"Playing devil's advocate here - why shouldn't the creditors expect the best return possible? If someone owed me money I wouldn't be happy to write off a large chunk of the debt if they had a huge amount of equity in their property. I'm not suggesting that people should have to sell their homes, just that all sorces of equity release should have to be explored before the extra year applies." Posted by Skippy
The issue here is that you are not writing ANYTHING off. You will live a penal life for 5/6 years paying your monthly amount all the while the creditors are hoping your house will appreciate in value. Any then they want ALL you equity to pay the entire debt if possible. You are left with years of paying inflated loan/remortgage rates.
If this is going to become the norm you are better to sell your home (or become BR), rent for 6 years whilst credit file clears and then look to buy again.
The maximum loan to value is 75% so creditors are not after all your equity. You will still have at least 25% of the equity in your home and loan repayment cannot exceed 50% of the IVA payment. This is a lot better than having nothing left after bankruptcy. I do not think this is unreasonable.
I go back again to the remortgage issue versus loan. It is bizarre to prefer a remortgage to a loan when the term is longer, the monthly repayments are higher and the total repaid is much greater.
Michael not all IVA's involving equity are max LTV of 75%. Mine is 85%.
Also lets not forget for those going on IO mortgage for the entire IVA, they are not actually paying ANYTHING off their morgage....its all going to creditors.
Last edited by Pennyless on Sat Jul 07, 2012 5:02 pm, edited 1 time in total.
I came into this world with nothing and still have most of it left!
If you debt was via loans you are not writing anything off. As when they calculate your debt at the start of the IVA as being the totally amount repayable over the full term (including all the interest). Not just settlement figure at the time of the IVA
Michael,
Why are you struggling to grasp the fact that if a debtor has not been advised,lead to believe or knowingly signed up for the option of an unsecured loan to meet the equity release, but is expecting to have their IVA extended by twelve months if they are unable to remortgage, because that is what they thought they`d had negotiated, accepted and signed up for, that it is wrong to then be told by their IVA provider "Sorry, you will not be extending by 12 months as we said you would if you can`t remortgage, you will have to take out a loan over a number of years instead"
Are you saying that homeowners should be penalised and have to pay more than non-homeowners in IVA`s.
Perhaps non-homeowners should only have IVA`s accepted with a much lengthier term than home owners and have to pay a much higher dividend???
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
I do think that if you are on an interest only mortgage and there isn't much equity in the property when you start then the property should be excluded from the IVA from the outset. I went onto an interest only mortgage for the period of the IVA to maximise the returns to creditors, my property was therefore excluded. I think that approach is preferable but with the withdrawal of Interest only mortgages it is unlikely to now be an option.
The problem of forcing people into releasing equity is that it can drag out the debt for many more years. This should really be made totally clear at the start of the IVA so there can be no debate later on with regard to such issues.
"Just when you think that you can make ends meet, somebody moves the ends."
Goosed I think that you have missed the point I am trying to make! If homeowners have alot of equity in the property then why should you be able to kp it! Non homeowners are not sitting on a pot of money and therefore should not have the same clause! Perhaps it should be that unless debtors have attempted to sell and raise money to pay their debts then an iva should not be an option!! You would not expect to win the lottery and be able to keep it if in an iva! I was a homeowner with very little equity and was forced to sell in order to maintain iva payments! As I said before if I had had enough equity to pay my debts then I would have sold instead of going down an insolvency route! There are alot of posts about ppi saying why should the debtor expect to kp it wen they owe money!! I do agree though that all terms and conditions should be signed and sealed and not changed during the process!
I dont think that is what Michael is saying Goosed. I think he is saying it is ok for this to happen if in NEW proposals if it clearly states that equity can be released by further financing. I think he agrees that if the wording remortgaging is used then a loan is NOT appropriate.
My main grudge with this is that you are actually shifting a large part of your debt from unsecured to secured.
Blimey an amazing post by annie, do i think its fair? Probley not the way its being done.
We read about creditors maybe getting the hump at some time with people doing an extra 12 months instead of releasing any equity yet they seem quite happy to except loads of F&F to settle IVA's early.
When you look at how our proposal was presented to the creditors it looks like the IVA is put across as a good return for the creditors instead of us going bankrupt.
We have about £100,000 equity and before we signed up i felt doing the extra 12 months was a good bet.Now if we are able to re-mortgage(and it does say re-mortgage NOT a loan!) then so be it.To be honest i feel we wont be able to, and hoping for that.
I do not agree with IVA companys fixing you up with a loan from a company connected to them charging stupid amounts of intrest.We are supposed to be getting out of debt arent we?
Creditors moving the goal posts? Blimey there's a surprise.
I have a feeling this whole thing whats happening with anni 1234 is going to open up a whole can of worms.
For future IVA clients: MAKE SURE YOU READY EVERY WORD IN YOUR PROPOSAL BEFORE SIGNING.
Hope you get everything sorted annie, very best of luck.
Baldy a good few points but a secured loan may read the same as remortgage! I'm sure it can be tweeked to read that way as perception is a wondeful thing!!
Agreed skippy, we need to keep all discussions and debate friendly, but it shows how much an emotive issue this this.
You have people thinking they will be free of debt potentially being asked to take out secured lending (in Anne's case of 17% APR !!)
I know Kallis3 for one has lots of equity in her home and was banking on an extra 12 months. I wonder how she would feel being asked to take out a penal secured loan instead (arranged by her IVA provider).
When you are looking to retire it is not what may will want to hear.
Perhaps for the first time, I am slightly pleased to be in negative equity!!
I do wonder if the whole thing will come down to the wording of proposals? As I said in a previous post we don't know how Annie's proposal was worded, nor anyone else's.
