What happens if you can't re-mortgage in year 5 and the creditors refuse to accept the extra 12 months payments?
The 12 month clause isn't in my agreement, although it is Protocol Compliant. But I am worried that if I get to year 5 and can't re-mortgage which will be highly likely then what action can my creditors take? It's a bit of a minefield this one as I can't seem to get a straight answer - can I be forced to sell my home? Thanks
I would think that you would be allowed continue on with a further 12 months, I'm surprised, as it is protocol compliant, that the equity release isn't in there.
It is something you need to take up with your IP, hopefully one of the professionals will be along later with further advice.
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The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
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Is there much point in putting an equity release clause into the IVA proposal, if there is absolutely no chance of any equity existing in year 4 or 5?
kallis3 wrote:
Hi,
I would think that you would be allowed continue on with a further 12 months, I'm surprised, as it is protocol compliant, that the equity release isn't in there.
It is something you need to take up with your IP, hopefully one of the professionals will be along later with further advice.
I don't know - who knows what will happen with the housing market at the start of an IVA?
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Your proposal must cover what is to happen if you cannot raise any money if it is protocol compliant - even if the IP is directed to call a meeting of creditors to determine their wishes.
Thanks for your comments - this is the latest reply I have had - which from what I can see basically it says that if I can't re-mortgage them the IVA will fail - so what would be the point of continuing in the hope that I will be able to re-mortgage but if not then I am back at square one and will have paid 5 years payments into an IVA - or am I reading this wrong?
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I tried to explain to you that we would try our best to help you either way. Within the IVA the creditors cannot force you to sell your home, however, if you were to go bankrupt the creditors would look at claiming your property. At the time the equity is due, you would need to provide an up to date valuation statement to check how much equity is due at the time and if so, remortgage your property. If you can remortgage I mentioned early completion which would be a Full and final settlement into your arrangement. However, if you cannot remortgage, I mentioned to you that as long as you are able to provide documentary evidence we can also look at other options first for you, including the 12 month extension, as previously discussed. If you cannot remortgage and there is enough equity there, the creditors would still expect that equity to be paid in to the arrangement, which could constitute the sale of your property. If you do not agree to sell your property then this would mean a breach of your arrangement.
Blimey, thats a bit worrying - on the one hand saying Creditors cannot force you to sell your home, but on the other saying if you have equity and cannot remortgage (I imagine this is not unusual when you are in an IVA situation?) then you would have to release it by selling! Somewhat contradictory?
I would like to see what the experts say about this one.
Worrying I know! If the 12 month clause was in my agreement then yes it would conclude after that time if I was unable to re-mortgage, but it isn't in my agreement.
I have been trying to get a straight answer from my company and they have just (after loads of emails going around it) sent me the above.
I wsn't sure if I getting it wrong but it just seems a waste of time doing the IVA if there is still the possibility that I may be forced to sell my home after 5 years of paying into the IVA.
I can only assume that these were the conditions of the IVA or were modifications proposed at the meeting. Regardless of whether or not the proposal is protocol compliant or not, creditors have the right to modify it. HMRC for example require 100% of the client's equity to be introduced and do not specify an alternative. Therefore if the equity cannot be raised by a remortgage there has to be a variation.
While in practice HMRC are currently amenable to extensions there is no guarantee that this will always be the case. They could insist on a sale and their modifications supercede anything in a protocol IVA. Indeed, HMRC will always modify a protocol IVA where they have sufficient voting power.
Depending on what was in Tobymoz's IVA and whoever voted on it, it is certainly possible that the marital home will have to be sold. If the majority creditor who proposed the modification insists on a sale and the property is not sold, it would mean termination and bankruptcy. If this is the case it should have been explained at the time and not be something to be concerned about now.
I would be interested to know what modifications were proposed and who proposed them.
Thanks for your response. Luckily I don't owe anything to HMRC. I'm going to be really daft now and ask where do I find which modifications were proposed?
Just had a look and it states:-
A copy of the Chairmans report must be emailed to Grant Thornton within 4 working days of the completion of the meeting.
The nominee fee including VAT will not exceed £2300 and may be drawn as soon as funds permit.
The nominee fee including VAT will be the equivalent of the first 5 monthly payments and drawn as soon as funds permit.
The first dividend shall be paid by month 8 of the arrangement and subsequently paid quarterly as a minimum thereafter.
The supervisor fee excuding VAT will be equivalent to 15% of all further realisations and drawn proportionally as funds are raised.
And then it goes on to show who voted and who didn't - which I presume you don't need, but nothing else.
We are with Payplan also and there is nothing in our Chairmans report about the equity release, but it is in the proposal and says we will release 14k each (if possible) or the IVA continues for a further 12 months.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
