HFC Bank increased my Final Loan liability .

[London Coool]

I have just received my IVA proposal from Payplan and discovered that whereas I was owing HFC £16,000 they claim that the final debt amounted to £26,000. When i querried the £10,000 discrepancy a Payplan case worker said that HFC added £10,000 being cost of insurance to the final proof of debt sum claimed. Is this a normal practice ?

My debts are £64,000
HFC £26,000
HSBC £20,000
AMEX £5000
LLYODs £5,000
EGG £4,600
INLAND REVENUE /others £3400

I am making a payment of £285 x 60 months (£17,100)+ £21,000 (75% equity) = £38,100 to my creditors.

Nom Fees =£2,500
Supervisors Fees=15% on all Asset realisations made to the arrangement.

Estimated Dividends to unsecured Creditors = 43%; how much to the £ am I repaying ?

What happens if I am unable to release the 75% equity through a Remortgage in the 4th Year of the IVA ?

[MelanieGiles]

Hi and welcome to the forum

You may be able to cancel the insurance policy. Get your Payplan representative to explore this for you, as you will not be able to rely on any of the cover once you are in the IVA. This will reduce your debts, and enable other creditors to benefit from the saving. It will also dilute the amount of the HSBC debt, which could be favourable, as they will want to see your expenditure are bare bone levels, and could therefore be outvoted by the votes of other creditors.

If you are unable to re-mortgage in the 4th year of the IVA, your Supervisor will need to call a general meeting of creditors to determine their wishes - ie whether the IVA should be failed and you made bankrupt, or whether they will be prepared to accept what they have received so far. The liklihood of you being unable to re-mortgage are, I would say, fairly slim - but do get Payplan to clearly explain to you in writing what will happen in this eventuality, so that you have something to refer to in the future.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[London Coool]

Thanks Melanie,

I do not remember taking out any PPI cover on my HFC Loan, do I have to ask them of proof of contract?

My Payplan Rep seems to agree that it is a normal practice for Insurance premiums to be added to final claims, isnt there any redress against this rip-off. Why should Payplan just accept this claim without asking for proof?

My Creditors meeting is on 8th February

[jamesfalla]

Hi there London Cool

I agree with Melanie, it is standard procedure for creditors to ask for equity to be released in the 4th year of the IVA. There are many mortgage brokers and lenders who specialise in this area. As such, it should not be an issue as long as you are not trying to re-mortgage past 90% of the value of your property.

In terms of the HFC insurance policy claim, in my experiance, there is not a lot you can do about this and in reality, there is not much point in trying. However, look on the bright side which is this: From what you have said, your IP is going to charge total fees of about £8000 + VAT (£2500 nominee fee and 15% of realisation which is c£5400), lets say £10,000 to make the maths easy. This will leave £28,000 for your creditors. £28k with return on a £64k debt is 44 pence in the pound. HSBC will demand a minimum of 40p in the £ to accept the IVA so there does not seem to be an issue. As such, once your IVA is in place and you pay it, HFC will only be getting back 44% of thier debt insurance or no insurance.

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[MelanieGiles]

Yes - asking for proof on contract is usually a good startin point, if you do not have a copy to hand. HFC should only claim for an insurance premium if one was properly take out, which cannot be cancelled by you during the term of the loan.

At the end of the day, if you do not agree with the level of the claim, advise Payplan to investigate the matter further in the interests of your other creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[London Coool]

Thank you Melanie and James for your advise and insight.

[zoe]

Hi there
I have a question which is slightly simalar.
I have a loan with Northern Rock. I have recently contacted all creditors and when Egg did a credit search it said that the loan was for £22000, i only took it out in September last year for £16500 and have made payments every month since. I am presuming that this amount is for the whole terms interest too.
If i go into an IVA how much would they claim can they claim the full interest too for the whole 9 years?
thanks
Zoe

[zoe]

Hi there
I have a question which is slightly simalar.
I have a loan with Northern Rock. I have recently contacted all creditors and when Egg did a credit search it said that the loan was for £22000, i only took it out in September last year for £16500 and have made payments every month since. I am presuming that this amount is for the whole terms interest too.
If i go into an IVA how much would they claim can they claim the full interest too for the whole 9 years?
thanks
Zoe