my children and I may lose our home

[sarah.b]

Hi, I have an IVA with Synergi, I have just received a letter from them. Saying that in the 4th year I need to get a market valuation and 2x mortgage offers on my property. The only thing is that, I have a secured loan on the property that run for another 5 years at this time. If I remortgage I have to pay this, therefore it has to be included in the new remortage. The only thing is that this will extend this for the term of the remortgage. Therefore extending the debt over a longer period. Also my work credit and child benefit will be reduced in the next 5 years which is the monies I am using for the secured loan. I will be unable to keep the new payment up. The whole idea of an IVA was to help you get out of debt and stay out. This will push me bad into debt and I am worried about this. I will only have my salary to pay for the mortgage in the 4th year and unable to live on the balance. Can I do anything about this as my children and I may loss our home after all this. Thank You

[scaredkez]

sarah hi and welcome to the forum, please tell us how far into the iva are you now? are you up to your 4th year, all the things that you have noted here were they disclosed at the time to synergi ( sorry synergi is not very well liked on here especially by me) we need to get a bigger picture of your iva so the technical experts on here will be able to advise.
kerri

Please view my blog at: http://scaredkez.blogs.iva.co.uk/

[Andy2]

What year are you in with Synergi ? This is a standard requirement of most IVAs so you shouldn't feel that another IP would have done things differently. It was probably the only way the creditors would accept your offer. Also secured loans do not always have to be redeemed when you remortgage. You can perhaps remortgage and retain any secured loan that is in existence without it being affected, though of course the valuation, loan to value and amount you can raise must take into account the existing secured loan and your commitments to it. Also why do you think your child benefit will reduce ? There are many lenders out there who consider all circumstances. An IVA is providing you with very valuable protection but in order to do that there is bound to be an equity clause in there.

[MelanieGiles]

Hi Sarah

I am assuming that the secured loan was in place at the beginning of your arrangement, and has not been taken out whilst you have been in the IVA. Please confirm this point.

The modification your IP has talked to you about relates to equity in the property. If you have no equity in the property at the fourth year point, because the secured loan is absorbing this, then there will be no further monies to raise. Of course if you do have equity, then your re-mortgage will repay the secured loan in any case, which will probably result in reduced mortgage payments for you as well.

Yet again, this strikes me as a case where this particular firm of IPs is not explaining things correctly to their clients - and about really important things about their family homes. When will we ever see them stop doing this I wonder?

Sarah can you tell us how you found this firm and what contact you have actually had with the insolvency practitioner themselves. And when was your IVA accepted?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Adam Davies]

Sarah
If you are unable to obtain a mortgage due to affordability issues then you may be able to extend your IVA by a year instead of a remortgage.
I,m interested about the 2x mortgage offers asked for.Do they expect you to pay for two lots of surveys ??
Regards


Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[Andy2]

I think it will probably mean two VALUATIONS and I imagine estate agents ones will suffice. If she could get an overall re-mortage to discharge the existing mortgage, the secured loan and her debts in an IVA, then she might have to do that. The affordability will take into account the secured loan payments/IVA payments that will no longer be needed once the re-mortgage is in place. It will have to be a specialist lender but they do exist.

I think the point Sarah was making is that she did not want to turn the 5 year secured loan into a mortgage of a longer term. I can see her point but at the end of the day Sarah is at the mercy of her creditors - she may have to relinquish her personal preference regarding this loan - particularly if her IVA is at risk of failure if she fails to do as the IP asks. I imagine the equity clause in the fourth year worries many people - how big will it be and will they be able to raise the money via a remortgage and who will be prepared to lend.

If Sarah lets us know what her monthly secured loan and IVA payments are plus what the likely equity is in her property it will give a better indication.

[MelanieGiles]

The two valuations modification has been around for a long time and is perfectly acceptable. However getting two offers of a remortgage is more tricky, as I understand it is illegal to apply for two mortgages with different companies at the same time.

I agree with Andy2's interpretation of Sarah's predicament, and I feel that a lot of people already in IVA's with the 4th year equity release provision do not fully appreciate that further borrowings at that time will extend their long-term debt repayments. IP's must ensure that this is fully explained to their clients before the agree to accept such terms or modifications.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[sarah.b]

Hi, Thanks for replying. To answer some questions you needed clarify
Melanie Giles comments:-
I have checked my letter from the IP's and it does state 1x Open Market Valuation and 2x Mortgage offers which would give best return to creditors. Melanie advised in response that it is illegal to apply for two mortgages at same time, presumably they are asking me to enquire??? And see which offer is best before going to next stage of remortgaging. I do not believe my IP has explaned the 4th year rule in detail.
The secured loan was in place 3 years prior to the beginning of your arrangement. Whilst I understand that if I have equity this needs to be released, however in the years to come my income will be reduced and therefore I would be unable to continue repayments, whilst my payments would reduce, this would take almost all of my monthly salary. Therefore either getting into debt again or having the house repossed. The whole point of me going down the IVA route was to avoid this action. I found this firm, as I contacted The Debt Councillers who dealt with my problem, they put me in touch with Synergi, I have my had contact with an assistant within the IP. I sent some emails, and contacted them by phone, to the point I said that I was infact there customer and paying for their services and at that point had a telephone meeting with one of the assistants to discuss my queries. It took again 2 months for them the confirm points in writing to me, hence to letter I referred to earlier. My IVA was accepted November 2005.

