Equity clause

[Scrooge]

Our IVA equity clause reads as follows:-
"The property is to be remortgaged before the end of the IVA and 100% of the net proceeds,estimated at approximately £10,000, are to be paid into the IVA."
Does this mean we could attempt to remortgage at any time and not ncessarily in year 4?
We are about 18 months in to the IVA and as you may have gathered from previous posts, we are self employed and really struggling!
The IVA also states that there is a "minimum" sum to be paid into the IVA....this is accounted for by the 60 monthly payments PLUS the proceeds from the remortgage (estimated by them at £10,000) PLUS "funds which would normally be for tax purposes,£20,000".
As the proposal states this MINIMUM return, what would happen if we are unable to raise this additional £30,000? Would the duration have to be extended until this "minimum" total was achieved?

[Skipper]

The EQ release is very interesting in the light of the downturn in the Housing market. Already House prices are starting to fall and talk of callapse has been predicted. If the drop in house prices incl. inflation of housing prices takes a grip on the market then the later the EQ release and remortgage the less the creditors will get??

So shouldn't those with EQ to release do it now while the going is good?

"Always think outside the box"

[maxdebt]

My creditors anticipated this and added a mod that if equity not available in year 4 then I will have to pay an extra 12 payments. That's fair enough I guess

3 down 57 to go

[MelanieGiles]

If that is genuinely the way that modification is worded, then you ought to be able to remortgage at any time.

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

[Scrooge]

Thanks for the replies - Melanie - I have quoted directly from the proposal word for word - As Skipper said if we tried to remortgage now we would perhaps be more guaranteed to raise the stated estimate of £10,000 than maybe in a couple of years given the current state of affairs with housing market - however we would then be stuck even earlier with higher mortgage payments which we would not be able to afford.
I am worried that we are tied to this "minimum" return which can only be achieved by paying in the £30,0000 lump sum.

[MelanieGiles]

Probably better to wait until the end of the IVA terms, but best discussed with your own Supervisor who has detailed knowledge of your case.

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

[ray_a]

Hi Scrooge

I am not sure why you want to remortgage so early. I understand that you would like to raise £10,000 min but that has to be done in year 4.

Basically the terms of the IVA and you have to check yours but you would be required to revalue your home and pay the requested equity release as per the percentage required. As you say this could be less than £10,000 and if that is the case then you would pay less.

Whilst there could be a danger that the IVA could be extended by a further 12 months to meet any shortfall but then this would be the concern of your IP, creditors, and yourself.

If I was sitting where you are I think I would wait and see but that is a personal view and I am sure others will comment on this!

Basically, I see an IVA as being a very flexible legal agreement which tries to get as much money out of you as possible in order to pay the highest dividend that you can. There is nothing wrong in that but it should be pointed out at the outset.

Hope my personal view helps and look forward to hearing what others think!

Good Luck