a few queries regarding iva's

[jax_76]

I'm just new to this forum but i've a few queries regarding iva's.
I currently have an IVA via Debt Free Direct which has been in place since Jan 2006 (when 1st payment was made). I have the 'usual' year 4 clause regarding looking at re-mortgaging at the end of Year 4.
My questions are as follows:
1. My annual statements are showing that virtually all the money i'm paying a month is paying DFD's fees and therefore hardly anything is going to the creditors. Does this sound normal practice? I'm starting to wonder if IVA was indeed best route for me. Also will they look at getting most of money for creditors via re-mortgage?
2. What happens/process with regards to the re-mortgage? especially with the house prices falling i'm bit concerned that i'll end up with negative equity and will end up in debt again!
3. If the creditors haven't received much money during the 60months and the re-mortgage is unsuccessful - is the debt still wrote off or could they fail my IVA?
I know some of my qustions are relating to future events but i would just like some advice and information now so i can put my mind at rest or do something practical if i can now.

[facingittogether]

hi and welcome to the forum!

i am not an expert so cannot answer some of your questions!

if you maintain your payments as agreed i dont see that your iva will fail! as for the equity clause in year 4 ours states to remortgage up to 85% of value and if no equity available then iva payments to carry on for another 12 months. i would think it would state in your chairmans report your exact terms!

hopefully a expert will be along soon to advise you!

barb x

[indebtforever]

normally if equity cant be raised or sufficent amount then the iva will run an extra 12 months.As for fees this varys between companys i think mine charge £1200+ vat per year the rest getting paid to creditors at intervals i also have an equity release but it is set at £1,225 were they expecting you to release a substansial equity amount?

[luluj]

I am with DFD too and my report says that the IP will receive their payments in the first two years, and then the creditors will receive payments after that - at the end of 60 months whatever you have not paid back will be written off.

Debt free direct have always been very clear with us that our creditors will receive some money each year, but their fees are paid first!

[Soulgrowth]

Hi Jax ... and welcome to the Forum.

Your creditors will have agreed your IPs fees and be aware of the situation. And as the others have said if you find it impossible to re-mortgage then your IVA may be extended for a further 12 months to compensate.

All the best ... and keep in touch as you are amongst friends here [:)]

Debbie

[MelanieGiles]

It is usual for the first couple of years to be fee heavy - this will alter as the IVA continues into the future and you should see creditors being repaid during this current year.

The whole equity release issue in IVAs is currently uncertain, due to the state of the mortgage marketplace, and if you are unable to raise any equity during the final year, your IP will likely call a meeting of creditors to ascertain their wishes in this regard.

[jax_76]

The whole equity release issue in IVAs is currently uncertain, due to the state of the mortgage marketplace, and if you are unable to raise any equity during the final year, your IP will likely call a meeting of creditors to ascertain their wishes in this regard.

Melanie - you mentioned (as quoted above) that if i'm unable to raise equity during the final year that my IP would call a meeting to ascertain the creditors wishes. I realise you don't what exactly they would say but i'm not sure what you mean by this and would appreciate some further clarification. In your experience what could these wishes be? could they fail the IVA at this point?

Also would the creditors expect me to re-mortgage to the market value at the time? What happens if i potentially could not afford these repayments?

Another query I have which I forgot to ask about initially is that my current mortgage is on a fixed rate - this is due to end in Feb 2009 - am I able to try and transfer onto another fixed rate mortgage, especially given that the following year is when the year 4 clause of releasing equity would come into effect?

[MelanieGiles]

It would be unlikely for your creditors to want to see the IVA fail at that point, but they may ask you to pay an extra year's contributions in lieu of the equity.

You will not be asked to re-mortgage if the repayments are not affordable into the future.

You will need to query the mortgage issue with your current lender - and if you are currently paying a discounted rate you may find that your mortgage payments increase significantly if you have to pay at your current lender's variable rate.