Paying an IVA off early - advice please

[discojen]

Hi there
I have been paying my IVA for just about 2 years now, at £300 a month. I would like some advice about how to go about paying off my IVA early. Firstly, is that possible? What happens to my credit rating if I do pay it off early? My partner, who is not involved in my IVA payments, is interested in taking out a mortgage. If I pay my IVA off, am I immediately able to be involved in a mortgage appplication or do I have to wait another year?
Would I need to pay the remainder of the IVA amount (in my case, about £12,000), or the original debt (pre-IVA amount)?
Lots of questions, sorry! Any help would be great!
Thanks!!

[Storm]

I can answer the credit rating / mortgage.

Your credit rating will improve slightly but it will take upto 6 years (depending on your CRA profile) for you stop feeling the impact of the IVA process.

You can be involved in a mortgage process (with IP approval) whilst in an IVA however the rate you will pay reflects this. The majority of lenders need to see between 12 - 24 months post IVA activity before the rate starts to reduce.

[accgroup]

Hello

You can pay off your IVA early, but this will require a variation meeting - basically your IP will prepare a report to your creditors proposing a variation to the exisiting terms of your IVA, eg, for a lump sum to be paid in in full and final settlement of the IVA. The creditors will then need to vote on whether to accept or reject the variation. You should discuss this with your IP as he will have the specific details of your case and have a fair idea of what would be a reasonable offer to put forward to vary the IVA.

You should check the terms and conditions of your IVA to ensure that there is no clause that states you cannot vary it in the first 24 months (if you have been in the IVA less than 2 years) this is a common modification put forward by creditors.

Usually a good offer for a variation would be if you could pay in as much or almost as much as you would have been paying in over the five years in one lump sum, thus saving on IP fees and getting creditors a dividend sooner rather than later.

Unfortunately, as with the initial meeting which approved your IVA, there is always the question of creditor apathy - whether or not they will be bothered to vote on the proposed variation, but your IP should be able to advise you accordingly.

My advice is to speak to your IP ASAP, consider what the basis of the variation is to be first though - can you obtain sufficeint funds for a lump sum full and final settlement?

I agree with Storm above regarding the mortgage/credit rating issues.

Hope this helps



AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[discojen]

Hi again
Thanks for your advice - I'll speak to my IP ASAP. Just wanted an idea before I spoke to him about it.

Just another mortgage question. My partner went to the bank to ask how much we could get, and the guy at the bank said even with the amount of money I orginally owed he reckoned I would have been better not getting the IVA at all as now I can't really get involved in a mortgage while in the IVA. I suppose I wanted to know that if I raised the money to pay off the IVA would the bank then count both our incomes towards a possible mortgage or would I still have trouble with this for 1-2 years until my credit rating improved a bit?

Also, I think I owe about £12000 on my IVA. Would making an offer of £10000 be acceptable, do you think? Or should I just pay the whole lot? This is assuming I can raise the money from family!

Thanks again!

[Storm]

Your income will still be included in the income multipliers.

You will not get much help going to the bank direct as they do not generally lend to sub-prime however a good broker / FSA registered mortgage adviser who deals with whole of market will be able to secure a mortgage.

You should note that typically the loan to value levels (ie the amount / % they will lend on property) are much lower and you will therefor need to really search out a good deal or put a deposit of between 15% - 20% in.

[neverending]

Hi
I would agree with Storm in that you are better going to a broker rather than a high st bank and there is no reason why you can,t be included in a mortgage.
Accuma,your quote"
Unfortunately, as with the initial meeting which approved your IVA, there is always the question of creditor apathy - whether or not they will be bothered to vote on the proposed variation, but your IP should be able to advise you accordingly"
Am I right in saying that failing to vote in a variation meeting is deemed a "yes" vote ?

[accgroup]

Hi Neverending

No, no votes does not equal a yes. Just like with the first meeting, at the variation meeting you need 75% of creditors voting in person or represented by proxy to vote to accept the variation otherwise the meeting will be inquorate and no resolution can be passed...

UNLESS there is a specific clause in the IVA which says that if a variation is proposed and no votes received then it is deemed accepted - the terms and conditions may have different rules for variation meetings, depending on the IP - which is why people should always contact their IP to discuss these issues as the IP will know the specific terms of the IVA applicable in each case.





AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[neverending]

Thanks Accuma
I,m sure that voting in a variation meeting is somehow different than the initial meeting,obviously not though.........must have dreamt it !!!!
Regards

[accgroup]

Hello

It will depend on whether there are specific terms in the IVA applicable purely for variation meetings, in most cases roughly the same Rules in the legislation are used for all creditors meetings, but some IPs may put in specific provision for variations, terminations, etc. A lot of IPs will use the "R3 Standard Terms & Conditions" which use pretty much the same rules for variations as for the initial meetings. This is something that creditors can modify though, a common modification put forward at the moment is that variations must be held on 28 days notice.

Hope this helps



AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com