payments are leaving us with barely enough to live

[godfrey]

My husband and I are currently in our second year of an IVA but finding that the monthly payments are leaving us with barely enough to live on - we are paying £634 per month into our IVA. We have debt of around £100,000 and wonder if introducing a lump sum to get out of the IVA early may be the answer. We have a little equity in our house, around £20K to £30K. Can you tell me what you think a reasonable lump sum might be in this instance?

[Oliver]

Hello Godfrey

Firstly, I would advise that you discuss your concerns immediately with your IP.

It is potentially possible to finish an IVA early through a lump sum payment. Creditors will sometimes agree to taking a lump sum to finish an IVA early even though this will mean less money for them in the long run. Obviously, as an IVA is Individual in nature, the majority of your creditors would have to agree to this. The following would have to be taken into consideration.

How much of the equity in your home are you going to be able to release? Remember it is likely that you will only be able to release a percentage of the value of your home (usually c80-90% of the property value.

How much will it cost for you to pay this extra mortgage per month. If the monthly cost is less than your current Disposable Income your creditors may expect the remainder of the money (i.e your DI less the cost of the equity release) to continued to be paid to them.




Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[neverending]

Hi
Your figures suggest that you are returning a 28-30p in the £1 dividend to your creditors.Have you a fourth year equity release clause in your IVA ? If NOT then you would stand a good chance to offer the full amount,plus IP fees,less payments made.I would guess that you would need 25-30k,have you family that could help you ?.
If you have the equity release clause then speak with your IP and submit a revised income and expenditure form.There are ways that your IP can help and one area that you could look into is to extend your IVA on reduced payments so as to achieve the original dividend.

An example would be to reduce your payments to £530 over the next 4 years[by showing that this is your disposible income].The 5k shortfall[48x£104] could be paid in the sixth year at the same rate[12x£530].This should return the original dividend providing that the IPs extra fees are reasonable.
Its just an idea for you and it will need creditors approval via a variation meeting

[MelanieGiles]

Hi godfrey and welcome to the forum

I am a practising IP, and will therefore try and answer this as if you were a client of mine coming for help.

Firstly, as the other posters have said you need to revisit your income and expenditure account to see what areas are causing you difficulties. Are there any reasons for you now struggling, or was the budget always tight. Have you made adequate provision for contingencies, or has any unforseen expenditure cropped up during the last year. Once you have arrived at a figure you feel is a comfortable alternative to the high figures you are already paying, then approach your IP to see if they feel a variation to the terms is possible and feasible.

Don't get too phased by the property issue - a variation proposal can vary those terms in any case, but you will need to get a current property valuation and mortgage redemption statement, as the equity will need to be addressed in some format.

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