forced to sell if mortgage payments out of reach?

[holeinpocket]

Hi,
We have been in our IVA for over 12mths. Our current mortgage deal is due to expire in september and putting us on a higher rate increasing our out goings by £200. Our independant mortgage adviser has found several companies willing to offer us a mortgage to reduce this increase. After contacting our supervisors office we were told that this is not an option as it eats into the equity therfore the creditors may not accept it. Our bank has offer us an alternative rate which will fix it to take it into the 4th year of the IVA. This is alittle higher but affordable or are we as well to try to haggle with the creditors to accept the better offer to us? We then also found that changes had been made to the amount of equity that the creditors wanted from us from the initial figure put forward in the proposal which they had failed to point out to us, once all the modifications had been made. Which mean that after the fourth year with the amount of equity available we may be forced to sell as the mortgage payments may be out of our affordale reach. Do they take this into account or do this want as much equity out of the property as they can. Is there anyway we can tie them down to a set figure before the final year valuation?
Thanks for any advice.

[accgroup]

Hi holeinpocket

Was your IP aware that your mortgage payment would increase in September? This should have been considered when taking into account the monthly contributions you were to make into the IVA so that your payments would go down at this time, or was it assumed that you would obtain a new mortgage deal on the same rate?

I am concerned to hear that you were not aware of the modification as you should have agreed to this at the creditors meeting - without your agreement to all the modifications from creditors the IVA cannot be approved. What is the exact wording of the modification?

Jane Finch
Insolvency Practitioner

AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[holeinpocket]

Jane,
The change states," The debtors property is to be professionally valued shortley after the fourth year anniversary of the arrangements, the debtors equitable intrest is to be realised and paid to the Supervisor before completion of the Arrangements. If necessary the arrangement can be extended to allow an equivalent sum to be paid by way of ongoing contributions for a period of twelve months. To protect creditors intrest in the property the Supervisor is to registar caution at HM Land Registry if this is not possible the debtors are to sign RX1 and return to the supervisor for lodgement at HM Land Registry to effect a restriction on the debtors property."
When the initial proposal was declined a represenative for the Supervisor rang to say we needed to increase our monthly payments by £65, and with a bit of juggling it was affordable. There was no mention of the equity raised within the phone call and the only extra comment is on the bottom of the report it also states " Due to modification the estimated dividend to unsecured non preferential creditors has now increased from 38.9p in the £ to 43.1p in the pound."
There is no mention of any other modifications.
With reference to the mortgage payments we told them we were on a discounted rate that expired this year and they said it wouldnt be a problem. We are however finding it to be a big problem and causing the stress and strains again just when we thought we were on the road to recovery.
We both know we made mistakes with money and would love give every penny back, as would most people, but we just feel that at the end of the 5 yrs we will be back to square one and probably looking for a new home!
I wish i had found this forum before now as there seem to be a lot of caring people out there!

[accgroup]

Hi holeinpocket

As per my previous post, you have to agree to all modifications at the time of the meeting for the IVA to be approved. If you are not present at the meeting then the modifications should all be explained to you before or at the time of the meeting and you must give your consent for the IVA to be approved.

When did you find out about the property modification?

It sounds like you may need a variation. I suggest that you put all your concerns and complaints in writing to your IP, if you haven't done so already. It will be in their interests to ensure that they resolve the issues in order to make your IVA a success.

Hope this helps

Jane

AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[Adam Davies]

Hi holeinpocket
You are not alone in having concerns regarding your equity release clause.
I am in favour of an equity amount agreed at the start of the IVA as the fourth year clause is like signing a blank cheque.I am also in favour of a solicitor becoming involved with this clause,to save any misunderstanding.
I would ,personally,go with the mortgage offer from the bank to reduce the stress and uncertainty of a remortgage.
Hopefully by the time year 4 arrives your creditors will be obliged to accept a remortgage that costs no more than 60 percent of your disposible income[60 percent of your IVA payments]as this is being discussed within the industry at the moment.
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

[MelanieGiles]

I don't understand why your IP feels that by remortgaging to a better rate that this will eat into your equity. Ask them to explain this to you more fully, as I assume that you are simply remortgaging the amount you currently owe to get a better repayment rate. Also, if your IP has agreed modifications on your behalf, without seeking your prior approval, this makes them null and void - but with the affect that your IVA is probably null and void as well.

The property modification you refer to is fairly normal these days, but should have been explained to you so you could consider the implications.

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

[holeinpocket]

They have said that any fees incurred by switching lender will be added to the mortgage thus using equity in the property.

With reference the null and void where do we stand even though we signed the modification? And what effect will that have on us?

We have been reading through all our correspondance and on our annual statement it states we are required to contribute £19k into the arrangement in lieu of the equity in the property. Also the property is to be valued and equitable intrest is to be realised and made payable before completion.
We have asked them about this and they have said its just a standard letter they send out!! Does this mean this is a percentage now or are the creditors still eligible for all the equity in the property.
We are getting confussed and frustrated.

Just to add a little more confussion The bank have come back with an alternative cheaper rate but only on a 2year fixed rate which will take us into year 3 not year 4. Would we be better to accept this and try to tie the creditors down in year 3. Or take the 3year fixed and hope for an acceptable remortgage offer from the creditors in year 4.

We are getting to the point were we wish we had gone BR and started all over from scratch!

Thanks for all the advice you have given so far its nice to know people are on our side.

[MelanieGiles]

If you signed the modification then presumably you agreed to it? The modification states that you raise all of the equity - assuming that your IVAs are for both of you, and this will be based upon the property's value at the time of the revaluation.

You will need to take proper expert advice on the mortgage options from a mortgage broker. We are not qualified to advise you on that area on this forum. I now suggest that you arrange to have a meeting with your insolvency practitioner to understand more fully about the implications of the equity release, so you can prepare for this in the future.

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