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  • FIRST POST
    • Jam99
    • By Jam99 11th Jun 19, 8:12 PM
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    Jam99
    IVA and Correct Credit Marks
    • #1
    • 11th Jun 19, 8:12 PM
    IVA and Correct Credit Marks 11th Jun 19 at 8:12 PM
    Hi, my IVA was approved Feb 2018.
    My IVA is with Aperture (not by choice as was with Swift).
    I am wanting to make an offer in full and final settlement.
    Apeture has advised the amount to offer.
    My 2nd charge lender has proposed to lend the amount required in principle, however for this to proceed to a formal offer which I can then confidently put to Aperture. The lender has requested that 2 out of all my unsecured creditors on my credit report are showing as marked 6,6,6,6 each month and status “Arrears”. All the other 6 unsecured creditors are marked as D each month and status Default at time of approval or just a month or two after.
    My lender has said the 2 need to be set and read as “D” each from the date of or a few weeks after the IVA was approved and status Default. Then we can move to formal offer stage not a problem.
    My lender has said that all the unsecured would expect to be marked as “D” each month status Default (happy to lend if Default is more than 12months old).
    Also I still get letters of Arrears from the 2 creditors. Which I have forwarded to Apeture (3wks ago, no response chased up with phone calls no answer no response, extremely poor service). I have checked if there were included in the IVA and yes they are.
    I have asked Equifax to look at correcting them. Waiting for an update (quite responsive though).
    My question is what should the marks and status be once an IVA has been approved?
    Who should review the creditors status immediately after IVA approval and pursue any changes required?
    Desperate to get this sorted and settle early (which I am sure creditors would appreciate instead of going to the 5/6 year term). Also calculated settlement after the 15% equity retain rule and the 5k rule. All figures stack up to the suggested figure by Aperture.
    Thanks in advance.
Page 1
    • foxy-stoat
    • By foxy-stoat 12th Jun 19, 8:16 AM
    • 4,456 Posts
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    foxy-stoat
    • #2
    • 12th Jun 19, 8:16 AM
    • #2
    • 12th Jun 19, 8:16 AM
    I would read your IVA agreement - you are not allowed to take out any further credit while you are in it, apart from in year 5 to release equity.

    You sure that your IP is ok with you obtaining credit in this way?
    • PrettyKittyKat
    • By PrettyKittyKat 12th Jun 19, 8:03 PM
    • 1,163 Posts
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    PrettyKittyKat
    • #3
    • 12th Jun 19, 8:03 PM
    • #3
    • 12th Jun 19, 8:03 PM
    Taking out more credit to offer a full and final settlement variation is certainly a new one on me! Although I acknowledge things have changed since I worked in insolvency foxy-stoat makes a good point about additional credit not being allowed.

    Is your IP happy to put forward a f&f variation based upon taking out more credit?

    In response to your question if the full and final variation is accepted, once the final report and completion certificate are issued (approx 6 months on average but some firms are more or less) then the creditors should update their accounts to show the debt as 'partially settled' and any defaults should be dated from the date the IVA was accepted or before. Depending on how fast the creditors process their incoming mail, and when they report to the credit reference agencies it can take up to 3 months. Once 6 years from the date of your IVA being accepted has passed the debts are then removed from the credit file (as the default is then over 6 years old). If any of this is not done correctly it is your responsibility to contact your creditors (NOT the credit reference agency) to get them to update their records. It is recommended to send a copy of your final report with your query.
    • PrettyKittyKat
    • By PrettyKittyKat 12th Jun 19, 8:06 PM
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    PrettyKittyKat
    • #4
    • 12th Jun 19, 8:06 PM
    • #4
    • 12th Jun 19, 8:06 PM
    Sorry I have misread your OP. You have asked about what happens upon acceptance not completion (sorry).

