process to make a settlement order ?

[cb3]

Can you tell me if after the first year you have enough value in your property to make a settlement offer what the process is. If you sell our house and you get more than is required to settle the amount that was requested in the IVA can you keep the difference to put as a deposit for another house??

[Lisa2009]

HI and welcome.
Do you have an equity release clause?
If so it would be unlikely your creditors would accept an offer to end so soon in when they could be getting 4 more years of contributions PLUS equity in year 5.

mrs skint

[MelanieGiles]

Mrs Skint is correct - and all will be dependent upon the provisions contained within your own IVA documents.

However if you were able to sell your house and pay all of the debts in full, plus the costs of the IVA and potentially statutory interest, that would be entirely possible.

[cb3]

Hi we do not have a equity 4 year clause in our IVA and therefore would like more details on if it is possible to get out. If we make sat £50,000 on the house and have already paid 9000.00 on the IVA when the original repayment was around 47000 do we only need to pay the difference?

[MelanieGiles]

If the property was excluded, and I have to say that I am suprised that it was when you have only been in the IVA for just over a year, and you have so much equity, then there is nothing to stop you making an offer of early settlement to your IP based upon the sale proceeds.

How was the property actually dealt with in your IVA as a matter of interest?

[cb3]

When we took out our IVA the difference between mortgage and property was around 32000. As the debt was 82000 it was obviously not enough and the property was excuded from IVA as i earn a good salary. Therefore we pay 750 per month for a agreed IVA of 43000 plus 6000 fees. We have paid 9000 and therefore believe the settlement would be around 36000 as the fees would decrease. What we do not knowis though if we sell and make 50000 and pay the 36000 off and 4000 estate agents will they have any right to the 10000 left or can we use this as deposit to smaller property. Thanks for comments so far.

[MelanieGiles]

If the property was genuinely and expressly excluded from your IVA, and not just not mentioned at all (have to say if it was expressly excluded you have been very lucky!), then the asset is yours to deal with in whatever way you see fit. I am personally amazed that your creditors would have disregared equity totalling £32,000 at the time you entered into your IVA.

Was a professional valuation of your property conducted and referred to in the IVA proposal?

[cb3]

Thanks Melanie, no professional valuation was completed. The words in the IVA appear under the excluded assets section and say the following.
Regardless of any equity there may be in the property i believe that based upon our personal and financial circumstances it is unlikely that we will be able to raise sufficent funds from our property and be able to afford the repayments, in order to make a remortgage exercise viable. For this reason the property is excluded from the voluntary agreement.

Therefore can you confirm that we have been lucky and that we should be able to come to some agreement with out IP on putting in a settlement?

[MelanieGiles]

I would say that you are lucky that your creditors did not spot the glaring inaccuracy in your IVA proposal in that you would surely be able to afford to raise equity during the final year, given that you are paying £750 per month currently into the IVA.

It may also com across as a little rich for you now to be suggesting to do exactly what a year ago your proposal said you would not be able to - albeit I accept that this was drafted for you by a professional company and that you relied upon their advice.

Many of my clients, with less disposable income and considerably less equity have been forced into accepting this very common requirement, which I personally find is unfair but is pretty industry standard.

I also am pretty amazed that no professional valuation was carried out on your property. How did your IP validated its value? And was the property, the outstanding mortgage and the equity sum fully disclosed in your statement of affairs?

That said, the proposal was accepted in its current form by your creditors, and the property is legally excluded and yours to deal with as you will. There is no harm in discussing the possibility of a variation with your IP, but beware clever creditors who might just spot the issue they failed to spot in the first place - that you can afford contributions and also have substantial equity.

I think a chat with your IP is now in order, as he/she will have detailed knowledge of your case and not just a brief snapshot. I wish you good luck and don't forget to let us know how you get on.

[cb3]

Thanks Melanie, we will contact our IP. Our original proposal was based on a payment £75 lower than what it finished at which is why i think they increased it due to not getting the equity payment. I dont understand your comment around the clever creditors, do you mean they can turn down the settlement figure?? Not sure how if it was excluded and it is a legal document but would like you to explain a bit more. Thanks again

[MelanieGiles]

Creditors might be bullish and just make you carry on paying the payments under the terms they previously agreed - or ask for a higher amount to compensate. At the end of the day this is still a lottery and they have either a yes or a no vote - although the likelihood that being tempted with early money might just do the trick.