IVA potential here

[rstewa]

hello

I posted earlier regarding setting up an IVA based on 64k of debt (2 loans and 3 credit cards). This figure included all interest left payable on the loans e.g. main creditor is NR Loan of 25k taken out 3 years ago (120 months) and 17k loan with Natwest taken out 4 years ago (72 months) with all interest included in the sum left, 8.5k on Natwest CC, 3.7k on Morgan Stan CC and 6.7k on Egg.

Through a great IVA firm my IP has assessed me and is proposing to pay 49p in £ back to creditors.

I have 2 questions.

what i dont understand is that the payments work out at only £385 over 60 months. how is that 49p in the £?

I have managed to pay back just over 9k on the debt since 2005 through DMP. Also I managed to payback around 10 months on the NR loan (310 original monthly payment) and around 18 months of normal payments (323 on Natwest Loan.

With NR being main creditor how does this case look?

[catullus]

Hello rstew

There is no way that, with 64k of unsecured debt and a contribution of £385, you'll ever get to 49p. I work it out (making some assumptions about costs) at 27p/28p. The only way that you could get to 49p is if there are other assets to throw in to the pot like equity in your house.

Is there?

Much has been written on this board recently (particularly by me!) about Northern Rock and you might want to search the forum to catch up. In short, Northern Rock are on record as stating that they reject 9 out of 10 IVA's they are asked to consider.

As they have more than 25% of your debt I have to tell you that statistically your chances are not good. However, the fact that you have paid off some of your debt may work in your favour and you just might be the 1 in 10 that get through.

One other little titbit I can throw at you is that if, within your existing DMP, it would take you less than 8 years to pay off your debts in full, this would work against creditors supporting your IVA.

I don't know what you are currently paying through a DMP so I can't work this out for you, but this is becoming an important statistic by which creditors judge an IVA.

[MelanieGiles]

I do not think that the case you are presenting will fit Northern Rock current acceptance critieria, but if your IP is not charging you anything for putting the proposal together then it is perhaps worth a punt as you have little to lose.

Your IP must surely be including equity in order to make the dividend higher, and you should ensure that what is being offered is achievable.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[rstewa]

yes i am puzzled.

the payments would be stepped due to my wife being on maternity leave from december.

620 for 2 months
641 for 3 months
61 for 6 months
400 for 49 months

of the original loans taken out (25k and 17k) i have made payments totalling, 7400 for NR loan and around 8000 for NW loan.

the 64k debt
current payplan DMP payment is 365 (2 years so far).

The IP did not mention equity release although there is potential as i have 168500 mortgage, 28550 secured loan on and my property has estimated value of 225k. last survey was done 3 1/2 years ago at 200k. I assume though as i filled in these details that equity release will be included although no mention of this to me however if it helps then so be it.

DMP will take 15 years to complete on current payment.

[MelanieGiles]

Those numbers do still not work out to 49p - I suggest you get them to e-mail you a copy of the proposal document so you can see where they come from.

Do you jointly own your property?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[rstewa]

yes the property is jointly owned.

they arent charging me if the proposal is not accepted.

my case worker is sending out a document regarding payment etc which i should receive later today or tomorrow.

i have emailed her in any case questioning the calculation and other bits such as equity release etc.

i am happy to do this however to raise the dividend.

strangely enough if i include in the payments what i have paid to my creditors thus far i come up with around 48-49p in the pound!!!!

[rstewa]

Hello

I have an update on my situation here.

My IVA proposal will include a remortgage in 4th year so that it will boost the offer to 49p in the pound.

One good thing also is my debt stands at 63,800 now instead of 64,200 a small decrease but every little helps.

just waiting for date on creditors meeting now.

Makes sense though now i have that info.