Complex IVA problem

[killerkev]

I have just completed the 5th year of a IVA and in the original arrangement I would input 75% of the equity this is very little and I cannot re-mortgage or raise and more money. At the outset only 3 of the 4 creditors voted ( the largest creditor did not reply to any correspondence)I am going to pay for a extra 12 months ( no problem) The problem is the creditor that did not vote will not except this and is trying to force the sale of the house ( this will only bring a small amount of extra money). My IVA company does not seem very helpful and is unsure of what will happen , something to do with the technical wording of the modification to the original IVA!!!
My main question is can someone who did not vote now have a say in the IVA?

[Tina Shortland]

Hi Killerkev - welcome to the forum.

Without knowing the full wording of your chairmans report it is hard to comment in detil but one thing is for sure - your IP should be on the case with this and either getting it sorted or communicating with you so you understand what is happening and why.

Normally there is a minimum amount of equity before the release clause kicks in - usually £5k.

Please push your IP for clarity and to see what they are going to do to address the matter.

Keep us posted.

[Michael Peoples]

If the original proposal did not address what would happen in the event of not being able to raise money, a variation would be required. The fact that the creditor did not vote at the original meeting does not preclude them from voting now on any variation.

It seems harsh and your IP should be able to sort this out. However, ultimately the IVA could be failed and you could be made bankrupt if you do not agree to the variation. Hopefully this will not happen and the creditor will see sense and fairness.

[killerkev]

Thank you for the quick reply! All the company will say is that in the original IVA I would inject 75% of the equity that could realisticly be raised But in the modifications the word realistic was left off to say I would inject 75%( so I have to inject that amount about £8000 no matter what!!) the extra 12 months payments will bring in nearly £3000 so I have to find £5000 or sell the house!

[Michael Peoples]

It may be worth having another valuation carried out on a 'forced sale' basis. You should also deduct an amount for the costs of selling for estate agents, solicitors etc and get 75% of this figure. If the property is jointly owned the creditor cannot pursue the joint owner's equity so there may be a compromise to be reached. There is no guarantee that you would sell the house at the price needed to raise the equity so this dissenting creditor should see some sense.

[killerkev]

Thanks as you say I think the creditor is trying it on The house is jointly owned so don't see how they can force a sale ! I have no problem paying my fair share .

[plasticdaft]

Any idea of the actual amount of equity Kev?

Paul

[killerkev]

At the valuation it is about 24k so my 75% is 9k
But if it was sold it would only bring it about 12k so my share would be less than 5k

[plasticdaft]

I cannot see creditors forcing a sale for such little return.

Paul

[killerkev]

Just heard that I have to find the 9k or the largest creditor will force bankruptcy, so I have paid for 5 years for nothing.
Something to do with the wording of the 2006 IVA , apparently would not be allowed on IVA'S taken out now.

[Michael Peoples]

What is the actual value of your property and what is the total outstanding on the mortgage?

[killerkev]

The property has been valued by 3 estate agents with a guide price of 110k-120k with a quick sell price of 100k the outstanding mortgage is 84k I am paying the IVA for the additional 12 mths and have been told at the end I will have to inject the remaining amount (at the higher value) or I will be bankrupt by the largest creditor ( not the 3 smaller creditors). So that comes to 13500 less what I pay in the next 12 mths.

[Michael Peoples]

This seems extremely unfair. The equity should be calculated allowing for costs of sale and perhaps using the quick sale valuation. This leaves your equitable interest at less than £5k and the extension should be more than enough. They seem to be playing hardball but I would push the IP to use the figures of £100k less costs of sale of approx £5k, less the mortgage of £84k equals £11k or £5.5k each. 75% of your share is £4125 which I would beg, steal or borrow to get out of this mess. Check with your mortgage company if there are any early redemption penalties or exit fees as these would further erode the equity and reduce what you are liable to pay.

Finally, I would find out who regulates this creditor and threaten them with a complaint. It seems to me that they are not treating a customer fairly as you have made more than enough reasonable offers.

[killerkev]

Thank you very much for your advice ! That's petty much what I'd worked out I will be paying 3k in the 6th year and have said I will some how get another 1k even if I have to go into a 7th year!!! Because I was in a IVA when it came up to re-mortgage I had to stay with my current leader ( who I must say were very helpful )they put me on a 10 year fix which I am happy with, but the early redemption fee is 6%
It seems as if my IP is trying to get as much as he can for the creditors and not meet me half way I may write out my own proposals based on what you have said and insist that they are put to my creditors ????

[Michael Peoples]

If there is a 6% penalty the equity has dropped to under £11k before costs of sale or about £6k after costs. 75% of your half is only £2250 so make sure your IP fights your corner. Ultimately the IP has a duty to creditors but this does not mean you unfairly treat your clients to the creditors' advantage. Is there anyway you could raise a lump sum of £2-3000 because this would mean the IVA could be closed down in line with the original proposal and there would be no need for a variation?