A little panic!

[JoeB]

Probably one for melanie how are creditors looking at income/mortgage ratios? - does it vary and depend on circumstances or do they have a 40%r ule

[MelanieGiles]

Some creditors have a 40% rule, which I have to agree with as any higher gearing is dangerous at a time when interest rates are volatile.

I have, however, recently presented some cases with secured loans in, where the percentages have been higher, on the basis that the debtors felt the IVA payments were affordable, and on the basis that an abandonment of a property leaving a large negative equity shortall would result in a further dilution of the dividend prospects for ordinary unsecured creditors.

Each case on its own merits, and IPs should not refuse to present proposals with higher ratios before looking at all the facts of the case. Do you fall into this bracket ggr?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

In a way - we are just over the barrier - but we do feel its affordable - our mortgage is fixed for the next 5 years and without promotion I will get a rise on top of the inflationary rise each years and assuming I am not forced into BR very likely to get a sugnificant promotion in the next year which would take us out of the category. My fear is that acreditor just rejects us without looking at the facts ie slightly over 40 so must be no.

I am hopeful reading your response as that logic certainly applies to us. Should we bring it up again with our IP?

Oh and as ever - thakyou for your response! - so helpful!

[MelanieGiles]

Make sure that your IP deals with this issue overtly, rather than tries to ignore it. Is your current mortgage on an interest only or repayment basis?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

Is this barrier a common reason for failing proposals if not dealt with appropriately?

[MelanieGiles]

Reason for asking the basis of your mortgage, is that if you switched to interest only you could reduce the monthly payments - beware of doing this though, as you will not be paying any capital off the loan, but you could consider part interest only/ part repayment as a compromise to bring you below the 40% hurdle.

Yes I mean that your IP should highlight the high gearing, and explain why it is justified. And that you expect it to be countered by forthcoming payrises.

Absolutely you can ask for changes - it is your proposal at the end of the day, and your IP will want to encourage you to get it right. Ask as many questions as you need to, and if you feel that there are suggestions which will improve your offer feel free to mention these the the IP. A good IP will definately not take the view that you are telling him/her how to do his/her job - and the process should involve a two way process, and not just a proposal slapped together quickly with little thought process.

This "barrier" has caused some IVAs to be rejected in the past, so make sure that the IP you have chosen has the ability and drive to fight your corner for you, whilst making sure that you are putting your very best foot forward with regard to your offer to creditors.

Good luck and do keep asking those important questions.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

Thanks for this Melanie

[MelanieGiles]

Not really come across the geographic argument personally, and I act for creditors all over the country including Northern Ireland! I definately would be dealing with this issue head on if I were your IP - but that is just my own policy.

You can disinstruct your IP at any time in the process leading up to the creditors meeting, and if you are getting bad vibes now, remember that you have to work with this person for the next five years. Do make sure that you have someone who you feel will look after your interests as well as the creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

Thanks Melanie

[MelanieGiles]

Most new IPs will react very quickly if they know there is a Charging Order about - and IVA can be done in 24 hours if necessary!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

Last one for this evening! - what about the fact we have sent letters of authority to our creditors for the current IP? - would they not question what was going on if then another IP appeared on the scene?

[JoeB]

Melanie on a less positive front - would a mortgage and secured load be considered excessive Mortgage payments in BR (we have no equity) just worried we could be forced to sell on these grounds if the worst hapened.

Sorry for all the questions!

[MelanieGiles]

No - I think this is happening more and more often now, and creditors don't really care. Also, there is no time for letters of authority, so long as your creditor information is up to date, and you can ring around and get balances over the telephone to give to the new IP, they ought to be able to process your case at speed.

Give your current IP a chance though, and make your mind up when you get the proposal through. If they appear then to be unco-operative in dealing with your requests and queries then, this may be indicitive of how the future relationship might work.

Night Night!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[JoeB]

Melanie on a less positive front - would a mortgage and secured load be considered excessive Mortgage payments in BR (we have no equity) just worried we could be forced to sell on these grounds if the worst hapened.

Sorry for all the questions!

[Adam Davies]

Hi g.g.r
That is an interesting point regarding housing cost ratios in certain parts of the country.While Melanie has not come across it personally it does seem a fair argument as housing costs in central and outer London are far higher than anywhere else.However it could be argued that wages are generally higher in London.Interesting point though.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp