Have I Been Mis advised

[busymum]

Help urgent advice, IVA DEC 2009 I was originally advised it would run for 60 mths although when I questioned they advised it could possibly run for 72 mths but only if our house price increased they explained that a few months before end we would provide valuation on our house but due to amount of negative equity the house prices would never increase that much, so I provided the info required expecting our IVA to be nearly concluded but now am receiving paperwork stating we still have 12 months can I complain of being mis advised. In the paperwork it states alot of of info regarding our house and 54months then further on it states 72months, this is what I questioned originally

[thisusernameistaken]

Your IVA was proposed and accepted at 60 months. In the 54th month you have to get a valuation of your property. If there is any equity in the property (usually greater than £5000) then you will normally have to do one of two things:

1) Re-mortgage to free up the equity to bring it into the IVA

or

2) extend the IVA by 12 months in lieu of being able to remortgage

Most people can't remortgage so the second option is taken. There are also some caveats around the remortgage regarding how much it can increase your costs by etc etc but if it's not an option anyway then that is moot.

Have you yourself had the property valued, and if so, by more than one estate agent? Some IVA companies seem to be doing 'drive-by' valuations (also known as 'looking on Zoopla') and coming up with a figure themselves. Clearly it's to their advantage if the figure requires more money. For what it's worth, Zoopla appears to over-value my property by some 15-20% so it's worth getting local experts to give you a 'forced sale' value. Get it in writing and take the average value.

The other consideration is whether the property is jointly owned and whether you and a partner are both in a joint IVA? If you alone are in the IVA and the property is owned 50/50 then you will only need to consider 50% of the equity (you cannot be asked to pay in equity which does not belong to you).

For example, let's say your property is worth £200k and is jointly owned. You have a mortgage of £150,000 outstanding on it. The figure used will normally be 85% of the value (so 85% of £200,000) so in this example £170,000. The total equity available is £20,000. As you own half the property, your share is £10,000 and would need to be made available to the IVA. If you're not able to remortgage, you would have to extend by 12 months.

Let's say your property is worth £170,000, jointly owned and with £150,000 mortgage. 85% of £170,000 = £144,500. Mortgage is £150,000 so therefore zero equity and also no extension of the IVA.

This is why it's important that your property is accurately valued, and normally this is the responsibility of the debtor in the IVA.

Check the terms of your IVA and speak to your IP to clarify. If you've not had the property valued yourself I would get this done immediately and remember to ask for a 'forced sale' valuation.

Hope this helps.

[busymum]

Hi Thanks for taking the time to reply, I even have the name of the person I spoke to originally however another company has since taken our IVA over, we do not have any equity in our property as we were in quite alot of negative equity when the IVA began,we own the property jointly but have seperste IVA's I did question the 72 months on the paperwork and that's when the adviser went through all the details and stated that this would only happen if there was a property boom and this was very unlikely due to the negative equity. Can't believe I never questioned this earlier it has only become apparent when they asked me for valuations just before xmas so I thought great we are nearly at the end, the suggested Zoopla so I sent them the valuation from there (this still doesn't give us any equity) and I got a text back to say they were running behind ) we then received paperwork for our next annual review!!! for the next 12 months of our IVA and payments never stopped I didn't want to cancel direct debit as I know this is classed as failure of the terms, I'm in such a pickle.

[relieved33]

They should only extend in lieu of equity if there was no minimum dividend to achieve. Ask for a written breakdown and I would cancel the direct debit but save the money. It may take a while to get back!

[Foggy]

Check exactly what it says in your paperwork about a)any anticipated dividend ... is there a minimum ? and b) What your equity release clause says exactly -- should be roughly in line with that mentioned above.

Then ask them for a detailed breakdown of their valuation and equity calculations and an explanation as to why they are asking you to extend if there is no equity.

I would guess that they are so snowed under that they are fudging the paperwork and haven't even looked at your figures.

If you don't get satisfactory answers within 28 days complain to their regulatory body.

[Michael Peoples]

If NRAM were a creditor at the time then a 72 month IVA would have been pretty much automatic. However you should have been advised this and if they were not a creditor I see no reason for the extension.

[busymum]

Hi again Thanks for the replies and Yes Nram are creditors but I raised this question at the time regarding the 72 months and now it looks like I was fobbed off as they stated that the only time it would go to 72 months was if we had equity, I now feel like I was lied to, do you have any advice of who I would complain to.
Much Appreciated.

[Foggy]

Did you ( as you should have) get a copy of the Chairman's Report, which should have detailed NRAMs amendment ?

[Michael Peoples]

There should be a record of the conversation when the IVA was approved. This will show what was discussed and hopefully your IP firm has still a copy of this. The Chairman's Report will also show the changes but if you feel you were deliberately mislead you may not have understood what was written in the report.

Ask for a copy of the recorded call when you did the meeting and this should clarify matters.