    After an IVA has been accepted different creditors show the debt in different ways. Some may show an arrangement is in place. The most important thing is that if they have defaulted you then this must be dated from the date the IVA was accepted or after. To be honest most people do not worry about the status on their credit file upon acceptance as they have 5-6 years on an IVA and can not get credit in that time anyway. If you want a creditor to default you and show this status on your credit file then you need to contact the creditors and request this.
    • Jam99
    • By Jam99 12th Jun 19, 9:32 PM
    • 6 Posts
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    Jam99
    • #5
    • 12th Jun 19, 9:32 PM
    Thank you reply
    • #5
    • 12th Jun 19, 9:32 PM
    Thanks foxy-stoat for you comments appreciated.
    A solicitor has checked all my documents, IVA proposal and Chairman’s IVA approved report. Also made contact with Aperture to discuss early settlement and where the funds would come from. No issues have come back.
    Your valued comments gave me more food for thought as well. So I have undertaken further research into equity release to offer f&f. It seems there are one or two debt help websites and chats that do say it is possible to offer to end an IVA early via equity release.
    The only issue is the status of 2 particular creditors not being marked as D from when the IVA was approved, to move to formal offer with confidence.
    Many thanks.
    • Jam99
    • By Jam99 12th Jun 19, 9:40 PM
    • 6 Posts
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    Jam99
    • #6
    • 12th Jun 19, 9:40 PM
    IVA and Correct Credit Marks
    • #6
    • 12th Jun 19, 9:40 PM
    Thank you PrettyKittyKat for your valued comments appreciated.
    I have been looking into what the status should be and that your statement relating to creditors status on date of IVA approval is really helpful. I will keep pursuing to get my creditors status corrected. To give some grounding is there some resource where I might find this statement so I could formally include it my correspondence?
    Many thanks.
    • mwarby
    • By mwarby 13th Jun 19, 6:01 AM
    • 886 Posts
    • 341 Thanks
    mwarby
    • #7
    • 13th Jun 19, 6:01 AM
    • #7
    • 13th Jun 19, 6:01 AM
    So I have undertaken further research into equity release to offer f&f. It seems there are one or two debt help websites and chats that do say it is possible to offer to end an IVA early via equity release.
    Originally posted by Jam99
    Seems very odd as the lenders and IP would have known about this equity when the IVA was drawn up. Would the lenders and IP not be expecting to get the monthly payments and equity, not one in exchange for the other
    • foxy-stoat
    • By foxy-stoat 13th Jun 19, 8:10 AM
    • 4,456 Posts
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    foxy-stoat
    • #8
    • 13th Jun 19, 8:10 AM
    • #8
    • 13th Jun 19, 8:10 AM
    Still scratching my head as to way you went down the IVA route only to try and pull equity out shortly after, but if your solicitor has looked at your paperwork then happy days....still dont know why you would get your solicitor involved in your insolvency.

    Good lucks
    • PrettyKittyKat
    • By PrettyKittyKat 13th Jun 19, 7:12 PM
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    PrettyKittyKat
    • #9
    • 13th Jun 19, 7:12 PM
    • #9
    • 13th Jun 19, 7:12 PM
    I have to echo foxy-stoat's post.

    Equity is included in an IVA. Creditors would not accept this instead of monthly payments to end an IVA early, as they are expecting you to release the equity and introduce it in month 54 anyway. Don't forget a f&f variation offer has to be accepted by the creditors so they need to be pursued that it is in their best interests to do it now.

    Please ensure the solicitor you have approached specialises in insolvency. Sadly we had many customers call us and declared that a solicitor had advised them of /x,y and z' which were completely incorrect. Whilst I think most of the client were just saying this and had not actually approached a solicitor (not saying that is your case btw) we did also have the odd solicitor letter trying to say that the requirements of the IVA were illegal, which of course they were not.

    I'd hate for you to spend all the time and money (as I presume the solicitor is charging for their advice) when what is being proposed is not possible.

    I don't have a link to the exact wording re: the default date. Your solicitor should be able to find this for you though.
    • Jam99
    • By Jam99 13th Jun 19, 7:58 PM
    • 6 Posts
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    Jam99
    Hi, all thanks for these valid comments.
    Sorry I have tried to get an understanding of how my credit report marks can be corrected (and what should the read after IVA approval) and who is the best person to enforce it to help me move forward to settlement.
    Noted comments relating to equity, I have tried to keep my case brief and focused on the above and I understand some head scratching going on.
    So here goes some way to help give a more fuller picture. From a failed business I still had 2 personal guarantees to obligate to pay back (60K was the balance at liquidation around 2 years ago). I managed negotiation of a repayment plan of 10 years and no further interest. However, they would only agree to this with my property as collateral (2nd and 3rd charges). So this negotiation was agreed then I needed to tackle the unsecured creditors which where the IVA comes in. 6 months down the line and some sleepless nights (got a job etc). An IVA was approved based on equity available which was around 15/20%.
    Now since the time has passed (over 2 years since liquidation) the balance of the 2 secured creditors has come down and I have also managed with help from my solicitor to get an agreed discounted lump sum settlement agreed in writing, which enables to offer to settle the IVA balance. My property has gone up and there is just enough to settle all round (hopefully the 2 secured creditors will be patient as it has been 3 months since the lump settlement figure had been agreed in principle without PJce etc).
    Potential savings per month is around £650. So big incentive to get this all sorted with creditor status/marks.
    I have taken further advice and that it is possible to release equity from you’re home to offer a full and final lump sum variation.
    Really appreciate all feedback and further comments would be welcomed very much appreciated (it has a minefield and I have experienced some very dark times) However, I have loving supporting wife and children so life is good and can only get better!
    Thanks��
    • PrettyKittyKat
    • By PrettyKittyKat 14th Jun 19, 8:31 PM
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    PrettyKittyKat
    Ok. I must admit I'm still curious as having seen several hundred variations it isn't something I've ever known be accepted (although that's not to say it won't!). The creditors would be expecting your equity to be introduced, so if it has increased they would expect more not just the amount estimated at proposal.

