Can I raise enough by remortgage to end IVA early?

[IVA fan]

I entered into an IVA in September 2006 , original debt was 72k.
I pay £600 pcm , with a 10k equity release at the end of the 4th year. I realise that this release depends on the available equity in my property. I have a mortage of 130k remaining on my property , it is worth 200k , possible a little more. My salary is 60k. Can any one with some knowledge of these scenarios advise me whether or not I can possibly raise enough with a remortgage to end my IVA early?
If not now , when would this become a possible plan to exit my IVA earler than 2011.
All opinions gratefully needed !


Cheers


Paul

[Beechy]

Hi and Welcome

Normally creditors would require change in circumstances before they would accept a Full and Final settlement early.

Looking at the numbers you were offering a good dividend to creditors and I would say (if your circumstances have changed) that if you could make an offer to creditors that gives them a similar dividend they may be will in to accept.
There are advantages to creditors of a full and Final as they receive monies back quicker.
What sort of lump some are you thinking and how are you going to raise the funds?


Dave Beech

[IVA fan]

Hi , thanks for the prompt reply !
I was thinking of a remortage to raise the amount of around 35k. I'm not sure if a mortgage company , or at least a decent rated one , would lend me the amount whilst I'm in an IVA though?
I also have been offered some money from my parents to pay this off early , I would rather do this by remortgage though - I hate being a burden still at the age of 40!
The amount outstanding , from the original settlement , is roughly 35k , could I offer less than this figure, realistically?

Cheers

Paul

[Beechy]

There are specialist lender out there and some of the contributors to the forum are mortgage specialist. They will be able to tell you about the rate.

The problem you have got is if you can raise 30/40k now and make monthly payments, why would a creditor accept a lesser dividend.

It is always worth a try to settle early for the reason stated earlier.

I take it the £10k equity release was based on the house price at the start of the IVA,

Dave Beech

[IVA fan]

Thanks again Dave , sorry I edited my reply before I read you response. Yes I see what you mean , they will want to get as much as they can. The house value has altered slightly , and the 10k was based upon the house value being 185k at the time of the IVA.
The part I altered in my last post was the fact that the total amount owed, from the original offer is about 35k. If I could raise a lump sum in other ways , would they accept less than this figure? Or would they perhaps expect more than the original settlement?



Cheers


Paul

[Beechy]

Hi Paul
If you are saying third party fund can be used to repay the equivalent amount in to the IVA this might be OK, BUT don’t forget that the IP will have incurred cost to date and will incur further costs in the future (until the IVA is finished) these will have to be taken in to account in your offer.


Dave Beech

[Adam Davies]

Hi
Your problem is the equity release clause
It is likely that creditors will receive 30k in monthly payments and 40k minimum as a lump sum from your remortgage[£300 per month increase in your mortgage payments equating to 50% of your current IVA payments].
You will end up paying nearly all of your original debt back.
Have you thought of selling up and keeping enough back for a deposit on a smaller property and then offering,say 50k in settlement ?
Regards


Andy Davie
IVA.co.uk Spokesperson and Website Manager

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

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

[IVA fan]

Hi Andy , would the alternative plan of a lump sum from a 3rd party be a viable option? Or is that also likely to be rejected due to the equity clause?


Cheers


Paul

[jpj]

If your mortgage is only 130k and you are earning 60k a year, Im surprised you are only paying £600 a month IVA payments.You must have very high outgoings!
I would stick with the IVA myself and just release the 10k equity release in year 4 .At least that way you will still have 60k equity in your house at the end of your IVA!..

[IVA fan]

Hi jpj , yes I have a fairly large family - thanks for the concern
If the 10k equity is still 10k then fine , but it seems it may be somewhat larger by 2011 due to market forces. 40k of the 130k mortgage is a secured loan with pretty high rates.

Paul

[Beechy]

I would think the 10K equity release will be increased as that was the equity at the time of the IVA. You will have to have the house revalued at the time of the equity release and dependent on affordabilty, this figure could increse, unless your proposal stated that the £10k is the maxinmum you will release

Dave Beech

[MelanieGiles]

The days of creditors agreeing to release you from an IVA with the offer of a lump sum from the property I fear are long gone. Creditors would rather see you continuing to make your payments, and then getting the benefit of the equity release at the end - and you have to see their point. So unless there has been a change in circumstances which is causing you to be unable to fund your IVA payments, I think that you are stuck with it.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[IVA fan]

Hi Melanie , would that also be the case if I were given/lent a lump sum from my Parents, as opposed to a lump sum from equity release?

[MelanieGiles]

Potentially yes - but the lump sum would need to take account of that future equity release as well as the future IVA payments.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[IVA fan]

Thanks Melanie , oh well 42months to go I suppose...

Regards
Paul