5k Deminimus Clause - IP wants an extension

[Til]

Dear all

We've had the initial figures re equity from our IP as follows:

Property value £86,994.00

Mortgage £84672.92

Equity available £2321.08

We have therefore been advised we have to extend the term of the iva to cover the £2321.08.

Is this normal?

I thought the 5k deminimus clause would mean no extension?

In addition I think they have overvalued our house so would like to know what recourse is normal when the house valuation is disagreed with?

Thanks for any advice x

[plasticdaft]

Question the valuation and ask them about the deminimus clause.

I think they are trying their luck!

Paul

[Michael Peoples]

You need to check the overall proposal and any modifications such as a minimum dividend. However, if your IVA is a standard protocol one I see no reason why it has to be extended. It may be an error so speak to your IP or drop them an email.

[Til]

I am a bit baffled at this point and have one more question before I dig further...

When it comes to EQUITY ... in an interlocking IVA ... is it considered that my husbands and my equity is separate?

In other words - would it be that my husbands share of the equity would need to be 5k and mine 5k too therefore meaning 10k in total?

My husband has different clauses to my IVA so I am considering how this affects us.

Thanks for your advice

[Til]

Further to this it would seem they are using a clause in our Chairmans report which is written as follows:

"If the amount of equity available in the property is under 5k, it is De-minimus and does not have to be released via remortgage. However the IVA should be extended by a maximum of 12 monthly additional contributions, or until contributions have equaled the estimated available equity, whichever is the sooner"

I am assuming this is not protocol compliant?

Thanks for any advice.

[nittykitty]

Hi Til,

Mine was the same however they overvalued my property and expected 6 more payments to cover. I challenged it with a local estate agent valuation and it was reduced to 3 extra months instead.

Hope you get sorted!

[Til]

Thanks Nityykitty - I think this is whats happening here. Our house needs major work but they don't seem to have taken this into account.

I didn't want to have to go down the route of deceiving estate agents about our motives in order to get written quotations (they tend to charge around her otherwise) but I assume I'll have no choice to pretend that we are considering a move in order to get the valuations to show the true value.

Whilst I will always pay what I signed up to - our house simply isn't worth it with the work that it needs.

[mole]

Sorry to hear your plight Til. The term in your chairmans report, does indeed fall outside a protocol compliant IVA. Hope you manage to get a better valuation as you have already done 6 years and that is enough for anyone!

[Til]

Thanks Mole - I thought so... I'm hoping an Expert might now be able to advise me on the following:

1. If I disagree with DFD's valuation of the house (done with online evidence only), am I entitled to obtain my own valuations to prove DFD are wrong on this and are DFD obliged to accept them if they are in writing?

2. If we sign up to the new 2014 Protocol T&C's (which we had previously rejected) will all old clauses in my chairmans report be replaced with the new protocol rules?
Would we, by signing up to the new T&C's, get rid of the clause I mentioned earlier in this thread that's causing us problems with equity?

Or would the new 2014 Protocol rules simply be added on top of our existing clauses?

Thanks for any advice

[nittykitty]

I had to pretend to the estate agent I was considering a sale but got the valuation no problem and forwarded it to DFD. This was only last year.

[MelanieGiles]

That clause used to be used by KPMG, who admitted to me from the time the IVA Protocol was introduced in 2008 was badly worded and did not concur with their intent - which was to mirror the spirit of the protocol.

In my firm we treat it is exactly the same way as the protocol provisions.

[Til]

Thanks Melanie.

If we were to sign up to the new 2014 protocol T&C's, would this get rid of this clause?

Thanks for your advice

[sponge]

something in my mind says sure I saw a thread about the new 2014 protocol and a secured loan clause! eeughhhh

[Til]

That's true Sponge but it also makes equity less than 5k deminimus so ours would be caught under that.

However we've now been told that signing up to the 2014 protocol would not get rid of any of the modifications - even the ones that are not protocol compliant!!!

So we would be left with non compliant modifications on top of all the new protocol rules as well?!

If any of the Experts could advise if this is normal I'd be very grateful as to be honest I can't understand how DFD would ask us to sign up to 2014 protocol but expect us to keep all the non protocol compliant modifications in too?!

I have asked DFD to clarify this point further but wondered what other experts think regarding this?

[mole]

Hi Til, I'm not an expert but have been around here a long time and I am pretty sure your modifications overrule the standard terms of the IVA protocol.

Interesting post from Melanie on how they interpret the claim in your agreement and where it came from. Perhaps this is a line of discussion with DFD.

TBF, after doing six years and with the equity so borderline, I would be surprised if you pushed and pushed you wouldnt get closure. GL