i thouhgt iva was for 5yrs

[NODOUGH]

can anyone explain why northern rock are asking for 6yrs contributions as i was under the impression that an iva lasted for only 5yrs or is this an alternative to the equity release in the 4th year if anyone has any info it would be grateful thanx

[emma_t]

Hi there

The usual term for an iva is 60 months but they can be extended to reach minimum dividends or if the extra year payments would help the proposal to be accepted in the first place

Emma x

[NODOUGH]

hi emma, this is all new to me.so i accept the fact that they want 6yrs contributions to get the iva started and then in yr4 the equity release thingmybob kicks in and if all goes well i will only have to pay back the mortgage and equity release bit or is it all lumped together as 1 payment, basically having a higher mortgage but no other debt nodough x

[emma_t]

I would wait for further advice as I am in a 60 month iva with no equity release clause as I have no property of my own!!
So my circumstances are different from yours, have you taken advice yet and what have you been advised?

[ianmillington]

There is no upper or lower limit to the duration of an IVA. Industry "standard" is 5 years but it may be longer. When drafting a proposal, it is necessary to check all loan documentation to see how long the loans have to run. For example if someone was quite happy to apply for a 10 year loan 12 months ago, is it reasonable to expect the creditor to accept a large proportion of it to be written off via a 5 year IVA? That's a question, not a comment BTW.

There are a number of lenders who have offered unsecured loans over 10 year terms. Things being what they are, the only thing that surprises me is that there aren't more seeking longer terms for IVAs.

Ian

[facingittogether]

hi - we had our iva approved on monday and nr is one of hubbys creditors and ours is over 6 years! i am not sure but think nr wont accept ivas over 5 years. am not an expert though so i may be wrong

barb

[MelanieGiles]

I personally think that we are going to see an extension of the five year term in IVAs - I am repeatedly being asked by creditors why we don't propose 7 or 8 year repayment schemes, so I suppose it will be a sign of things to come.

I personally feel that 5 years is about right - for both the debtor and creditors, allowing a reasonable repayment period but with incentive to move on into the future.

[NODOUGH]

hi ian,i can understand what you are saying about the creditors not expecting to write off a large portion of the debt in a 5yr iva.but why advertise this " be debt free in 5 years " i think its a bit misleading.i personally dont expect the creditors to write off anything but would just like to see the creditor to give the debtor a bit more time to pay off their debt.is an 8 to 10 year plod better than a five year struggle? after all we are in financial difficulty, can we expect to see companies like nr employing their own ip's to reduce their losses,maybe its just me looking at things from the wrong angle......
nodough

[Beans on Toast]

Hi nodough,
I can appreciate you being a bit miffed at the 5 year promise. We were told from the offset that we could be looking at longer. This is all based on individual cases of debt amount, secured debt and ultimately, equity after month 54.

We weren't too disappointed in this, our other options were ridiculous loans with huge APR over 10 - 15 years. The payments would have been more than we are on in our IVA and it wouldn't have cleared our debts.

Six years doesn't sound too bad compared to this, and we will be card debt free at the end of it. As the experts have stated, I think we will be seeing a lot more 7 & 8 year IVA's on the horizon.

Hope you're still following it up and go down the IVA road, remember it's NR who are pushing for the 6 years, not your IP's.

[ianmillington]

I think it is fair to say that the "norm" is for 5 years not only for IVAs but also for personal loans. Greater periods than that are the exception, rather than the rule. As with any form of advertising, an advert is designed to attract attention to the existence of a product, and all IVA advertising is thoroughly vetted by the ASA and other regulatory bodies.

There is no advert, however, that can possibly cover all bases, otherwise every Ford advert would have to warn you of everything the car was not suitable for, and chocolate adverts would have to warn viewers that their product will make you fat.

Others may disagree, but I think what is important is what has been told to the client at the point of sale, which is when a letter of engagement has been signed. By that stage, those for whom an IVA is not the answer ought to have been advised to take alternative action - incidentally about 50% of my IVA clients are advised they should really go bankrupt but for their own reasons elect not to do so. Also those who don't fit the "5 year contributions/no equity release" profile should similarly have been advised.

So far as your case is concerned, nodough, how long does the NR loan have to run? As regards the point made by dots, I would hope the need to extend the VA just to get an acceptable dividend will now, largely, be a thing of the past.

Bank IPs? I would be very surprised if that were ever allowed to happen. The independence of the IP (who needs to see both sides and be an honest broker) is vital to the role of the Supervisor.

Ian

Edit - Nodough I see from your other thread that your NR loan still has 7 years to run. I'm not saying it's right, but it explains what is happening.

[NODOUGH]

hi b.o.t,thanx for your comments,its just if they had stated the fact the iva was for longer in the first place it would'nt have bothered me.just being new to all this and finding out as you go along you start to question things.anyway im off to phone the ip to see if nr have made a decision as it was my creditors meeting yesterday ill let you all know how i got on and then off to bed as i work nights
thanx to all

nodough

[pm5]

My IVA is for 6 years but this was on the basis that I would achieve a minimum of 25p£ payback to my creditors, otherwise it would not have been accepted, I'm happy with it.

[TheMatrix]

Strangely mine is a 63 month IVA, not quite sure why there are another 3 months though. Seems a odd number

[NODOUGH]

hi inaiva,in my propasals it says,where the debtor has made payments to the nominee or third parties in relation to the origional consultation or preparation of this proposal.the balance of such payments less the fee agreed with the debtor will immediately be paid into the arrangment for the benefit of the creditors.this peyment will be in addition to the contributions proposed in the proposal.where such sums equate to three months contributions or less such sums may be paid in lieu of contributions and the term of the arrangment reduced by a maximum of three months.
not sure if this helps answer your querie in any way

[ianmillington]

Hi inaiva

It is normal for the duration of an IVA to be 63 months. You make payments for the first 60 (I assume that's the case in your IVA) and the final 3 are to give the Supervisor time to prepare his final report and tidy up the administration and close the case.

Ian