Do you actually have debt written off?

[spenmotherhen]

Totally agree Melanie. I understand this statement alot better now, this was never explained to me at the start of my IVA and looking through my proposal etc there isn't any mention either.

For members on this forum who are entering or considering entering into an IVA, I think it would be essential to fully understand exactly what the IVA involves and how it will develop over the 60 months, in particular the 4th year clause as i feel for many of us this is a grey area.

With the experience of those posting on this forum and the superb advise of the forum experts you really could'nt be in better hands.

Thanks very much for the advise.

[Sadsack]

I am not sure I am understanding this thread!!!

I think there is some confusion regarding equity release and why it comes up in the modifications. There are instances where 75% of your debt can be "written off". However, there are circumstances where debtors who have property would be required to "add more to the pot" for the creditors benefit. This is of course under the assumption that the valuation of the property would have increased after 4 years.

Let us assume that you have £50k debt and your creditors have asked for a minimum return of 40p/£ (agreed at Creditors meeting). Your IP has calculated that you have £250 surplus income to pay into the IVA over 60 months. This would mean that you have paid £15k. However, the return your creditors want is £20k which means you are going to be £5k short. That is why there is an equity release clause so that you can raise the extra £5k to make up the shortfall.

If I have misread this thread and posted unnecessarily, apologies!

Sue

Ho Hum! Think I'll bang my drum!

Read My Blog
http://sadsack.blogs.iva.co.uk/

[spenmotherhen]

Confusedchris

My train of thought was on the same lines as yours towards my IVA.

Ref: If like me you were under the impreesion that all you ever paid into an IVA was the monthly payments and if you were unable to remortgage nothing else would be paid after 5 years then that's two of us that' have never met' have never communicated before, that have got the same impression....

...and therefore that cannot be our fault

When my proposal came throughI did ask questions on the 4th year clause as this had not been mentioned until my draft proposal had been sent to me. The problem was as you seem to have experienced also, I spoke to several different members of staff who gave me several different variations of what my 4th year clause actually was.

I must admit by this stage i was pretty desperate and despite not fully understanding this, I went ahead in hope of getting my IVA approved ASAP.

Now a year and half in I still ask questions and still receive different responses. I have trird to contact my IP direct on several occasions but my return calls are ALWAYS from other colleagues.

Hense the reason for needing to clarify my confusion with this thread.

regards Spenmotherhen

[confusedchris]

Spen

Are you with Debtmatters by any chance?

Chris

[spenmotherhen]

Hi Sue

You have just explained exactly how easy it is to put across the 4th year clause in simple terms.

Although I understand how this works (I think lol!)
It is misunderstanding for people who are in a desperate situation reading and hearing these adverts of "A Goverment backed repayment system in which you will be debt free in 60 months and upto 75% of your debt will be written off"

As Melanie said "This is why the Advertising Standards Agency have largely stopped this type of marketing"

Yet it is still on the TV at present.

I think there is a lot of confusion towards people who have'nt experienced or heard of an IVA with regards to the repayment and the 4th year clause etc, that may explain why this thread is a little Squiffy in parts.

Thanks for your info

[Sadsack]

You're welcome!!

If I may, can I just point out something in your last post --

"A Goverment backed repayment system in which you will be debt free in 60 months and up to 75% of your debt will be written off"

UP TO being the operative words!!!!

Sue


Ho Hum! Think I'll bang my drum!

Read My Blog
http://sadsack.blogs.iva.co.uk/

[spenmotherhen]

No, Im with Kingsgate

[spenmotherhen]

No other problems with them just a lack of knowledge from their staff sometimes and for some reason an IP that doesn't want to talk to me!

[spenmotherhen]

I undestand that part now, Sue but realsitically once this 4th year release takes place you will actually repay your total debt in full, plus interest.

[confusedchris]

Sadsack Sue

That's a very simple example but what are the circumstances where 75% can be written off everyone is quoting, quotes but not explaining the circumstances.

I now believe having read the replies on the Forum that there is a massive difference in opinions and as an arrogant Australian Video Judge said over the weekend "Opinions are like Bums,we all have one".

The concern here should be that there is no one to check whether what we have all agreed to is actually right or someone's opinion if I ask my IP or as close as you get to one I'm getting the mixed messages that are ringing the alarm bells

Unless that is the Experts here are prepared to look at individual IVA's and advise if 'best advice' has been given...if this is the case I apologise

Chris

[MelanieGiles]

The equity release issue has recently been made a lot clearer for new people entering into IVAs, in that if you are a property owner you will not avoid the need to have your property revalued during the final year, and an equity release effected based upon borrowing of 85% of the value of your property. There is a de minimis £5,000, under which you are not required to borrow further, and the increased mortgage payments are not be be more than 60% of the amount you are paying into the IVA at that time. Much clearer and fairer. Anyone whose IP does not offer this sort of provision, ought to seek a second opinion elsewhere.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[spenmotherhen]

So the 75% part is not true for home owners which isn't made clear - well not in mine or confusedchris's cases anyway.

Anybody else experienced these confusions?

[confusedchris]

Melanie

That's very clear do the repayments reflect Capital repayments or Interest only

Thanks

Chris

[MelanieGiles]

That's a very good point Chris. I would say payments are to be based on the same basis as the existing mortgage to provide consistency, but if there was scope to argue that a repayment basis still gives creditors a reasonable return I would actively encourage this as interest only mortgages are dangerous in the long term with no tool for repayment.

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

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[spenmotherhen]

Im on an interest only mortgage, so if by year 4 I have no equity, what happens then?

Is this where I pay for a further year if unable to do the equity release?

What if th equity release isn't substantial to cover the IVA?

Lastly (sorry about all this) if after having to pay for the final year, if there is any equity built up then would you need to remortgage to cover any outstanding money owed in the pot?

thanks Spenmotherhen