Ending Early - offer of 17800 accepted

[ali2201]

Hi I wonder if anyone can help me...

I entered into an IVA in April 06 with a total debt of £70,183. I was put in this position by my ex wife when she left me and subsequently divorced me. I had never missed a single payment for anything in my life but just could not handle that amount of debt on my own without her income as well as paying maintenance. My IVA was agreed quite easily I think and I'm paying £515 per month since April 06. I have been through my first annual review which shows figs as follows on my statement...Creditors £70,183...Claims Logged to date £65,005....my total contributions £6,180...Fees/Expenses/VAT etc £3,991.07...giving balance of £2,194.96.

The IVA as agreed states an expected dividend of 27p in the pound.

So here's the question....I want to end this IVA as soon as I can so I can start to rebuild my life. I have spoken to my mortgage provider and they have agreed in principle to extending me a further advance now to release my equity of about £20,000, subject to a few things. They don't usually lend to customers with IVA's but as I have been an A1 customer for some years they are happy to help me at normal terms.

My IP (Debt Free Direct) do not seem to be very willing to help me now, perhaps they are worried about loosing out on fees???

Anyway here it is....my mortgage co want to know how much I need to offer to end now and I don't know how to find this out....can anyone tell me the best way forward, do you think that they will accept £20,000 or not as I'm not sure if I have anymore equity than that.

Any advice much appreciated, thanks.

[MelanieGiles]

Hi ali and welcome to the forum

Was tbe property originally included in the IVA - ie have you agreed to an equity release during the final year, or additional contributions to address the equity? We cannot advise you properly without this information - and can you also confirm the current value of your property and amount owed to the mortgage company.

My gut feeling is that an offer of £20,000 will be too low, as you will probably have some disposable income left to still maintain IVA contributions until the end of the 5 year term.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ali2201]

Hi and thanks for your input, ok the house is worth £194,000 acording to my mortgage co. and I have an interest only mortgage of £153,710.70 on it now. They are offering me £20,365 as a further advance. My property was included in the IVA for the 4tyh year equity release as you say.

Hope this info helps, what do you think I should do??

[ali2201]

Oh yes one more thing....I'm locked into the mortgage with high early redemption penalties totaling nearly £8,000 at present.

[MelanieGiles]

I really don't feel that you have much chance with this. You are currently paying creditors £515 per month and therefore have approximately 46 payments left equalling £23,690 - plus an equity release which I imagine was based upon 85% loan to value - so if this was done now this would produce another £11,000. £20,000 instead of £34,000 does not equate as far as I am concerned, and whilst I can understand your need to rebuild your life, creditors are unlikely to be too sympathetic. I'll be interested to see what your own IP has to say though, so do keep us posted.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ali2201]

Ok I think i'm getting this now...I have made 16 payments making £8240 however as my mortgage rate will revert to non discounted in year 3 my IVA payments will drop to around £350 per month as agreed. This makes my total payments left £16720? My mortgage is 90% LTV now which gives me the £20,000 after fees etc would this not do the trick now ?? if not then how much more do you think i'll need to offer???

[MelanieGiles]

If your property is worth £194k and your mortgage is £154, how do you work out that your loan to value figure is 90%?

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ali2201]

simple thats wot is was when i took out the mortgage...its value has gone up to 194,000 thats not wot i paid for it!

[ali2201]

I paid £170,000 for the house 4 years ago, sorry if that was not clear!

[MelanieGiles]

But the revaluation clause does not value your property at the time of the IVA surely, but requires it to be valued during the fourth year. You have only just started year 2 - and already the property has increased in value by £24k - therefore it may continue to increase in value causing the equity sum you will require to be raised to also increase.

I suspect that you may need to speak to your IP about this directly, as he/she will have specialist knowledge about your specific case, and can advise accordingly.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[ali2201]

You are right in what you say, however its only a gamble on what my house will be worth in year 4, almost everyone thinks its peeked now, I live in Ashford and we have justvlost our fast train link, we have interest rates going up and lots of empty property here...this could be the best i could ever get. This is why i've come to this site, for some advise as my IP seems unwilling to help or advise me. I did check this out with one so called independant advisor/mortgage broker who specialises in ending IVA's and he seemed to think that I would need to raise £23,000 to get out now?

[MelanieGiles]

So if you feel that this is a good offer put it to your IP. I can only speak to you with direct experience of the industry and current attitudes of the creditors. As you only have the cost of the IP's variation fee to lose - why not give it a go!

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[hara]

I do not think with the interest rates going up theproperty value appreciation may as juicer as it has been before.

Aa an example look at America,subprime lending is causing a big problem, with large swings in markets.
Large swings of 200 to300 points up or down is order of the day for Dow jones. such swings are not helpful to financial markets.

Subprime lending is the main cause of this,as ever thng in economy this may pill eventually to this country.

Also the the thinking is that American economy may not be doing well in coming months.

Hence Ali's thinking has a logic to it.

I only have to remind people of negative equity in 1980 ies.

WHAT GOES UP MUST COME DOWN.

Ali's thinking has a logic to it.

It all depends on how good a case is made by your IP.

And that depends on how appropriately the facts are put in to words.

No harm in trying Ali


Hara

[ali2201]

Thanks for that Hara, I've been thinking about this again today and think that maybe my offer (remortgage offer that is!) might not be too far off the mark....£34k less expeses over the next 3.5 years or £20k now, when you think my creditors are being charged £3,500 in fees for year one alone maybe £20k isnt too far away?????

[Adam Davies]

Hi
The 3.5k fees in year one will include one off nominee fees of approx 2.5k[to organise and set up your IVA].The fees for the remaining four years will usually be no more than 1k a year.
Regards

Andy Davie
IVA.co.uk Spokesperson

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

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