    I know you say you have had alot of advice from a solicitor, we are just trying to make sure you have been given the best advice.

    Just to check - have you been made aware that it is not a given that the creditors will accept you getting a second charge on your property to introduce the money?
    Have you completed the application to ensure that the creditor would definitely give you the funds? As if they then change their mind you are in breach of your IVA and it could fail and creditors petition for your bankruptcy (i saw similar with a customer offering a pension payout and then weren't able to release it)

    How soon after the variation is accepted will they then send the money? I would recommend your IP writes a timescale into the variation (e.g. 4 weeks after the variation is accepted would probably be standard however your IP may be willing to suggest longer if needed).

    Has your IVA company drafted the variation proposal and send it to you for approval yet? If not, have they told you the timeline for doing this? As for some IVA companies it can take up to 3 months for them to do this.
    • Jam99
    • By Jam99 14th Jun 19, 10:11 PM
    • 6 Posts
    • 0 Thanks
    Jam99
    IVA and Correct Credit Marks
    Hi PrettyKittyKat,
    It has been a minefield and I really do just want the best advice all round and want to question everything including the correct steps. So to try and answer you’re valid questions:
    “Just to check - have you been made aware that it is not a given that the creditors will accept you getting a second charge on your property to introduce the money?”
    No this has not been mentioned by anyone I have been in contact with.
    However, we have looked at the numbers and it is only because we have negotiated substantial discounts with secured creditors that the unsecured IVA creditors would get there full balance early which is equivalent to going full term. If the IVA creditors don’t accept, then the significant discounted deal with secured creditors is off the table. Equity then goes back to next to nothing. Working on a 5 year forecast with a property growth of around 3%. There would be (taking into account 15% my share and the 5K rule) no equity to introduce. Plus the fact that secured creditors would want there debt settled prior to IVA and put the blockers on Aperture if Aperture tried to enforce equity release. The secured creditors would simply refuse sit back and let the payments continue until the 10 year term has expired and paid back in full.

    “Have you completed the application to ensure that the creditor would definitely give you the funds?”
    The application has not been progressed due to the blooming credit status marks as stated previously. Monies have been offered in writing in principle. That’s why I need the best advice to get these credit marks & status corrected to Default. As the lender has confirmed the application would go through if the defaults were more than 12 months old and therefore should have been marked as D from date of IVA approval.

    “Has your IVA company drafted the variation proposal and send it to you for approval yet?”
    No I have not asked this to be progressed yet until we are confident that the credit status has been corrected to a status that will satisfy the lender and give confidence to approach Aperture to progress the draft for the lump variation offer.

    “Have you completed the application to ensure that the creditor would definitely give you the funds?”
    No I have not asked this to be progressed yet until we are confident that the credit status has been corrected to a status that will satisfy the lender and give confidence that the application will be approved.

    “How soon after the variation is accepted will they then send the money? “
    Lender has confirmed maximum of 5 working days. They confirmed that payments will be made directly to the 2 secured creditors and to Aperture.

    Initial timeline from Aperture in writing was stated back in “April” was 6 weeks waiting time for variations to be drafted.
    I have not asked Apeture to commence drafting yet. Then unsecured creditors are allowed up to 28 days to vote on the variation. So Aperture summarised a 3 months maximum timeline from draft to latest vote date.

    What’s you’re thoughts on the above?

