IPs are not advising their clients to enter into 6 year IVAs if they are property owners, they are advising their clients that the deal is a 5 year IVA with a potential remortgage at the end. If this cannot be effected, then the sixth year is a fall-back position and not a done deal or a choice.
Also - if an IP receives a commission from the introduction of business to a mortgage broker, they are not allowed to retain this but it must be paid into the IVA.
And lastly - I do object to the thought of an IP "creaming off" a further 15% of realisations. This is the fee basis that you all signed up to in the proposal, so can we please stop giving the impression out that some IPs may be doing this for financial gain. if we improve the result for creditors, then we expect to be rewarded - in line with what the debtor and creditors have agreed.
Michael has made some really good, sensible and commercial points on this thread. Things that have also made me think a little deeper about this issue and how we may address this for our clients.
Surely nobody in an IVA would object to any IP receiving their fees for the administration of the IVA, why would they?.
It is a different ball game entirely though if there is a financial incentive at the near end stage of the IVA for IP`s to push debtors into a high interest long term third party loan secured on the home that the debtor assumed would be safe when entering an IVA.
IP`s ARE advising clients with equity that the IVA will last for 5 years and if they are unable to remortgage in the last year of term then they will make a further 12 monthly payments in lieu of equity, so in effect a 5 to 6 year IVA if UNABLE to remortgage,quite simply that is what debtors are being `sold` and on this advice people are signing up to IVA`s.
I am confident that those people who have posted on this forum in the last twelve months or so unable to remortgage experiencing their debt solution company trying to enforce third party long term high interest secured loans on them as an equity release tool were never advised at any stage that this could ever be a possibility.
If this becomes the norm people approaching the equity release stage of their IVA may be in a situation where they would be better off changing their jobs to temporarily scale down their earnings or perhaps even taking a brief break from any employment at all.
Last edited by Goosed on Sat Jan 19, 2013 8:12 am, edited 1 time in total.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
6 or 7 years ago remortgages were easy to come by. Sub prime lending was all the rage. 125% ltv self certified deals were on the table.
Times have changed but why should creditors write off debt to leave you sitting on a large equity pile?
Regardless of how ivas are "sold" to customers (a terrible phrase), the whole idea is to repay what you can afford. If you are being asked to go BR and have to sell home now or an iva is suggested where you will make payment for 5 years then borrow securely at 50% of your iva payment you still end up better off that you were.
I know people halfway through and beyond will take this as a moving the goalposts but I think its simply creditors levelling the playing field.
Paul.
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
I knew from the word go that I would have to remortgage or have the extra year and was quite happy with it, indeed I prefer the extra year rather than taking on a remortgage which would either put my repayments through the roof or mean my mortgage carries on for longer than it would have done.
I would never change jobs or make myself unemployed just to finish my IVA sooner. For one thing you never know if you are going to be able to get another job in this economic climate.
Paul, changing equity provisions in line with what is happening in the financial world isn't so much "moving goalposts" as "evolution".
And "evolution" id how we have arrived at far better IVA agreements than not so long ago. However .....
Altering the letter or the spirit of an IVA mid-term IS moving goalposts and it is apparently happening more and more.
Mel, I don't like the idea of IP's "creaming off" their 15%s either, and I am sure the majority of IP's do not do this. However, it is an insidious position to be put in by the creditors and is open to the levelling of such charges.
Incidentally, what I agreed to in my proposal was a flat fee. The creditors altered this to a percentage, which I had no real choice but to sign up to if I wanted the IVA.
The bottom line in all of this is that the IP should be enforcing the proposal as it was signed up to. If the equity clause specifies re-mortgage or 12 months then that is what happens. If it just says, for instance, introduce available equity (by any means inferred), then secured lending or the sale of body parts will be expected --- and, more importantly, the debtor will be aware of such a provision and prepared for it.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Goosed hit the nail on the head, come my 4th year and time to get a remortgage if my IP suddenly turns around and says -
"You have been unable to get a Remortgage and although I could extend your IVA for 12 months where you will then be Debt free as per your contract I thought I would do your creditors a massive favour so Ive found you a secured loan with a sub prime lender at 15% apr and you will now be Debt Free in 15 Years "
I would do everything in my power to make sure I do not qualify even for the most generous of lenders. If that Means my wife taking a career break hence getting no wage and me temporarily stopping overtime to decreae my salary then so be it. My wife can resume work after I have been rejected for the loans, saving myself thousands of pounds in interest and further payments and actually be debt free in 12 months.
And before people start the old line - " Morally you should work the extra overtime and get the loan and pay the creditors so they get as much back as possible "
Where was the Credit card comapnies Morals when I was 17 Yrs old with a part time job earning £200 a month, and without even contacting them I would wake up on a saturday morning and there would be a cheque for £6000 sitting in an envelope with a letter saying "just bring this cheque into your bank and deposit £6000 instantly" Im not saying that I had no part as I obviously cashed in the Immediate cheques (they sent me numerous might I add) but they were obviously not deemed morally right as they are now BANNED! Whilst I am still paying for them 12 years later!
