IVA - no way out?

[Scrooge]

This is my first posting after many months of reading post after post on this excellent forum.
We seem to be in such a complicated situation and are going around in circles trying to get to grips with possibilites.
I have so many questions but will try and give some backround first.
We have been in our IVA now for about 15 months - We have run a business for twenty years and over these years we have amassed massive debts - we always managed to keep going but in the last 2 or 3 years it became clear there was no where left to turn to raise the credit to pay for the credit!!
Without going into all the gruesome detail we owe a lot more than anything I have seen on here!!
We entered into an IVA giving a return of 26p in the £. We also have a "4th year" equity clause on our house asking for "the property to be remortgaged before the end of the IVA and 100% of the net profits estimated at approx £10,000, are to be paid into the IVA."
As I said we also run a shop (on which we also have a mortgage) - this was NOT included in the IVA.
We agreed to open the shop for longer hours to meet the IVA payments however this did not prove succesful so my husband has taken on a night job in order to raise the extra income and I have also taken on part time work.
We are both working long hours to enable us to meet the payments - I am not sure how lomg my husband can keep going on this basis as he is working the equivalent of 65 plus hours a week plus paperwork/stock buying etc.
We have an 8 year old child and are in our 40's - Family life has become non existent as you can imagine - We rarely see each other as if he is not working in the shop then I am.
This year the shop has been less profitable than we would have expected - a general trend within the town/area in which we live - we have never seen so many empty/for sale businesses.
To make matters worse for us a multi national pub/restaurant is moving into the town - this will be a very serious threat to our level of trade which has already taken a bashing from other individual similar businesses opening in town and falling numbers of holidaymakers in the area.
I am awaiting surgery that will mean I am unable to work for at least 2 months.
We are seriously doubting that we can sustain the IVA for another 3 and a half years for the above reasons.
We are now desperately trying to look at the various possibilities open to us but it seems so complicated - obviously we are trying to avoid bankruptcy as this would mean the loss of everything we have worked so hard to achieve over 20 plus years and life as we know it!! but to be perfectly honest it is looking more attractive week by week!
The possible options that we have toyed with so far :-

We walk away from the whole lot - declare bankruptcy - lose our home of 20 years and lose our main source of income.

Question 1 - Why was the business premises not included in our IVA when this had been declared to the providers? In bankruptcy how would the business be dealt with as there is approx £40,000 equity in the freehold? Would we be allowed to continue to trade with presumably a payment order applied??
Question 2 - To ourselves!! Would we even want to continue to trade having lost the lovely home we have struggled so hard to pay for over the years - or better off going into rented keeping on 2nd jobs only and claiming available benefits thus having less disposable income but better quality of family life??

Another possibilty -
We attempt to offer a full and final by selling both the house and the shop?
Question 3 therefore :- would we be allowed to do a sort of staggered full and final on the basis that the house and the shop would never sell at the same time - we would obviously have to sell the house first and move into rented accommodation whilst continuing to trade awaiting sale of the business.
Question 4 - Would the IP see the equity from the house as a windfall rather than a % towards a full and final?? And the same again with the sale of the business? - Could that equity also be seen as windfall!!? Thus leaving us having given our creditors the same return they would have got in a 5 year IVA but us still having to declare bankruptcy having cleared up the mess for them!!

Last possibility :-
We struggle on with the IVA as long as possible in the hope that we can make the 5 years and manage to remortgage in the 4th year - working every hour God sends - probably wrecking our marriage in the meantime! Making ourselves ill through overwork and stress and still probably fail due to other cicumstances before the end of the term.

Last question - if we do continue on - our existing mortgage is a self certification mortgage where we were able to borrow more than would be currently considered prudent based on our income level - it is therefore possible that we would not be able to remortgage at a higher level than we are in at present as we are already considered sub prime and paying interest only.
Any thoughts and comments would be hugely appreciated!

[mikebdomain]

Hi Scrooge and welcome to the forum.

I would just like to say, that you have come to the right place for help and advice from people in a similar situation and suitable experts. I’m sure an IP / IVA expert will be along shortly, it might help them to help you, if you could possibly give us a bit more insight…

Are both of your mortgages, interest only?

Are your mortgages in a ‘fixed rate’ period (where Early Redemption Charges apply)?

From your post, it reads that you have a possible 50k equity in the house and the shop, is this right?

How much is your original debt for?

The sub prime interest only mortgage may be worth a review, to see if you could obtain a better rate, especially if you took it out whilst your credit report was in a bad state. Being in an IVA for 15 months would have ‘cleaned’ your credit record slightly and may help you obtain a better mortgage product.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[Adam Davies]

Hi
How much equity do you have in your house at present and how much is your unsecured debt in the IVA ?[and don,t be embarrassed about the amount,we are here to help and will not judge you]
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

[Soulgrowth]

Hello Scrooge .. just wanted to welcome you the forum. Your story sounds very similar to mine. There are lots of experts here to help you.

Debbie

www.babynamings.co.uk

www.soulgrowth.co.uk

[Scrooge]

Many thanks for the replies - I am just off on school run so will pop back on later with the info you have asked for when I can get the details from my husband.

[Scrooge]

Debbie - many thanks for the kind welcome - it does feel good to be amongst people who understand the situation.
Mike and Andy - The mortgages - both house and shop are repayment mortgages but the house is on a flexible mortgage meaning we can draw down against the original £170,000 advance at any time which is what we are doing to survive - the IP has been informed about this and althogh he was not very happy about it as the original amount is not increasing its just not reducing there seems no reason to prevent us continuing.
Early redemption charges do not apply.
Equity - we would estimate approx £50,000 in the house - assuming a current value of £230,000 (it was valued on the proposal at £200K.
We would assume a max of £45k on the shop if we could sell the freehold - possibly more if we could sell as a going concern - these figures are obviously dubious given the current state of affairs.
Our original unsecured debt???? ok all sit down[:0]£400k - Told you it was gruesome!!
The mortgage was only sub prime because it was self certification. Its a Tracker mortgage at an apparently resonable rate - At the present time we could never justify the income levels we declared at the time the mortgage was orinally taken out and we could not afford to lose the flexibility we have now of being able to run it as interest only for the duration of the IVA.
Hope this helps.

