Paying back the full amount of debt in an IVA

[spenmotherhen]

Hello all

Please excuse my ignorance and the lack of knowledge with regards to my own IVA.

My question is during my IVA I was told that I would not pay all of my debt back and once I have met the 60 month mark any debt outstanding at that point would be written off.

What I don't understand is, in the fourth year when I have to release equity from my home, my IVA company are entitled to 75% of this to put towards my debt. Whilst I am more than happy to repay my debt, am I understanding this correctly that by this stage I will be paying all my debt back as I will have around 30K equity?

Hope this makes sense. Thanks for any info.

Spenmotherhen

[sonyse2t5]

You will be paying your IVA monthly payment plus EQ on your property.....and if you have a fair bit of EQ....the total you pay could be 100% plus.

But near in mind what happens if there is no EQ in your property? The Housing price boom have made iVA more attractive to lenders -debt writing off is only really for those with no assets or BR - my debt could be written off by 39K and it would be 47K if if you count the IP fees taken from the Banks

IVA really only writes off debts if you have NO ASSETS...many have property....THAT IS WHY many IP say THAT CREDITORS LIKE IVA....with the 4th year EQ release....

But what would you opt for - a DMP....THERE IS NO OTHER CHOICE.

[kah]

I never met my IP face to face. Both of the firms I contacted for initial discussions said that this would probably be unnecessary unless there were problems.
I began to look at IVAs after internet searching for reliable debt management and a company I spoke to on the phone steering me very clearly in tnis direction.
Nothing was mentioned about equity release until - at the last moment - basic proposal all drawn up and meeting date agreed - it was brought in as if it was something I should always have been aware of. I've rechecked the documentation and information I had received up to that moment - nothing there.
So - equity release - assurances from the IP that it wouldn't be a problem to me - changes to the propsal by creditors meeting that did not allow me to feed a 19 year old in college vacations never mind help (as required by government) with university support - no contingency money at all - and I still accepted it!
I do wish I had found this forum before I started the process. Advertising etc gives the impression that there is something somehow regulatory in the set up of an IVA to protect the person in debt from my sort of folly whilst recovering as much money as possible (as should happen) for creditors. Unrealistic IVAs don't help either side - and realising that you are struggling in an IVA in order to keep your home (well as one of your priorities) only to lose it because you can't carry on after the 5 years - equity release ....

As you can probably all tell from my moans on the forum - 2 years in and don't think it's worth trying to make it for me.

[sonyse2t5]

kah,
The 4th year release thing is unavoidable - I believe they should have said so to you. Creditors will write off less debt with that EQ payment. Genrally that's why they find IVAs attractive...but with me they got a lesser deal-nearly 40K will be written off as long as my IP got his penny to the pound calculations right from day one and I honour all my payments....the alternative DMP and cough up 93K....

I don't have or want no property till IVA is over.

[iva experts]

It is true that in an IVA the individual must pay as much back to the creditors as possible. For some people this may mean 100p/£ plus I.P fees for others it could mean 25p/£ including I.P fees.

Your debts will not get written off until the 5 year period is over OR until the decided dividend was reached. When this has happened your debts will get legally written off.

Best Regards,
IVA Experts
http://www.iva-experts.co.uk/

[bagpuss]

can i just ask...I did F/F IVA , never did a monthly payment one at all. this was nearly 2 years ago...is this 4th year equity thing not applicable to F/F then...dont think iwas ever told we would have to have a valuation done after 4 years. It was just F/F and thats it.

Angie xx


My IVA Story......http://bagpuss.blogs.iva.co.uk/2007/09/ ... iva-story/

[catullus]

$th year equity clause only relates to 5 yer IVA's where the debtor is also a property owner (to unlock any equity that may exist in year 4)

It shouldn't apply to you, Angie, and by now you must have received a Certificate of Completion that marks the end of your IVA.

[jpj]

SPENMOTHERHEN
You dont pay 75% of the equity!!...you have to remortgage up to 75% of the value of your house.... so if your house is worth 100k and your mortgage is 60k, you have to mortgage up to 75k (75% LTV, loan to value) so you would have to remortgage up to 75k ! and pay your IP £15000 !

[bagpuss]

well i think i have ...it doesnt look like a cert but it does say...

Notice that voluntary arrangements are fully implemented

I blah blah blah (ip) give notice pursuant to rule 5.29(1) of the insolvency rules 1986 that my duties are complete and that the arrangements have been fully implemented.

signed..(ip)

Is this a cert...i hope so.

Angie xx


My IVA Story......http://bagpuss.blogs.iva.co.uk/2007/09/ ... iva-story/

[catullus]

Tis so. It's over. Freedom!!

[Adam Davies]

Hi jpj
Just to clarify
You will have to pay your IP between 85-100% of the equity that you can release,depending on your proposal.So in your example of a house worth 100k with outstanding mortgage of 60k you would usually be able to remortgage upto 85% ltv and this would be 85k,you would then have to pay over £25000[difference between old mortgage and new mortgage] if a 100% was requested or £21,250 for an 85% equity release.There are costs of remortgage to consider so these figures may be changed.Finally many proposals now contain the clause that the extra cost of your new mortgage must not cost you any more than 60% of your IVA payments[disposible income]
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[jpj]

Andy
spenmotherhen said on their first post that the equity release clause stated 75%!

[Adam Davies]

Hi
Well it's 75% of the equity raised,not 75% ltv
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[jpj]

Hmm...Well mine says I have to remortgage up to 85% of the value of the property (LTV)and hand it ALL over. Surely if you only had to hand over 75% of the equity raised you would keeping the other 25%, in effect getting a mortgage for more than you needed?

Think I may be missing the point here!! )

[spenmotherhen]

Thanks for all your comments.

It does seem to be a misleading clause as we all interperate in different ways.

The problem for me is I do not have direct contact with my IP and tend to only be able to talk to other colleagues who all interpret our clause differently. Some have even told me this will happen in our 3rd year??

Once this happens to me and for what I understand of it, I think I will have to sell our property, as with the remortgage our payments will be to much. As this happens in the 4th year does this mean we continue to pay our IVA payments for a further year. Surely if the debt is repaid by this remortgage we should be debt free??

Love the new picture Andy, Planet Apes are a thing of the past!!


Thanks to you all for your advise