I was just told to try and remortgage and that was it and that is all it says in the paperwork. We had to try and release £38k between us which was never going to happen.
I do think now though that proposals/Chairmans reports in the future will have both options in there.
They just have to make sure that people are aware and fully undertand all of this before signing on the dotted line.
I tend to agree, if we're going to bring morals into it then why take out an iva at all? Why not just have a dmp so you can repay your debts in full no matter how long that takes. If we are going to be expected to take out secured loans or any type of further lending to repay debts then what was originally a formal debt repayment plan with a fixed end date suddenly becomes a never ending debt, I have said this before and I will say it again, secured loans never stay at the starting interest rate and only go up and up, I had a first plus loan a few years ago when we had a good credit rating which started off at 6pc and within 2 yrs had gone up to 15pc even though base rates came down during that time.
What may be affordable by being a max of 50pc of your iva payment at the start may very soon end up being unaffordable, but where will your old ip be then for help?
I don't believe in having to take out further debt to pay off debt and if having to take a secured loan to repay debt in an iva was told to me at the start I would have refused to go down this route
I have to say that our secured loan with Black Horse has never altered the interest rate and our payments have remained the same throughout. We've got just under two years to go until it is paid off.
Baldy,
Just to give a renters point of view to your argument.
I live in a concil house, I was never in a position to buy a place as hubby worked seasonally for most of his working life, and was on unemployment benefit from Oct to March every year so we were unable to get a mortgage.
Yes we will only have to do our IVA for 5 years and never have to worry about remorgaging etc but it soon changes when later, we will ALWAYS have to pay rent, we do not have a mortgage ending and when we are both pensioners and our income drops we will still have to pay it in full because of our small private pensions on top of state pension will take us out of the bracket of benefits. Plus home owners have a home to pass on to their children (provided they do not have to go into a care home) etc we do not. Our rent goes up every year without fail but a lot of home owners have gained from the low interest rate from the bank, In fact a guy I work with, his mortgage is now less than our rent, although that will change when interest rates rise again.
Life is not so rosy for renters as you imply.
If life is what you make it, I must have been in a strange mood when I made mine
Conversely, any maintenance you need is always done without you having to pay for it yourself as a council renter you have the advantage of lower than market value rent, we live in an ex council property which the previous owner purchased cheap from the council at £20k, out on a 2storey extension which cost 50k and sold it to us for £175k, many council tenants have done very well, our neighbours are council tenants and have everything done for them, grass mowed, they have even had the cheek to have their guttering replaced but have moved ours and caused a huge gap which has now caused damp into my conservatory and I am having a fight with the council to get them to sort it. All my equity has been wiped out, and we will be lucky to pay off our mortgage before we retire, if we ever do retire, tenants can also claim housing benefit if they are out of work, we will still have two pay our mortgage if we are out of work even though we don't own a single brick of our house
Always many sides to any story. I was a home owner until redundancy a while back swept that out from under my feet -- can't see that I will ever get back onto that particular ladder.
Would that all renters enjoyed the apparent "perks" that Local Authority tenants do. I pay full market rent, and, although insolvent, qualify for no benefits. Yes, I have major breakdowns paid for, at the whim of my landlord and have absolutely no security of tenure!
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I haven't noticed many 'Perks' even though I am a council tenant, our rent is only a little short of private rents in this area, we do not get any benefits and although I do get repairs done I have to wait, we waited 12 weeks to get our garage repaired when it was broken into. Our neighbour's whose was broken into at the same time but owns his house was repaired within days. We also have no choice on things done to our home, the council workers always use the cheapest materials and the workmanship leaves a lot to be desired.
They had to put us a new bath in this year, but because our old bath was an imperial size and the new one is metric and not as deep we have bare plaster left around the top of the bath so now we are going to have to pay to tile it. If we leave it and it gets damp because we left it, if the council end up having to repair it they will send us the bill as we have an obligation to keep things in a good decorative state even though it was there fault it happened. As far as they are concerned they put us a new bath in. Nothing more.
Last edited by Pandy on Sat Jan 19, 2013 2:54 pm, edited 1 time in total.
If life is what you make it, I must have been in a strange mood when I made mine
My parents live in council accommodation and do not get any 'perks'. As with Peejayel they have to wait a long time for any repairs to be done and they're not always the best. They don't get their grass mowed for them, they pay a local handyman to do it. They are both in their eighties and quite frail. They had to pay to have a stairlift put in and the other mobility aids were done by Social Services.
Dad is lucky in that for some things he qualifies for help from SSAFA as he was in the RAF regiment but other than that they have to sort themselves out and of course we're in no position to help at the moment.
