I went into an IVA in Novmber 2015. There have been no issues. However I have a concern about an amendment to my IVA by HMRC. Ordinarily in month 54 an attempt is made to release equity in my property. This is not likely to be achievable, so I would expect the arrangement to then be extended by 12 months. However the HMRC amendment reads as follows "The duration of the arrangement shall not exceed 66 months without the prior approval of a 75% majority of creditors in value of creditors claims voting for the resolution" in short, given that HMRC are a major creditor, does it mean they can force my house sale/bankruptcy and prevent the further 12 payments option. Is that the purpose of the clause?
Never attribute to malevolence, that which equally explained by stupidity.
I've not heard of this one before - check exactly what your paperwork says and speak to your IP.
I doubt they will force anything but that's just my opinion and HMRC seem to run by their own rules.
Hopefully Lisa and/or Michael will be along later.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I am guessing a lot will depend upon the amount of equity it all works out at and if it is worth going after. HMRC seem to have taken a dislike to IVA's generally at the moment and, as Kallis says, tend to do things their way !
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
When I went into the IVA I had a house worth 285k with a mortgage of about 236k.
By the time the IVA concludes, the house may be worth as much as 400k, and the mortgage down to 220k. therefore I would have 180k equity of which half belongs to my wife.
i emptying bak 54 pence in the pound on a debt of 105k. Sp come the end of the 5 year term, there would still be a debt of about 45k.
The whole point of entering into the IVA was to protect the house. The IVA is through Mccambridge Duffy and is on the standard 2013 terms, but with the addition of this clause.
What I want to know, is if I have complied throughout with the terms, and an attempt to remortgage is not successful what happens? What would be the effect of my creditors not agreeing to the usual 12 month extension. The maximum would be 6. Where would that leave the IP? Could they require me to sell the house, not withstanding I have complied.
The reason I am worried, is that if I sell, I wont be able to get a mortgage on another home.
I would be really grateful for any input from an IP as to what the approach would be, and any help as to the purpose of the HMRC amendment.
Many thanks in advance
Never attribute to malevolence, that which equally explained by stupidity.
Unless Michael is about then there won't be any as Lisa doesn't post at the weekend.
Speak to McD on Monday and ask them about it as they are your IP company.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
HMRC quite often put a limit on the timescale of IVAs which means that we must report back to them if the remortgage conditions are not met. However, they are still amenable to offers and prefer a lump sum to an extension especially if the lump sum achieves a minimum of the dividend on the Chairman's Report.
HMRC do not like extensions to IVAs where there is huge equity and small monthly payments and could demand a sale but if third party funds are available or you can source a secured loan for example then HMRC can be a supportive creditor.
There is one other thing that HMRC monitor and that is post IVA compliance. By forcing us to come back to them. it gives them the chance to seek the failure of IVAs where the client has not maintained their paperwork or payments. It also works the other way in that if you have been compliant and have no problems HMRC often abstain from variations and just accept the outcome.
When month 54 arrives for your IVA there may be remortgage products available anyway so this is speculation but in my opinion an offer would need to be made of some description for HMRC to be content.
Thanks for the response Michael. I can see there is room for optimism in the prospect of securing a mortgage, however, I have to prepare on a worst case scenario basis.
There will not be a lump sum available to me as I do not have anyone I can go to to seek one.
So the choices for me will be extension or house sale, which I want to avoid at all costs.
I have been compliant with my IVA, and have also been compliant with my tax affairs, with all returns, both VAT and SA submitted on time along with payments.
My Proposed dividend of .54/1 will be achieved without an extension. My payments are not small at £1102 per month. A further extension of 12 months would yield 13k less supervisors fees of £1000 for the additional year. that would mean 68k paid back against an original debt of 105k
If I were made to sell the house, we would have to rent. Is this a realistic possibility? When you say an offer will need to be made, do you mean an offer of a lump sum?
I don't understand how, given the wording of the arrangement, which is on standard terms, with the amendment, how HMRC can force a house sale?
Never attribute to malevolence, that which equally explained by stupidity.
It is not a case of HMRC forcing a sale but what this modification means is that we cannot just extend the IVA as we would normally where a remortgage is impossible. It effectively forces us to go back to creditors for them to make a decision and HMRC would take a look at the equity situation.
Your dividend is very good and the compliance issues will be a big help so hopefully HMRC do not push for a sale. It might be an option to try and release some equity early and see if you can settle as quite often this type of offer is acceptable. You usually need to be at least three years into the IVA before you can source funds but might be worth a try. If HMRC accept then so well and so good and if they turn down the early settlement offer the IVA just stays as it is.
I can fully understand your wanting to keep the property and there are options other than just being forced to sell.
He has access to a product which can be useful to some ( according to how the figures stack up) to raise enough to cover the equity extension with a lump sum offer.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I was operating on the premise that HMRC would , if they could, seek 100% recovery via the equity.
I note foggy's comments and wonder whether if I were in a position to cover the 12 month extension payments in a lump sum, that would be a way forward? I may be able to achieve that, as it would be about 13k but I could not obtain a lump sum of 45k.
Ps, thank you for all of your help. I just want to be prepared for all outcomes.
Best wishes
Marc.
Never attribute to malevolence, that which equally explained by stupidity.
HMRC may seek 100% recovery but they may also be prepared to settle for less. It may depend on the level of equity at the time the offer is made which together with affordability would be taken into account.
I hope it works out for you and I agree with Foggy that Shaun Vickery might be worth a call.
