Option to IVA

[simplesimon]

Just before I proceed down the Iva route I just wanted to explore any alternatives.
Does anyone have any suggestions / details of any options available to me . £57000 debt
I have just dicovered that my house is worth more than I thought and I probably have a total of around £60000 tops equity, less any remorage redmption fees / selling costs etc etc. The house is also in both mine and my wife names.
The problem is that my morgage repayments are ove £1250 per month and this would rise even higher shifting repayments from cards onto morgage repayments.

Any help welcome
Thanks
Si

[go_4_broke]

Hi Simon,

Have you already been offered an IVA, if so on what terms ? Do you know what your monthly payments would be, and how much of your house equity you would be expected to release ?

-Best

'5 years sticking my head into the Lion's mouth of debt !'

[simplesimon]

I have seen my IP and discussed the IVA , he asked me to get a valuation of the house and that they would also get there own.

I thought that my house was worth less when we met, he worked out that I would have around £12000 equity in the house based on the guess figures I gave him.
He suggested that if I could raise a lump sum of around £14000 + fees it would be more favourable than the house to my creditors.

But now were talking possibly an additional £10,000 of equity (my share) so the lump sum would need to be more.
I guess I could go with a lump + payments over several months/years but am woried that the creditors may note vote and prefer the BR route.
Just thought about stopping it all and doing some kind of debt programme instead, but do not know how these work.
Si

[go_4_broke]

OK, so the £60,000 above is a typo, yes ?

I would imagine the '14k now' is probably viewed as preferable on a 'bird in the hand is worth two in the bush' basis.

It's very unlikely that your creditors would prefer you to go bankrupt unless your situation was such that it gave them a better payout than an IVA, which seems unlikely given the figures you mention.

However that does not mean they will vote for your IVA unfortunately. What is more likley is that they want to push you into a DMP (Debt Management Plan). If you post which creditors you have and approximate amounts folks will give you an idea as to your chances of getting an IVA approved.

In a DMP you would be expected to pay back 100% of your debt which given the amounts looks like a pretty tall order. However you would not be making the contibution from equity you would in an IVA or paying IVA fees so it isn't a straightforward comparison to make.

It would be very useful if one of the IP's who posts here could give some guidelines as to how the property/equity contributions are worked out.

Or could anyone who has experience of this give an idea of what they were required to contribute and how it was done ?

-Best

'5 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

Hi Simon

As the property is jointly owned by your wife, I understand that your share of the equity is approximately £30,000. This sum would be available to your creditors under bankruptcy proceedings, so any offer of settlement via an IVA or a DMP would need to provide for at least this sum to be raised.

You could do this via a re-mortgage and try offering a lump sum full and final settlement. If, having taken account of increased mortgage payments, you are left with any disposable income, ongoing contributions should also be offered to your creditors. You may even be able to repay your creditors in full!

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

[simplesimon]

Thanks for the replies,

Just to confirm,

House has now been valued at around £220,000 [:(!] Morgage redemption details show £180,000 thus leaving £40,000 equity less selling costs etc. between me and my wife.(But only me doing IVA) So £20,000 max equity.
I don't really want to remorgage because the payments are crippling enough now.

My creditors are as follows

LLoyds Tsb Card £4500
Lloyds Tsb 0/D £4500
LLoyds Tsb Business Loan £12500 (personally Gauranteed from business liquidation)

Egg Loan £10,000
Egg card £1500

Tesco Card £1800

Amex green card £1000

AA Loan £9000

I ideas what my chances of getting the votes ? based on a lump payment.

Si

[neverending]

Simon
Have you worked out your disposible income ??
If so how much is it
regards

[MelanieGiles]

All of those creditors are relatively supportive - but one thing to watch is the mortgage payment to income ration. Creep above 40% and then you will likely meet rejection - and also with unstable interest rate predictions at present, a contributions based IVA must have the flexibility to cope with increased payments if rates change.

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

[simplesimon]

Disposable income is hard to work out because I have just started a new business , following my previous company liquidation.
So it's all dependant, thats why I was looking at the lump sum option from the outset, Before all this I was managing to keep up with the various personnel debt payments at the detriment of the company by means of paying myself to much in divs and not paying the inland revenue.
I must avoid this with the new company.

Melanie can you explain the mortgage payment to income ration not sure that I understand. I would say that my morgage payment is around 35% of my monthly outgoings if thats what your saying.

Thanx

[MelanieGiles]

You take your mortgage and any secured loan payments and apply those as a percentage of your total household income. So if your mortgage is £1,250 and the salary is £2,500 your ratio percentage is 50%.

Hope this helps.

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

[simplesimon]

Just been reading a few other posts on the forum, and came across one suggesting that a lump some could be offered to each of the creditors outside of an iva. this would save fees but i guess not all creditors would accept it.

[MelanieGiles]

Hi Simon

You might like to try this as an option first - because you are quite right you will avoid paying IP fees and therefore the creditors will get more back from your offer.

The difficulty I think that you will encounter is that they may all want a different outcome, and then the balance of equal distribution cannot be effected. But best to try as it doesn't cost anything to ask!

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