IVA & selling house

carosel · 25 April 2018 at 7:05PM

Hi
We have been in an IVA for 6 years and are now facing the equity clause. We gave the info PayPlan needed and they sent a letter about remortgaging our property. Well, we don't want to remortgage as we want to sell up. The house is too big for us now and we're both 62 so remortgaging isn't for us. We have informed Payplan and they have said that we could pay more to our creditors etc. However they asked us to remortgage to release £50K - we originally had £72K in debt and have paid £48500 back.
We cant see why they don't realise that we have decided to do this both for our mental health and for ourselves as we want it ended.
What do forumites think? Also it is something we WANT to do.

sourcrates · 25 April 2018 at 9:30PM

The problem you have is that you are legally bound by the terms of your IVA, if you refuse to re-mortgage chances are your IVA will be failed by your IP.

That may not be too bad, as you will still owe money to your creditors, but if you sell up, you can repay the shortfall from the house sale.

TakeAwayKing_2 · 26 April 2018 at 1:02PM

Give them the 50k from the house sale and job done.

fatbelly · 26 April 2018 at 3:50PM

You can't remortgage (due to your age no doubt)

You have already made a sixth year of payments when the original agreement was (I presume) five years

Ask Payplan to mark your IVA complete and tell them you've changed your minds about selling up.

Do this in writing - ask for the response in writing.

DorisTrousers · 27 April 2018 at 12:19PM

Ask if you are in a protocol compliant IVA. If you are, you have safeguards built in, which I will come to in a minute. DO NOT SELL WHILST YOU ARE BOUND BY THE IVA, IT WILL BE A DISASTER FOR YOU.

Sorry about the capitals, but I wanted to get across the point that it is contrary to your own interests to do so.

Anyway, safeguards in a protocol compliant IVA.

1. No new deal can be for longer than the term of your current mortgage, unless explicitly specified at the outset, which is unlikely.
2. No monthly payment on any form of equity release can be larger than 50% of your current IVA payment
3. No product can take you past current state retirement age.

Given these safeguards, given your age, affordability factors and of course bad credit rating I doubt very much if any equity release is even possible, but do double check your T's and C's just to be on the safe side.

carosel · 30 April 2018 at 3:04PM

Hi
I rang PayPlan today to discuss the issue about selling up. The advisor was very clear and very helpful - basically because of the terms of the IVA - if we put our house for sale now the creditors can ask for 100% of the original debt plus any on-costs. She has advised me to try to remortgage (which has 100% chance of failing) give them the details then start on another 12 months of IVA payments. She said that if we sell the house in the 12 month period we will be able to pay off the remainder of the IVA as the equity will not be in question any more as it will have been taken out of the equation.

I do find it complicated but thanks to forum members who responded because it gave me more info to be able to talk through this with Payplan - I now have to convince the husband!!

fatbelly · 30 April 2018 at 7:10PM

carosel wrote: »

She said that if we sell the house in the 12 month period we will be able to pay off the remainder of the IVA as the equity will not be in question any more as it will have been taken out of the equation.

I'm not sure this bit is correct. Forcing you to release the equity by remortgaging is out of the equation but if you were to voluntarily release the equity by selling ... there is still a restriction registered on your property at the Land Registry and your solicitor would approach the IP to ask 'how much do you want?'.

What do the T&Cs say should happen at that point?

carosel · 8 May 2018 at 9:34PM

We have received the full equity clause from Payplan - within this it says that the IVA is not viewed as a failure if we cannot remortgage - which we can't and have now accepted another 12 month payments to the IVA. There is interest in property and the clause states that there is a restriction on the property with the Land Registry and we cannot sell unless we get written permission from the Supervisor. So if we waited either the full 12 months before selling or maybe 9 months would that be acceptable to Payplan?? Clearly if we sell now they will demand the full amount back.

PrettyKittyKat · 9 May 2018 at 8:45PM

To save any risk you are best waiting until your get your completion certificate to sell.

IVA & selling house

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