Andy 2 comments:
Yes Andy you are correct that I did not want to turn the 5 year secured loan into a mortgage of a longer term. The secured loan monthly amount is £473.00 and IVA payments are £225.00 per month. My mortgage outstanding at mo is £73000 and secured loan £35000. My property is worth approx £165000.

Andy Davies comments:
Hi Andy as answered above, the IP's requesting an open market valuation and 2x mortgage offers.

Andy 2 comments:
I started my IVA November 2005. My Child Benefit and Tax Credits will reduced as my daughter will have left school and my son will no longer require childcare. This makes up quite a bit of my income at the moment. As discussed above my secured loan finishes in 2012 and my income will reduce. If I had to add to the remortgage, this will extend another 10years. My only source of income will be salary which is approx £1100 per month, if says the new mortgage figure is £800.00 per month, this leaves £300.00 for food, gas electric etc.
I have seen on another site www.insolvencyhelpline.co.uk, they state that:-
"As part of the IVA process, the Insolvency Practitioner will ask you to have your house valued. Your creditors are entitled to up to 75% of your share of the equity. You may be asked to release this money for the creditors benefit within the 5 years. This could be via a re-mortgage."

"If there is little or no equity in the house at the start of the IVA, then you could still be asked to have the house valued in the 4th year of the arrangement and again up to 75% of your share of equity would be expected to be released for the benefit of the creditors."

My IP has stated 100% share, so is the above information correct and have I been misinformed.

Scaredkez comments:

Hi Kez, My IVA started November 2005. Yes I have told the IP in a telephone meeting, which I discussed my concerns. Hopefully you will have the bigger picture by reading the answers I have posted to questions raised by Melanie Giles, Andy 2 and Andy Davies.

On reading your comments regarding my initial posting, there is people out there that can provide me with a little advice and answers.

Thanks to you all.

we need to get a bigger picture of your iva so the technical experts on here will be able to advise.
kerri

[Andy2]

Just so we can give a fuller answer what was the total amount of unsecured debt that went into the IVA ? (we won't judge on here we are not like that). Your situation is far from hopeless but - depending on the amount - I will be honest and tell you that you may have to "let go" of the idea of maintaining the secured loan - as an "all in one" remortgage may have to be effected purely on affordability. True it will extend your debt repayments over a longer period - but I will be brutally frank - millions of people have done this, are doing this, and will do this to satisfy their unsecured debts. And if it means preventing BR, saving your home and finally saying goodbye to all your unsecured debts via completing the IVA it is surely worth it.

[MelanieGiles]

It is a shame that the fourth year revaluation implications were not properly discussed with you on the day of the creditors meeting. You appear to have agreed to something without thinking through the issues, and are now contractually bound to comply with the terms of the arrangement. Your creditors are unlikely to allow this term to be removed, and will expect that money to be raised.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[sarah.b]

Hi Andy,

Thanks for your reply, in answer in some questions you have asked:-

The unsecured amount totalled £95000.
Your comment "all in one" remortgage may have to be effected purely on affordability"

I am unsure what you mean by that, do you mean that if I do not fit an affordability critera, if I cannot get a remortgage therefore may have to continue into the 5 year and then finish the IVA??

[sarah.b]

I have been looking at my paperwork and I signed an RX1 form. I am unsure what this is. Could you clarify. Thanks

[Andy2]

What I mean is your secured lending at the moment consists of your mortgage (£73,000) and the secured loan (£35,000 - although this will be reducing each month if the loan is capital + interest). I am guessing that your secured loan is on a 10-15 year term, hence the high repayment amounts of £435 a month.

When it comes to the fourth year and you get your valuation, your IP and creditors will want you to release a certain percentage of your equity to fully complete your IVA. This figure will be based on your equity in the property but it will have to take into account both your loan to value and your mortgage affordability. However you will not be able to dictate your affordability by hoping to keep up the high repayments to a secured loan - your creditors will rightly expect this loan to be redeemed and rolled up into the remortgage to MAXIMISE affordability.

At this stage the secured loan - with only a few years left to run - will have a relatively small redemption figure in the grand scheme of things but the monthly payments are just too large to keep in the equation.


The RX1 form is a very standard part of the IVA - it prevents you from selling your house whilst in an IVA and thus depriving your creditors of a return from your equity. It's nothing sinister.

The main thing to be is POSITIVE - your IVA is a very standard one and will provide a very real solution to your £95,000 unsecured debts - as long as you comply with it. Think positive - for a start these unsecured debts are no longer accruing interest and charges or the threat of court actions. And the main thing is you are able to keep your home, which I am sure was the point of taking the IVA in the first place. In BR, this would have had to go.

[Adam Davies]

Sarah
An RX1 form is lodged at the land registry and informs your IP if there is an attempt by you to sell your house or secure another loan on it.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[sarah.b]

Thank you everybody for your advise and support. I do feel more positive now. And hopefully light at the end of the tunnel. I guess I am worring now for the 4th year, as discussed there will be other factors to consider. I believe that the affordability factor in this may play a big part in the 4th year. As I cannot see a lender offering me a remortgage if I cannot afford to repay.

Will keep you posted and thanks again.