[BrassicLintus]

Hi Scrooge, I'm sure the experts will be along shortly to help you in your hour of need! And don't worry - nothing shocks anyone on here! We're all in the same boat - the sum involved may vary - but we all experience the same feelings.

[Scrooge]

Thanks BrassicLintus - but it looks like we are beyond help

[catullus]

Hello Scrooge

You are certainly not beyond help, believe me.

Fundamentally you have to take a view om the viabilty of the shop.From what you say the IVA was based upon certain assumptions relating to the business which may no longer be valid.

Insolvency practitioners have a phrase called "busy idiots" meaning people who put 24 hours a day in to a business, but get nothing out of it and yet think that they have no alternatives.

Are you one of these?

You need to agree with your IP an alternative forecast for the business and, if this shows that it cannot generate the required profit to service the IVA, agree an alternative plan, whatever that might be, variation to the iVA, BKR, F&F settlement etc.

Why the shop was excluded from the IVA, I cannot speculate on, but it may turn out to be a really positive thing for you because you could now offer this as part of an F&F settlement if the circumstances were right

[jpj]

I think its terrible that they expect Scrooge to pay back 26p in the £ on such a high level of debt of £400k.... But I guess if you can get £400k of credit you must be earning a reasonable wage?? (or they think you are!)
I would get Mikebdomain to have a look at your mortgages,maybe change them and get interest only ones, and either pay off your IVA with a full and final offer or sit down with your IP,demand a review and work out realistic income and expenditure...I dont think the end is nigh..but a bit of tweaking in all departments wouldnt go a miss !

[mikebdomain]

Scrooge

As far as the mortgages are concerned, I am currently at home so do not have access to the tools required to let you know if there are any better options out there (I am just about to leave to visit a friends son in hospital)

I would say that the flexible mortgage you are on is probably one of the best available; you may be able to achieve a better rate, however you would lose the draw down facility (might be a good thing).

We do have a commercial department and commercial advisors that could give you more information as to what would be available as far as the shop is concerned, but as I say I am not in the office. Please feel free to give the office a ring and go through your options, both for the residential and commercial, explain that you are from iva.co.uk. They will take a look at your situation and be able to offer advice as to whether there are any better options available; there is no cost for the advice, and they may not be able to help, but at least you will know for sure.


FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[Scrooge]

Thanks again for the replies -
Catullus - Much as I hate to admit it, yes, I believe we have been "Busy Idiots" for the last 20 years!!
We have worked incredibly long hours - no time for holidays etc until my son as born and we tried to claw back a family life for ourselves.
I guess we are desperately trying to hang on to our home but this is what is eating the money.
Part of me thinks we must hang on to it all at all costs - the other part (maybe more logical) says why live like this just so we can own our own house - when in reality all we will have for years to come is a massive mortgage...sorry thinking aloud here1
I know our debts are high and maybe thats stopping some people from passing on their thoughts - but I would soooo appreciate anyones comments really.
Mike - thanks for your reply I will get my husband to speak to your office re the mortgages.
JPJ - thanks - I would love to be able to offer F and F but cant see how it could be done.

[mish1953]

Scrooge -im not a technical expert - just a single dad who is BR.

Is the business making enough money to cover everything ? No - didn't think so . Are you going to make your fortune running the business?

It's maybe time to cut your losses and downsize , try a different direction .. your in your 40's do you see yourself living like this for another 40 years ? What about your kid ?
It would be a massive change , scary but if your going to do it now is as good a time as any.

The house - well thats a tricky one how long till its paid off completely - folk get emotionally attached to houses but at the end o the day its bricks and mortar .

I concentrate on our little family, I work full time in a responsible job, don't earn a lot but have lots of time with my kid.

So a non technical answer ..

Good luck you have a hard decision to make.

Mish

[tracy.h]

We all get in debt for various reasons,be it £1000 or£100,000 i owe about £86000 and at the moment im paying my creditors directly as had a bad experience with iva well as others would say a miunderstanding.Its not ideal i know but for now i'm happy doing this as i'm in control,and hopefully early nxt year i will be in a position to offer f+f.

to be honest with you as you have said you work so hard you don't really have any quality of life,and your child is growing up and that is so important try not to miss out on it.
My children have now grown and left home,and i have grandchildren who i adore and see as often as i can as before you know it they to will be grown up and will want to do there own thing.

As i always say you have not committed a crime you are dealing with your situation but i think it gets to the stage when you have to make some important desicions,and only you and your family know what the answers are.

Like you i did not want to loose my home ive worked bloody hard to stay here but if push comes to shove its only bricks and mortar if i end up having to sell it then sadly i will.
I have read so many posts where people as yourselfes are looking for answers and doing everything possible to get out of the mire and often they find there answers here,sadly for others its not that straight forward.

I really do wish you well and hope you will make the right desicions when the time comes.

Good luck

Tracy

[Scrooge]

Mish and Tracey - many thanks for your thoughtful replies - maybe not technical Mish but sound advice I think.
We managed to get out as a family this afternoon and talked in a bit more depth - I really think my husband has just about resigned himself to losing the business one way or another - In fact I think its what he wants now.
Has anyone any idea about our idea of offering a "split" full and final?