We're in our final year of our iva last December a new company took over other than the initial letter we have had no correspondence from them so now we're in September with my iva due to conclude the 5 years in October I decided to ring an find our what we do now. After being passed around the different offices I was told it was in closure and had 2 payments left. Then 15 minutes later I received a phone call to say in actual fact we now have another 12 months as we have around £4000 equity. Is this right? We don't really have that amount of equity after getting in touch with 2 estate agents both have similar valuations, both have told us that we can expect to receive £5000 - £8000 less than the asking price which would leave us in negative. Advice please
Ask your local estate agents to provide you with a written quotation for the value of your property for an immediate sale. This is usual lower than the price they would take the property to market at.
Submit that to your new company and ask for clarification on terms or check your proposal. Many IPs do not bother if equity is less than £5000 anyway, but not all.
I would ask for this in writing. Who are you with now?
Check the wording in your own proposal and Chairman's Report. Both you and the creditors are bound by that and the IP cannot vary this without agreement.
Do you have the £5000 de minimis clause ?
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
In my agreement under Equity in the property states..
the debtors are obliged, where possible, to release the equity in the property per the terms of the modified proposals[?]
The equity is to be introduced after month 54 of the arrangement's following a valuation of the property
The valuation was reduced to the price of a repossessed property for comparison purposes when the IVA was drafted. However, if you still believe that there is little equity in the property it may be worth getting your own valuation.
The equity terms are vague and seem to depend on what creditors proposed at the meeting of creditors. Yopu would therefore need to read the Chairman's Report and see what conditions were introduced by creditors before you will know what your obligations are.
If they cannot find the report how can they extend the IVA? The proposal states that equity is to be dealt with per the terms of the modified proposal so unless you know what these modifications were you cannot address the issue.
For example, there may have been no modifications [unlikely] or there may have been a minimum amount of equity demanded, a minimum dividend requirement or even a creditor could have demanded the sale [again unlikely]. However unless you know what is in that report you do not know your obligations so your IP will need to find it and give you a copy.
All of this should have been explained to you at the time of the meeting when the Chairman's Report was drafted but perhaps this did not happen if you do not have a copy of the report.
Thanks after many more phone calls I've got a copy of the chairman's report from the Iva company
After month 54 of the arrangement the supervisor will obtain a professional valuation of the property. The debtor will then obtain two remortgage quotes from reputable brokers / lenders to satisfy the supervisor that the equity realisation is the maximum achievable. The property shall be remortgaged to a maximum 85% loan to value less existing secured borrowings. A re-mortgage of less than 85% loan to value is allowable where the lower realisation will introduce funds equating to 100% of the debtors equitable share or where the arrangement will receive payment in full. Where the debtor is unable to obtain a re-mortgage, the IVA should instead be extended by up to 12 months. The amount by which the additional secured borrowings increase shall not exceed 50% of the monthly arrangement contribution at the time the mortgage offer is obtained. Where it is demonstrated after month 54 that the equitable share is less than £5,000 (gross) the property is to be excluded from the arrangement without extending the existing term. The costs of re-mortgaging to release equity shall be deducted from the mortgage proceeds and the monthly payments deducted from the contribution. If the increased cost in the mortgage means that dividends to creditors fall below £50 per month after fees, monthly payments are stopped and the IVA is concluded.
If your equity is only £4,000 your IVA should cease after 60 months based on what is in the report. If this is on each Chairman's Report then you arguably can have up to £9999 between you before you need to extend.
This wording is also slightly unclear in what it says and may intend. Is the £5,000 de minimis calculated on a remortgage at 85% loan to value or the total equity in the property? Regardless it should not matter to you as either way you have insufficient equity to justify an extension.
I will contact them once again an see if they can explain the meanings of :
the property shall be remortgaged to a maximum 85% loan to value less existing secured borrowings. A re-mortgage of less than 85% loan to value is allowable where the lower realisation will introduce funds equating to 100% of the debtors equitable share or where the arrangement will receive payment in full. Where the debtor is unable to obtain a re-mortgage, the IVA should instead be extended by up to 12 months. The amount by which the additional secured borrowings increase shall not exceed 50% of the monthly arrangement contribution at the time the mortgage offer is obtained. Where it is demonstrated after month 54 that the equitable share is less than £5,000 (gross) the property is to be excluded from the arrangement without extending the existing term.
This is the same in both mine and my husbands Chairman's report so with a little hope this will mean £5000 each as appose to £2500 totaling £5000 so the margin will will alot wider form the £4000 and few hundred pounds they have calculated
Exactly. This may just be enough to get you out of the IVA in time for Christmas and I will keep my fingers crossed. Please let us know how you get on.
Back so soon.. No getting out early they see in the lines that potentially I have nearly £6000 equity Top line property valuation.
the £5000 is based on the property not on each candidate.
The 12 month extension is in the post to be signed boohoo.
"Where it is demonstrated after month 54 that the equitable share is less than £5,000 (gross) the property is to be excluded from the arrangement without extending the existing term."
If this term is in each individual IVA then I would say they are wrong. It specifically refers to your SHARE of the equity ( which in most cases is 50%).
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
