Does this invalidate the IVA?

[Erickyl]

Question: I have signed on with Money Debt and Credit for an IVA. It is costing me £221 a month, it is not taking into account bills above and beyond housing bills, nor does it give me any cash left over for clothing and/or bus fare, or any other items. I had included in my initial information that I have bills and debt that are not included in the IVA or basic housing/food payments. These were not taken into consideration. Does this invalidate the IVA?

At the 54th month it is expected of me to re-mortgage my house to be able to pay off the full amount that is due, not the rest of the agreement, but the rest of the original debt. This will cost me tens of thousands of pounds in higher mortgage payments for the property. Can I then back charge/sue for this?

Also, as both they stated and your web site stated, the whole point is not to go bankrupt, but to pay back what I can, so I was told that I would save over 50% of my debt, but instead with the forced re-mortgage will cost me not only 100% of the original debt but several times more in higher interest payments, can they do this?

What happens if I cancel the IVA?

The company is demanding that I and the co-owner of the house sign an RX-1 form, even though the co-owner is in no way liable for my personal debt, can they do this?

The company sent me the RX-1 form following a letter which I signed with modifications to the first agreement. However, I did not notice that, in that letter, one of the clauses related to the obligation of re mortgaging the house (which I had told the company several times before I did not want to involve). Because the property is co-owned, shouldn’t the co-owner have to agree with this as well? Nothing was sent to the co-owner in this respect.

If the co-owner of the house is involved, should this person also have been included in the process, since anything that happens directly affects them?

Related to the above questions, what can I do to “shield” the co-owner of the house? Can I, at this stage, transfer ownership/gift or change the form of ownership of the house?

There were many items that were sold to me over the phone, and have later turned out to be false or opposite, can this be considered a breach of contract on their part? Or just part of the sales gimmick.

[ianmillington]

Hi Eric

Has your IVA actually been approved, given that they are asking for an RX1?


Ian

[jpj]

You can only mortgage up to the max amount that mortgage companies will let you borrow!
What does the actual wording of the equity clause say?
As regards the RX1 form, it is to stop you selling the house and running off with the equity,As you cant sell half a house it has to cover the whole house! You cant gift your share of the house as it is now part of an IVA and is no longer yours to gift.
Unfortunately your equity clause is pretty standard and very few people can choose wether they have that clause or not. It should only cover your half of the equity and usually you only have to mortgage to a max of 85% of the value!
You are better trying to work through your IVA rather than start talking of breach of contract,

[pbeck]

Your IVA provider should have taken into account ALL your nexessary expenses when doing the budget for an IVA. If you have discovered that they understated your budget by missing off bus fares etc then this is highly likely to make the IVA fail as you simply won't have enough money to live and you will not be permitted to borrow while in the IVA.

Yes, you will only have to mortgage the property up to 85% of its value in the last year and then only to pay your half of the remortgage proceeds (equity release) in to the IVA so don't worry that you will have to remortgage for the entire debt outstanding.

IF you were to give or transfer your interest in the property to the co-owner, this would certainly be a breach of the IVA terms, and were you to subsequently be declared bankrupt the transaction could certainly be reversed.

Actually, £221 per month is right at the bottom end of what be possible for an IVA and many IVA providers simply won't find running an IVA at this level feasible, it wouldn't be surprising if your IVA seller tried hard to get it to this level to help achieve their target for that month.

If it will be too difficult, you should think long and hard about whether you will continue with the IVA, as it is better to fail now than 2-3 years down the line when all that money will have been wasted.

The moral of the story for all IVA applicants is make sure the budget is manageable BEFORE you sign the proposal.

[MelanieGiles]

What a strange story, and if you have not yet entered into the agreement I would certainly seek a second opinion as to whether an IVA is a viable option for you. As Philip has already commented, this is a recipe for failure if you have not properly provided for all expenditure, and whereas you could probably struggle without some items for a couple of months, you certainly won't we able to sustain that for five years.

The remortgaging of your property during the final year of an IVA, is now generally accepted practice (at creditors insistence) in IVA processing, and if you were really adverse to doing this then an IVA is simply not a solution for you.

