Equity payment

[kallis3]

If our IVA's are successful, it looks as though we will have to raise about £30,000 from the equity in our home. Payplan have told us that we should start and do this in Year 4, but we will have 12 months after the IVA has finished to complete this.

Does this money have to be raised by taking out a re mortgage, or could we use other money if we had any?

[Adam Davies]

Hi
Your creditors will not be concerned where the money comes from,as long as it is the same as the amount that they would receive from a remortgage.If you can get the funds from a third party that will be fine.
Regards

[kallis3]

Thanks Andy.

I would be able to get the money from my final salary pension scheme. I have not been asked about this during my journey towards an IVA and I have not volunteered the information as my pension is quite complicated and I am not sure whether or not I can realise it at 60, or have to go on until I am 65. Either way, I should have completed my five years by the time I am 60, and if I can retire then, I can use some of my lump sum. Other than that I will have o remortgage

[Adam Davies]

Hi
I think that you will be ok with this plan and it makes sense,rather than increasing your mortgage.
Look carefully at your proposal regarding your pension provision though to make sure that it is not included.Also when you have the creditors meeting use the 14 day adjournment option to carefully study all modifications to see if your pension lump sum has been included if you release it within your IVA term
It is so important to be clear on each area of your IVA so that there are no miss understandings later on
Good luck to you
Regards

[kallis3]

Hi Andy,

There is nothing at all on my proposal about realising my pension. I have not even been asked about it at all. All that is mentioned is the amount I pay out per month towards it. It is not down under other financial assets at all and the only thing I am required to pay towards my half of the equity release is £15000. Whether they think I won't be able to collect it until I am 65 (and well out of any IVA) I don't know. I don't know whether I can go at 60 either as I have to speak to the pensions department.

[MelanieGiles]

Pension schemes are not generally affected by insolvency proceedings, as the funds are ringfenced from the action of creditors. Should you wish to use money from your pension scheme to fund the equity there is no problem at all in doing this - but do be aware that the effect of this will reduce your pension entitlements for long into the future.

[kallis3]

Hi Melanie,

Thanks for the info about the pension, nice to know they can't touch that. It will be better for me to use that if I can rather than remortgage. I would be getting the lump sum anyway, and then I will be receiving a very good annual pension on top. That amount will not alter with the taking of the lump sum. It just means that I won't be able to go on a mega exotic holiday!