single parent trying to keep my head above water

[spull]

Hi, Didn't know that this existed and am so happy to find I am not alone in this nightmare.

I approached an IVA company last year due to my mounting debts and inability to sleep at night with the worry. The debts were accured through neccesity rather than extravagance.My IVA was agreed and the propsal documents stated that I would pay £200 per month for 14 months and a lumpsum payment of £11,500 when I could re-mortgage which is now. I have approached several mortgage companies and through the use of an independant advisor have been informed that the most that I an borrow on top of my existing mortgage is £6000. I contaced the IP and was told to wait a couple of months as during that time I would have paid a bit more off the mortgage and the house would of increased in value!!!! (crystal ball somewhat cloudy on that one)

I informed the young lady on the end of the phone that as my mortgage is currently on interest only that I would be unable to pay any capital off the initial loan and that also my expenses had increased and therefore my disposable income had decreased during the past few months. She then said that one of the clasues in my propsal stated that I needed to get two mortgage quotes to ensure that I got the maximum equity release for them which I have and am sending onto them.Another clause also stated about the payemnt being net of any fees so does this mean that the fess involved with the re-mortgage are to be taken off the total amount that I can borrow?

What I really want to know is can the offer of a lesser amount as a lumpsum payment induce bankruptcy proceedings and also with the remortgage and moving onto a capital repayment will reduce my disposable income will they be able to ask for an more monthly payments once I have paid the 14 as stated in the proposal. Basically where do I stand? What are the options? I am a single parent with a child trying to keep my head above water.

[go_4_broke]

Hi spull,

Sorry to hear about your situation.

What basis was used to arrive at the £11,500 figure ?

Is it a definite amount, or just an estimate ?

If it was a definite amount that sounds like it could cause a problem but there are probably still several options open to you.

If it was an estimate and you are still making 'best possible' contribution then you should still be within the terms of the agreement.

Yes, you might have to make extra payments depending on the terms of your agreement. I would also guess you might have to postpone going onto a repayment mortgage until the IVA has ended.

I think a lot of this probably depends on the exact terms of your agreement and hopefully someone will be along later to give you a better answer than I can.

-Best

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

[spull]

Thank you for your comments,to be honest with you I think I have been somewhat naive over the whole process. The £11,500 was given to me by the individual I initially spoke to at the IP company as it is Loan to rate value of 85% on my property value - at no point did he ask how much I could borrow or could afford to borrow. In my proposal it states that " I propose to exlude the property from the arangement but will introduce a lum sum payment of £11,500 from the proceeds of a re-mortgage. An open market value must be provided and a mortgage redemption figure. I shall arrange for two re -mortgages offers in principle. I shall accpet the offer which provides the greatest return to my creditors and 100% share of those proceeds, net of costs and after clearing the outstanding mortgage must be paid into the arrangement" Reading through the small print though about the IVA failure it states "The sale or realisation of an asset for a sum less than the estimated in a proposal shall not constitute failure of the arrangement" So does that mean that an offer of less money is within the IVA proposal?

[go_4_broke]

Hi spull

Still a bit of a mystery I'm afraid, at least to me.

The statements seem contradictory, for instance, I don't see why any valuation would be required if the figure had been fixed at £11,500.

I'm sure one of the IP experts will be able to see through it, hang in for now.

It might also be useful to know the IVA company/IP that arranged the IVA

-Best

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

[MelanieGiles]

Hi spull

Your IVA seems odd in that it comprises of very low contributions, and a relatively small lump sum offer. Notwithstanding this, creditors accepted it on this basis so they must have thought you were making a viable offer at that time.

The proposal requires you to obtain two offers of remortgage, and for you to introduce the total amount of funds raised - if the maximum which can be raised is £6,000 then so be it. Unless you have guaranteed a dividend payment at a certain level, and you should check your documents to verify this, I would say you will successfully complete your IVA shortly. Check with your own IP to be sure.

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

[spull]

Thank you Melanie.
I have had a look back in my documents and all it says is what I have put in the quotation marks in the initial post. The total debt I owed was 30k so not sure if that bears any relevance? I have sent the mortgage quotes off to the IP so will wait and see if they accept the 6k I can raise through the re-mortgage if not then not too sure what the options are?

[go_4_broke]

Melanie, does that mean the £11,500 figure is a red herring, or at least non-binding ?

-Best

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

[MelanieGiles]

The £11,500 figure was obviously based upon an assumption of equity, but as the poster's second quote states that the realisation of an asset for a lower amount should not constitute failure, then the estimate is irrelevant.

Spull - also check your Chairman's Report to make sure that there are no conflicting modifications which might override the proposal.

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

[go_4_broke]

Thanks Melanie and fair enough. It was just that the 'will introduce a lum sum payment of £11,500 from the proceeds of a re-mortgage.' bit sounded rather. . . unequivocal.

-Best

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

[MelanieGiles]

IP's need to be careful when drafting proposals not to commit the debtor to things that may not be achievable - which has kind of happened here, but not quite!

To all those debtors out there in the process of putting IVA's together, make sure you read the proposals carefully and query anything you do not understand BEFORE YOU COMMIT TO SIGNING ON THE DOTTED LINE. If in doubt get a second opinion.

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