I am over 3 years in to my IVA and I had a variation last year to take in to account a potential shortfall on my mortgage of around £21k and the IVA was taken over an extra year. When I was selling my house earlier this year, my mortgage lender refused the short sale.
After negotiating a settlement with the lender, I got them to write off half the shortfall and my parents paid the rest so I effectively came out of the mortgage with no shortfall. My IP was aware of all this as they agreed to take the Land Registry restriction off the property.
My questions are as follows: Why did my IVA company go for a variation to take the shortfall in to account if they knew it was extremely likely that most lenders would refuse a short sale? If they had told me that I wouldn't have bothered doing it.
Also, now that I have no additional shortfall can my IVA be varied back to 5 years from inception?
If I had stayed in my property I would have had no equity to release so my agreement would have gone over another 12 months anyway, but as I no longer have a property, will the equity release clause still apply?
ie as I sold my property during the term of the IVA, can I now be treated the same as someone entering an IVA with no property?
Any advice is gratefully received as if I can get my term back to 5 years from inception, I can be debt and mortgage free by June 2014!
Hi Carl, do you know if your original proposal asked for a specific sum regarding the equity release? otherwise it seems strange you had a variation based on a potential shortfall as most IVA's since 2008 look at equity in year 4 and work on a percentage of equity available rather than a specific amount.
I don't know if the original proposal asked for a specific equity release sum without looking... what happened was I was struggling with mortgage payments and asked the IVA company's advice. I told them I was around £21k in negative equity, so they said OK we will go for a variation to cover the shortfall within the IVA. It was all accepted but I feel like I should have been told my mortgage lender may not agree to a short sale then I could have done that research before agreeing to the variation.
As I said, now I effectively have no property and no mortgage and no shortfall so should I not be able to not have to pay for a 6th year? As there is no shortfall, there is no reduction in dividends for the creditors so I would hope they would allow me to vary it back to 5 years.
Ah ok then, it sounds like what your IVA company were thinking you were probably just going to hand the keys back and that the shortfall arising from the repossession would then be covered by the IVA.
I would agree with Niobe on this, you need to speak to your IP and let them know that there isn't now going to be an additional 21k of debt in the IVA and see what they suggest, they may have to call another variation to reduce the term but it may be difficult to persuade the creditors to do this
You will need another variatoin to vary the terms back to those of the original IVA, however the reasons you have provided for this would appear to be reasonable to me.
Thanks for the replies guys... just to update you, I had a long conversion with my IVA company yesterday and they too ( as Melanie says ) think my reasons for requesting a variation are reasonable and they are going to try to arrange this for me so fingers crossed!