    Many thanks again for yours valued comments and questions. Appreciated.
    Thanks
    • PrettyKittyKat
    • By PrettyKittyKat 16th Jun 19, 4:59 PM
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    PrettyKittyKat
    That timeline sounds reasonable.

    I am surprised no one has mentioned that the variation can be rejected - this is key to know and understand. They can also accept but with modifications (like when you proposed your IVA).

    Be careful with the term 'full balance.' This means their full debt back, but from what you have said I think you mean that amount (p in the £) they were expecting to receive from the IVA if it completed as expected so they would still be writing off debt- please correct me if I am wrong as this does change things if they are getting 100p in the £.

    One thing your creditors may query....
    - Is the payment to the second charge going to be less than the payment to the two secured creditors given that they are given you a substantial discount to end early?
    - If yes, then get the second charge to pay off the secured creditors with the reduced settlement figures (and not the IVA) then increase your IVA payments accordingly and continue the IVA as expected with equity assessment in month 54.
    - If the secured creditors are offering reduced settlement figures now then it is possible they will also offer it in month 54 so the increased equity you are stating is created by them agreeing to a settlement figure would also be created then - therefore no incentive to settle early.
    - Change the equity assessment to now rather than month 54 so you can take advantage of this situation but rather than settle the IVA introduce this lump sum figure as the equity from your property and continue your payments as normal.

    You will need to be very careful that the reasons for accepting the f&f are clear and convincing and that it proves that they are better off doing this now than allowing the IVA to continue as normal. Particularly my last point. Do you have reduced affordability that means you can't afford to continue your IVA payments now which is why you have looked into this?
    • Jam99
    • By Jam99 16th Jun 19, 9:51 PM
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    Jam99
    IVA and Correct Credit Marks
    Hi thanks for the detailed advice really appreciated.
    Yes settlement “p in the £” and not 100p.
    Potential new monthly payment to new 2nd charge will be about £50 less than the monthly payment total to the 2 current secured creditors.
    Strategy and end goal from the outset looking into this a couple of months ago. Was to:
    1. Achieve just one 2nd charge at similar £ payment per month (set up to same term as mortgage roughly 20 years to keep payments as low as possible).
    2. Settle and IVA early which would mean £650/month back in to family living.

    The IP did confirm on email that an offer wouldn’t be put forward if it seemed unreasonable and it would only be put forward if the offer would be deemed acceptable and advised that the offer would need to be at least equal to the full term and consideration to the 5K rule.
    So the is have us confidence to to enter negotiations with secured creditors.

    Our thoughts for the incentive for unsecured creditors to end early is that they get there balance in full which would be the same amount as if the IVA ran to full term.
    Yes the equity is available now due to the secured creditors acceptance based on discounted lump sums to be paid in short order. Potentially they could accept a discounted offer in month 54. However, this would only be an option if I approached them under my own initiative and not raised by the IP/enforce me to negotiate discounted lumps on month 54 so to release potential equity as per the “equity release clause”.
    Assuming that the IP cannot enforce me to approach the secured creditors on month 54?

    Payments are manageable, but 650/month would enable me to contribute properly to the household and family living year on year (not just existing). Hope you understand where I am coming from?

    Please forward any thoughts and potential on the above.

    Thanks
    • PrettyKittyKat
    • By PrettyKittyKat 19th Jun 19, 4:37 PM
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    PrettyKittyKat
    Yes i understand where you are coming.

    Putting a creditors 'hat' on so to speak I would say that you should pay off your secured creditors with the second charge and increase your IVA payment by 50% of the reduction in payment (which if you aren't lending as much as no longer settling the IVA will likely be more than £50 saving). The IP would likely give permission for to to do this as it is to the benefit of your creditors. Then review equity in month 54, of which there will now likely be equity that can be released as your second charge amount owed is less than the previous two secured creditors.

    Your variation offer will need to be very convincing so be careful to check what the IP has written when it is send for approval. What you are saying could be interpreted as you don't want to have to pay a monthly payment each month to cover your debts so that you have more money available (fair enough, don't we all!) but you also don't want to pay your creditors back in full (as you are not offering 100p in the £). You need to be very careful as to how it is worded. I would personally offer above the £ in the P to encourage them to accept, as they are also forfeiting any chance of additional monies/income increased over the next 5 years.

    Creditors can vote in lots of different ways and there were times I was very surprised by what was accepted and rejected, but ensure you are cautious that it isn't a given that it will be accepted.

    It would be really interesting to know how this goes so please keep us updated on your progress. Good luck!
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