The newer proposals state that the clients are to remortgage to 85% of the property value and introduce all this money. Some IP firms are promising money based on the property rising by a set amount each year and potentially committing their clients to huge remortgages in the future.
The fact that mortgage products are not available at the moment does not mean that this will still be the case in 2,3 or 4 years and people may be forced to remortgage because they signed a proposal agreeing to do so. The 12 month extension only applies if the client cannot obtain refinancing and is not an alternative where they can.
Don't 2008 / 2010 Protocol compliant IVAs simply say that if you are unable to remortgage you will just pay the extra 12 months and that is the end of it?
Last monthly payment made 3 June 2013 after 6 long years. CC issued 21 August 2013, but, er, lost in the post. Finally got it 17 September.
Yes if you are unable to remortgage. This may change in the future and clients can remortgage and not have the option of an extension. Primarily the protocol proposal says that the clients will remortgage and the extension is only available where they cannot.
There will be lenders who will produce products specifically for the IVA remortgage market as is already happening and anyone thinking they will automatically pay for 6 years irrespective of their equity could be in for a major shock. Creditors are already asking have clients exhausted all avenues for raising money because it is possible in some cases and just getting a rejection letter from the Nationwide and your own lender will not be sufficient in future.
Changing the rules to adapt to market forces / state of the economy / what lenders are prepared to do in certain economic climates does not seem right.
Last edited by brokebryn on Thu Feb 16, 2012 3:14 pm, edited 1 time in total.
Last monthly payment made 3 June 2013 after 6 long years. CC issued 21 August 2013, but, er, lost in the post. Finally got it 17 September.
I think that some IP firms gloss over the equity condition which is a very dangerous thing to do as you have found out. In the past our firm did not promise equity of a set amount for the very reason that property prices can rise or fall. Creditors put in their own equity modifications which means in many cases we can close the file down because there is no equity and we never promised any.
Creditors inserted minimum dividend requirements based on what was promised in the proposal and I think some blame must be attached to IPs who promised equity that is either not there now or cannot be raised.
To be fair, when some of the older proposals were drafted the IP's attempted to limit their client's liability by specifying equity, in the belief (mistaken, as it turned out) that, with the rapidly rising market they were helping the client not get clobbered.
Hindsight being a valuable thing --- this isn't how it has turned out.
Referring to Petercar's predicament, it seems Tenon "are promising money based on the property rising by a set amount each year and potentially committing their clients to huge remortgages in the future". Not a wise move at all.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Yep, this is presumably the IP who will be chucking in the towel and everything else if the creditors vote against the variation, thus clobbering instead of helping me. Yes indeed, how times change. What happened in the interim? The fees were paid.
Last monthly payment made 3 June 2013 after 6 long years. CC issued 21 August 2013, but, er, lost in the post. Finally got it 17 September.
IP's need to exercise common sense when it comes to equity release provisions, and in my firm we operate in exactly the same manner as in Michael's. Most IPs feel that it is unfair for creditors to seek equity in the family home, when their clients are already paying an additional two years worth of contributions compared to that which would be payable under bankruptcy proceedings. That said, we are stuck with it - but we should not be actively setting our clients up to fail from day one, by using percentage based assumptions of an increase in the property market. This was not the best thing that was included in the IVA protocol in my opinion, and we do not use that particular aspect in our own proposals.
hi Brokebryn, I am in a similar situation to yours. I am in my 5th year of IVA and recently my IP made me claim PPI, where I was incorrectly advised that it will clear my debts and even if its more finish my IVA. I couldnt believe my luck, signed my attorney and waited for the outcome, just to find out that £5000 won from PPI will be used as a windfall and nothing will be reduced of my IVA. I got very frustrated and complained and complained until received a similar letter. that a creditors meeting has been arranged for beginning of March 2012 and if the creditors agree to variation to accept 29.12 instead of 35 pence in each pound I have completed mu IVA early, if 75% agree, if not I have breached my IVA and I will fail. My jaw dropped and Im not very happy either. I have asked for the meeting of creditors myself to offer all I paid until now and plus the £5000 PPI money towards my IVA but have not stated that if they don't agree that Im happy to fail. Incredible. Like you said..is this some kind of threat letter to the creditors, so they are pressured to agree with the variation or is this an ultimatum? Very scary. I have struggled for 6 years (firs year doing debt management). It looks as IVA company get their charges of us no matter what the outcome is. Not fear. I have written another letter and am waiting for reply, because I really do not want to fail the IVA, not now. Fingers crossed for my creditors meeting.
