Looks like things are moving on and I have just received a call from Grant Thornton. One of the questions they asked was would my mortgage provider accept interest only payments as this may be required by the creditors. I didn't see this one coming and after contacting the mortgagee this is a possibility and would free up >£800 per month. Now I don't know what to do, this would mean I had enough to maintain just over minimum payments (which is not the answer) or repay 100% within 4 years if I could get the interest frozen. Maybe an IVA is not for me after all? However it also means that i will also increase my mortgage by £40K which will have to be paid back one day.
If this creditor is influential - I assume it is Northern Rock - then you will be very unlikely to get an IVA accepted, as they will see that you could make amendments in your own budget to avoid insolvency and therefore any form of debt write off to their detriment.
Why does this mean that your mortgage will increase? Or are you notionally feeling that this would happen as a result of not paying off any capital for the next four years? I am afraid that when you are a victim of having unaffordable debts, it is not unreasonable for creditors to want to get paid as quickly as they can - and I would have advised you exactly the same.
Grant Thornton are a very good company, but I am suprised that this was not mentioned to you by the people you spoke to at the NDH. Do they actually give advice, or are they just collators and transferors of information?
No creditors have been approached as yet (other than by me) and Northern Rock are not one of the creditors. The mortgage will increase in real terms as I am not repaying any capital (only interest). I don't mind repaying 100% of my debts and I certainly don't mind not having an IVA if this can be resolved with a DMP or self negotiation. Surely if i change to an interest only mortgage I could get the interest frozen in return?
The interest will be frozen under an IVA in any case, so that is not a worry. If you are now talking about doing something outside of an IVA, then you will only broker an interest freeze at the discretion of creditors - who are unlikely to take account of the fact that you are penalising yourself by moving to an interest only mortgage.
In my experience - and I do a lot of IVAs as well - the only creditor who regularly ask for mortgages to be amended is Northern Rock - but if your IP firm have noticed that you could avoid a formal insolvency by making some budgeting adjustments ie moving to interest only, then I commend them for highlighting this.
As a matter of interest, what is the percentage of your total mortgage payment to your total income? If this is high, sometimes creditors will query this - but apart from the creditor I have already mentioned, I have never been asked by creditors to consider this.
How can your mortgage increase if you are covering the interest?
I'm a bit confused now so perhaps not thinking straight. Maybe I am using incorrect terminology the mortgage would not decrease as it would have done so at some point I would have to repay the additional outstanding mount. This may be by either increased capital and interest payments once my unsecured creditors have been repaid or out of my company pension lump sum when i retire. Am I still eligible for an IVA if I can repay 100%
Technically yes - but the reality is that your creditors may well believe that you ought to be doing a DMP with a non-fee paying company - as you would pay them a lot earlier if you were not covering IP fees which are likely to be taken at the rate of 15% of your contributions.
There are two non-fee paying companies recommended by the NDH, and two who charge fees. I would be very interested to learn if they give you a choice of which one to pick, and how they would justify their choice of selection - given that by choosing a fee paying company you could end up taking longer to repay the debts if you plumped for the DMP option.
With a reduction to an interest only mortgage, have you actually asked your mortgage company whether they will allow this. Depending on the amount of equity you have available, they may say no outright or insist that you remain on repayment or pay into an endowment plan instead - thereby defeating the object of reverting in the first place.
I must firstly thank you for your replies Melanie, it is very good of you to provide this information when I am not one of your clients. I have spoken to the mortgage lender and their reply was that this should not be a problem would you like me to process this now (no application necessary) they even quoted me the new repayment figure. So it looks like it could be possible. I'm not sure what will happen now, GT are calling me back tomorrow so I will have to wait and see what they say. In answer to your earlier post it would appear that NDH take down your details then refer them although the IVA was their suggestion as I was considered insolvent.
It is my pleasure Mark. I am very happy to help anyone to the best of my ability on the forum and do not distinguish between those who are and are not their clients. Plus I have the utmost respect for the firm you have been forwarded to.
As I am sure that GT will not charge you any fees in advance of your creditors meeting, why not let the IVA process proceed with the repayment mortgage, and see whether you get creditors objecting at the meeting stage. You can then pull out at that stage if you feel a DMP is the better option - as sometimes we should not judge what creditors reaction might be. I don't think that you have anything to lose.
Hi - I had some problems with Log Book Loans and various credit card lenders and called National Debt Helpline last month Sorted now. Thank god, i was really worried that before Christmas I was going to get my car taken from me but they managed to sort me out a debt management plan id advise anyone just to give me them a call and get some help.
Have a good christmas all. And hopefully a financially happy new year.
Sorry, you are not allowed to post links to companies or give phone numbers out.
Last edited by jtmorris on Sat Dec 05, 2009 7:29 pm, edited 1 time in total.
