Advice please

[mustang]

Hi all,
I'm currently 18 months into my IVA, which was for £18k, giving a return of 26p in the pound.
After some quick sums I was thinking of a Full and Final offer of £12k.
A couple of questions:
1...Does this sound a fair offer that is likely to be accepted?

2... I own a property with my partner.The money would come from releasing some equity in the house,but my partner would only agree to this if it was for a final settlement to my IVA. Is taking a secured loan ok for a F & F ??
Any opinions would be gratefully recieved.
Thanks in advance.

[Michael Peoples]

The amount seems reasonable and should achieve close to the original dividend. However, creditors would want to know how much equity is in the property and possibly may want a reason for the early settlement. If you are struggling and this is the maximum you can raise creditors may look favourably on the offer.

The secured loan option is difficult as is any refinance while in an IVA so ensure the funds would definitely be available before you put the offer to creditors. Good luck.

[mustang]

Thanks Michael...I was thinking of 12-13k ballpark figure.
The house has approx 35k equity in it....however the first 30k is my partners,and this is written into my IVA.
We are somewhat struggling,as at the moment as my work is very sparse(self employed!!)
We were thinking of trying to put the extra onto the mortgage...any ideas if thats possible??

[Michael Peoples]

The offer does seem more than fair and being self employed and struggling is a good reason to offer a full and final settlement. I think the problem may be getting the extra money as your mortgage company will be aware of the IVA and could refuse the further advance. If they agree creditors would likely accept but it will depend on their underwriters and lending criteria.

The extra money on the mortgage would be the cheapest option but if you cannot raise it a variation to reduce payments may be the next best thing. Be wary of a total remortgage because you would be transferring all the mortgage to adverse rates and probably pay a lot more in the long run than you would in the IVA.

[MelanieGiles]

Was the property included into the IVA to be considered for a release of equity during the final year? If so, you will have to demontrate good reasons to your creditors for wanting to settle at this stage - but as you suggest that you are struggling with the payments this may be sufficient.

Presumably your partner gave permission for a remortgage at the outset of the IVA, and form RX1 has been lodged at HM Land Registry?

[mustang]

Yes I've got the final year equity release clause Melanie,and the RX1 form was returned.
My partner agreed to me attempting to remortgage my share of the property at the outset,and is prepared to remortgage some of her share for a F&F. Whether she will agree to her share being remorgaged in the final year is doubtful.

[MelanieGiles]

But that is the modification that you have agreed to - so surely she would have been consulted at the time? If you have equity to raise during the final year, and your partner refuses to co-operate with this, your IVA could fail.

In my firm we ensure that we get the partner's agreement in writing to this, prior to the proposals being issued to creditors. It is too late for misunderstandings on this very important point once you have paid nearly five years worth of contributions.

[mustang]

Melanie,my partner definitely didn't sign anything to that effect at the start of my IVA.
She realises and accepts that I will have to make every effort to raise the 85% of my equity in the house at the end of year 4. We have equal 50% shares in the house,but she put £30k in at the start for deposit,which is mentioned in my IVA.
So as I understand it my equity is half the overall equity after her 30k has been taken off.....is this correct?
To be honest,as well as struggling to make the payments because of lack of work,the other reason we are excploring the possibility of trying to clear the IVA with a F&F is the strain it is having on our relationship.
She suffers from Bi-Polar,and gets very paniced and stressed about money.She earns more than I do,and is getting very resentful about having to pay her excess money to clear my debts,which I had before we met.
She has recently returned to work after a long time off sick following a Bi-polar episode after the death of her father. Our worry is that the extra money stress will tip her over the edge again,causing her once again to have a long period of sick leave, which would then have to be unpaid.In that case we would have to sell the house and go our seperate ways,with me presumably having to go bankrupt.
It appears to us that if we can raise the money for a F&F that would remove a lot of the stress for her.
Any thoughts would be gratefully recieved.

[MelanieGiles]

I completely understand where she is coming from. One of my closest friends has bi-polar and I know how difficult that condition can be.

So long as she has agreed to the principle of re-mortgage to cover your share of the equity (after her £30k deposit of course) then this should be fine. If youcan offer an early settlement, based on an early remortgage, I would definately explore that with your IP.

Your relationship is far more precious than having a few debts, and your partner needs your support whilst she is getting back into the working environment.

[orange]

hy melaine we didnt complete a rx1 form...but have an eqiuty clause....we recently had our valuation which was much lower..has are many in the climate.so have gone for a final year.does this sound ok.

[MelanieGiles]

What year are you in Orange?

[orange]

we are in the final year....iva started in 2004

[MelanieGiles]

Then I think that extending your payments by a further year in lieu of any equity is a good idea.

[orange]

what about the RX1 form then melaine ..im sure we did not complete..can i check this on the internet

[MelanieGiles]

It may be that your IVA did not require this to be signed. If your IP has not asked you to sign one, then I would not worry about it. The comfort of and RX1 form is for your IP and creditors, and not you, so I would not be overtly checking up to see if the IP has done his/her job propertly!