How much equity is there currently in your property and how much do you actually owe to your creditors?

[Kent]

How much equity is there currently in your property and how much do you actually owe to your creditors?
[/quote]

At the moment there is very little equity due to the short term that we have lived here. I am also upset that they would force us from a very good interest rate to a less good one, thus costing us many times more than the overall value of the leftover debt. How is it that they can force me (and the co-owner since they would have much higher monthly payments also)to carry a higher debt load than what I currently owe?

btw I had to reregister so am now using the user name 'Kent', thanks..

[MelanieGiles]

They don't force you - this is part of your offer to them, although you will not get an IVA these days without agreeing to equity raise. I really think that you ought to look to other solutions, perhaps bankruptcy is now a better choice if you have little equity in the property which would be at risk.

[Kent]

Thanks, I am also working on getting a better paying job since currently the IVA takes all of my available cash, leaving me unable to pay any personal expenses and my other bills, if I do get one, will they want all of my excess monies above basic house needs (mortgage, utilities, food)?

[MelanieGiles]

The general rules are that you pay 50% of any additional earnings to your creditors leaving you with 50% which you can use as you like. When you say that the IVA will not leave you to pay personal expenses and other bills, what do you actually mean? The IVA payment is calculated after you have paid all of your expenses.

[Kent]

I listed other debts that I was not including in the IVA and a few small personal items, the allowed me £20 per month for all other expenditures according to the documents we are currently going over.

[Adam Davies]

Hi
What debts were left out of your IVA ?
Regards

[Kent]

I included 3000 that I owed to suppliers and 15000 that I owed to a friend, plus a few personal bills, no amounting to much, but they were not included, instead I was alloted £20 per month for 'other'. Also, there was a paragraph included into the modified agreement that I don't understand, it is as follows:

“110. Property Valued & Equity Release (M54)

After month 54 of the arrangement the Supervisor will obtain a professional valuation of the property. The debtor will then obtain two re-mortgage quotes from reputable brokers/lenders to satisfy the Supervisor that the equity realization is the maximum achievable. The property shall be re-mortgaged to a maximum of 85% loan to value less existing secured borrowings. A re-mortgage of less than 85% loan to value is allowable where the lower realization will introduce funds equating to 100% of the debtors equitable share or where the arrangement will receive payment in full. The amount by which the additional secured borrowings increase shall not exceed 60% of the monthly arrangement contribution at the time of the mortgage offer is obtained. Where it is demonstrated after month 54 that the equitable share is less than £5000 (gross) the property is to be excluded from the arrangement without extending the existing term.”

What does this mean?

And I apologize for this but I am very confused about all of this and so am desperately looking for clarification.

So, with a higher paying job, I can bay my bills, live a bit and give them more money, will this shorten the term of the IVA? Or will it just give more to my creditors?

Also, with regards to my share of the house, will we be able to rent the house and move out of the area, using the rent to pay the mortgage? Or is our only choice to sell the house?

I am sure I will have more later.

Many Thanks!

[Adam Davies]

Hi
All unsecured debts should have been included in your IVA.
Do you have documentation showing that these have been left out ?
You have the standard re mortgage clause and basically you will need to remortgage for 50% of the equity after you calculate 85% loan to value,less your original mortgage.
For example,house worth 200k,ltv is 170k and outstanding mortgage is 130k you would have to release 20k by way of remortgage.The new mortgage will be limited to costing no more than 60% of your IVA payments and this may work in your favour as your current payments are quite low,so if you use the above example and releasing the 20k costs you more than 60% of your £211 monthly payments then you would have to release a lesser amount to cost you £126 per month in increased mortgage payments.
Hope this helps

[Lisa2009]

Hi i would assume that you would be required to remortgage for 85% of your share of the equity.
In any case you wont be made to remortgage for more than 60% of your disposable income (which you pay to your IVA) so in the long run, although you will be paying a slightly higher mortgage, you will be saving the other 40% of your disposable income.

mrs skint

[Lisa2009]

Sorry Andy, hadnt realised you were mid-reply

mrs skint