advising this omission is in error and I would still be bound by this, presume I can tell them to sling their hook because it's not in the proposal form that I agreed to?

fatbelly

1. The entry on your credit file disappears 6 years after the IVA started, provided your IVA has completed or been terminated by that point

2. Yes and no. If you abandoned your IVA then you would have to negotiate on a non-formal basis with individual creditors. They may well be open to full & final settlement deals but if you entered into a dmp they would expect the headline balance to be paid in full

3. I agree with you but expect your IP to get difficult at that point. Be prepared to start a formal complaint and escalate it if they don't back down

ManyWays

If the IVA is terminated, the entry on your credit record will still remain for 6 years. And another mortgage lender would want to know that all the remaining debts have been cleared, most of these are likely to have defaulted at the time the IVA started so they too will be around for 6 years.

You do not have a right to choose to cancel your IVA. If the repayments are unaffordable then it may need to be cancelled, but not just because you want it stopped so you may be able to pay less. If the IVA firms thinks you are just refusing to pay, they have the right to make you bankrupt; this is very very rarely done, but it is unusual for people to refuse to pay an IVA they can manage.

So you should NOT see "getting the IVA cancelled" as an easy way for you to save a bit of money. And as @fatbelly points out, the new creditors may see a failed IVA as a way to get you to repay the debts in full and not accept a low settlement

Your 3rd point, had the IVA firm told you in writing before you were sent the papers to sign that you would have to extend the IVA by 12 months unless you can use equity release? Is there any mention of equity release in what you have signed?

sourcrates

Up until recently, the re-mortgage clause was all but standard in most IVA`s.

I agree that you need to have a measured response to this, failing an IVA should not be a decision taken lightly, especially when you are a homeowner, its only advisable in cases where, (a) the monthly payments are unaffordable, with no prospect of that situation improving, and, (b) as IVA`s are mis-sold on an industrial scale to non homeowners who really should have a better option, only those who are non homeowners should really consider this approach.

Your debts will have been sold for pennies in the pound, but there is no way you would be offered such a deal, this is the idiosyncrasy of the debt purchasing system, they sell debts, basically money they never had, for literally 10% of its face value, to corporations who buy them in bulk, and then try to extract the full face value from your good self, whilst writing off the remainder of the balance you owed to tax, and its perfectly legal.

I would stick with the IVA, try and see it through, in the hope that you will get at least some of that debt written off, so you can at least say you stuck it to the man in the end.

ByzantineByron

Thanks both for the responses,

I spoke again to the IVA provider to explain the extra year wasn't in the proposal form. After the lady on the phone spoke with the IP she confirmed that it was actually deliberately left off. The theory was that we would not have enough equity in the house to ask for a release, so it's been purposefully set to 5 years max, so happy days.

Regarding the re-mortgage, understand the IVA will stay on file for 6 years. My question is more, after the IVA is completed, can I re-mortgage anywhere provided I can provide certificate of completion, or will I be looking at the IVA / Bad Credit Score specialists?

fatbelly

That last question is more suited to the mortgage board. I don't know how standard is the question Have you ever been insolvent?