Hi, I am new to the forum but have read many posts in the past and found some useful info on here.
I have a question and would really appreciate any advice.....
Myself and my husband entered into an IVA 6 months ago. I am self employed and have irregular income and my husband is employed but alot of his weekly wage is based on overtime. This means some weeks we are struggling to get by as we just do not have enough income coming in and have had to rely on family gifting us money as we are in no position to pay them back. We feel trapped because even if either of us found a new job for more money we would not be any better off as we would end up paying more into the iva.
Amazingly we have been offered help by a family member as he can see how much we are struggling and what it is doing to our family. He has offered to lend us the money to settle the iva and then we pay him back. But this depends on how much we would need to settle. Can anyone give us any idea of what we should be offering? I haven't contacted my IP as I'm not sure what to say.
By the way, our iva payments are £300 per month for 5 years and then they have said we should remortgage and release some equity or pay into the iva for an extra year. Our initial debt was around £33k. At present I would guess we have around £20k equity in our home but if we were to sell we would be homeless so with 2 small children this is not an option.
Any help much appreciated. Thank you.
Last edited by trapped77 on Wed Jun 27, 2012 1:35 pm, edited 1 time in total.
The fact that you are struggling so early puts the whole IVA at risk so there is no guarantee that creditors would get the £20 over the term. I think £15k would be a reasonable offer and should have a good chance of success.
Hi trapped77 welcome to the forum and what a lovely family member you have!
You need to check the terms of your IVa proposal but if you have approx £20k equity in your home you would not be expected to pay all of that over as normally it is based on 85% LTV and you need to have a minimum of £5k to pay over the 85% i.e if house worth £100k and you have £10k equity you would not be expected to pay any in as £90k mortgage is 90% LTV. It is only if your mortgage balanxce is below 85% LTV that equity normally comes into play. Also, valuations need to be based on a realistic forced sale price not something that would sit on the market for a long time and need to be reduced anyway.
Ultimately if you have a lump sum to offer then your IP is duty bound to put that forward to creditors but it would be wise to know if it is in the right ball park. Creditors tend to look at getting what they would have got had the IVa gone full term however, as Michael rightly says, if you are struggling now, chances are, at your next review your monthly payment should have been reduced to reflect it and therefore the dividend could have been reduced unless there was a minimum dividend to meet so the term would be extended.
If the creditors would have only received the 60 monthly payments at the current level there is still £16200 to go but could have dropped if payments reduced so Michael's suggestion of around £15k seems but if what is available is lower than that it is still worth seeing if it is possible.
Keep us posted how you get on.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
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Thank you both so much for your quick replies, that really helps. And yes, we are very lucky to have a family member to try to help us out of a worrying situation. For the record, we estimate the house to be worth around £130 to £135k max, but like you say it would be sitting on the market for a while at that price I expect. We still have a mortgage of around £112k owing.
I am getting everything ready in order to contact my IP and put forward an offer. I am also doing a new I&E form to show our reduced income and an increase in expenses such as mortgage payments etc. This pretty much shows that there is next to nothing remaining each month to maintain payments. What will happen if the offer is refused? Will we have to go BR? Will we lose our house?
Sorry for all the questions, I'm feeling very anxious as it feels like all the worry is back, the same as when we were waiting for the IVA to be approved! At the end of the day I'm scared we will lose the house and I want to keep it at any cost for the sake of the children. Many thanks x
tina thats a goood explanation of how to work out equity.what if you have a joint mortgage and only one of you is in an iva.as i have been advised at the outset only my half is required when it comes round.so any equity is halved.
is this right?
cc received 6th January 2014 now upwards and onwards
