I think the whole iva thing is becoming absurd! I agree with pelder! We took ours out 5 years ago and havnt appeared to face half as many issues as some posters on here! I truly believe that there appears to be alot of miss selling of iva's and many clients do not realise what they have signed up for! We had to sell our home as we could not afford the rise in mortgage payments when the fixed rate finished only 2 years into our iva! We really should have gone bankrupt as reading some posts it is almost impossible to have another mortgage even tho I agree with Michael in that we are safer and richer now than ever before! Our iva payments equated to almost £1400 per month! Iva's are sold as a way of getting rid of debt, keeping your home and avoiding the road of bankruptcy!! I don't see that anymore and I'm sorry Michael if clients have alot of equity in their home then they should perhaps be advised to try and sell and pay off debts before signing up to extortionate terms associated with an iva! Sorry my opinion only
I know that we will have to try and release some equity and we have more than enough.
Due to our ages and personal situation this is not going to be possible and so we know that we will continue on for the extra 12 months as stipulated in our Chairmans Report.
Franky I agree entirely. If there is sufficient equity in the property the client should be advised to sell and repay the debts. Furthermore, where mortgage and secured loan repayments are not affordable the client should be advised to sell and rent thereby freeing up more income to pay creditors.
However, since the advent of protocol, these issues need no longer discussed because the client is told from day one that their home is safe even if it is the wrong advice as you found yourself.
What we have at the moment is muddled and quite often not the best for clients, creditors or IPs.
Michael -- I think you and I have either ends of the stick! Debtors are NOT attempting to avoid equity release per se, they are attempting to re-mortgage, as laid out in the proposal, and failing.
Yes, I can see the point that, in some cases, a loan could work out more favourably, and yes, if it causes a problem the creditors should consider re-wording the proposals.
However, if my proposal specifically states "re-mortgage" I am not obliged, under the terms of my IVA to take out a loan (secured or otherwise). In all other aspects I am expected to adhere to the LETTER of my proposal -- so why not in this clause, just because the outcome might not suit the creditors ?
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Michael Peoples
Franky I agree entirely. If there is sufficient equity in the property the client should be advised to sell and repay the debts. Furthermore, where mortgage and secured loan repayments are not affordable the client should be advised to sell and rent thereby freeing up more income to pay creditors.
However, since the advent of protocol, these issues need no longer discussed because the client is told from day one that their home is safe even if it is the wrong advice as you found yourself.
What we have at the moment is muddled and quite often not the best for clients, creditors or IPs.
Ooo... sorry Michael but I don't like the sound of that at all. If you are eventually going to have to sell off your assets (assets you entered into an IVA to protect) why bother with an IVA at all?
Thank God for the IVA protocol!
Last edited by Imhotep on Thu Jul 05, 2012 5:06 pm, edited 1 time in total.
I think the stark reality of the terms of an IVA are being made clearly by Michael. I guess most of us on this forum are relative newbies to this area, only really getting involved when we took up the IVA. In my circumstance for the last 3 years I can hardly recall a case where equity has had to be released and 12 month extension has become the 'norm'.
I guess as times change equity release may well become the norm, and although this is the first time I have heard of a financing organisation being directly linked to an IP, it does make sense and could be another huge earning area for IPs.
There is also an onus on the IP providing better information on the equity release clause at the outset. Yes I was told but to use Michaels words from and earlier statement,
"If there were mortgage products available she would be switching her entire mortgage balance to sub prime rates and would probably have to extend the term to the maximum."
It certainly wasnt explained in as stark a terms as this!!!
I think lots of people count on a 12 month extensions which is dangerous, because the dissappointment if creditors are able to move the goalposts to secured loans within the terms of the IVA will be enormous and unexpected. Those who have an extension written into their proposals should be fine, but people whose proposals are silent on what to do in the event a re-mortgage can not be obtained may find themselves in a more vulnerable position.
My mum always says hope for the best and prepare for the worst.
This is the first and only time in my life that throwing away money on rent has been a good thing!
I agree Imhotep! Why bother with an iva! This is where I feel it is going! To extend to 7 years in some cases is just abissmal! 5 years is long enough with such stringent ties! Eventually it maybe the same clause as a ppi! If your house had equity during your iva then does it become an asset should you sell which your creditors wud be entitled to claim on!!!!!
Franky I agree entirely. If there is sufficient equity in the property the client should be advised to sell and repay the debts. Furthermore, where mortgage and secured loan repayments are not affordable the client should be advised to sell and rent thereby freeing up more income to pay creditors.
However, since the advent of protocol, these issues need no longer discussed because the client is told from day one that their home is safe even if it is the wrong advice as you found yourself.
What we have at the moment is muddled and quite often not the best for clients, creditors or ...
Just go bankrupt forget the iva if this was the case! Not a very good view!
Gina.gu it may be that bankruptcy is the more favourable option as the outcome is still the same! I'm not saying that an iva is not suitable for everyone but for some it becomes a goalpost which is moved beyond reach!!
Franky. If the above happened in reality sell your house etc I think a lot more people would go for br . Having said that I lost my house during my 1st iva for 1 reason and another. Still got another iva as my husband didn't want to be made br and the judge said no. So it works both ways. Myself if I was single I would have gone br if the above about selling your house off was in my proposals or a long loan . I would have laughed all the way to the br court. Guess its an individual thing . We are all different
Michael makes a valid point about reaching a situation creditors are tired of seeing a 12 month expension in lieu of significant equity.
So while their change of heart will not affect everyone; it may start affecting how new proposals are drafted and affect whether creditors carry on accepting 12 month extensions as plan B where proposals allow for higher levels of equity release through sale or secured loan.
Michael is a good guy and his advice on here always errs towards giving the client the benefit of the doubt - so we shouldn't damn what he is saying about changing creditor attitudes.
If future proposals change the wording around equity, it may well affect peoples' decisions about entering an iva. We can only hope it doesn't happen too quickly so people currently in ivas aren't taken by surprise.
