I am currently in an IVA paying approx 30p to £1 to creditors for substantial debt amount and have been for 6 months. There is an equity release clause in year 4/5 to release 20k from 2 properties; 1 which I 50% own and the other I transferred my 50% to my wife for no cash and is the property we live in.Also majority of my IVA payments come from family benefits rather than my own employment income. But since my IVA was proposed both property's values have plummeted due to the state of the economy, and I am not sure whether 20k can be raised in year 4 or 5 if there isn't much equity by then. Also I am finding it hard to maintain the monthly payments with my other monthly outgoings. Can I ask my supervisor to put forward a new proposal to the creditors with lower monthly payment and less equity release? Obviously the dividend to creditors will reduce but they will get back more than if I went bankrupt. Do you think in the current economic climate more than 75% may vote in favour to an IVA if they know they will get less in bankruptcy? Lastly if I can't do a new IVA proposal with my current IP can I approach another IP to propose an IVA for me if i don't want to go bankrupt without much cost or shall I stick with current IP?
First of all you cannot choose to change IP's half way through - which is why it is so important to choose the right firm to represent you in the first place.
It is strange that you are struggling so early into an IVA, when the cost of living has actually reduced quite a bit over the last couple of months with interest rate reductions and an overall reduction in fuel and food costs. Did you and your IP thoroughly go through the figures at the time your IVA was proposed to ensure that the contributions you were suggesting would be actually affordable. This is such an important step in the process.
I would not worry too much about whether you will be able to raise equity in the final year - it is too far in advance to be worrying about that, and there ought to be provisions in the IVA proposal to deal with that in any event. It is possible to present a variation to the proposals now, but you will need to gain your IPs support and also the agreement of creditors. The creditors will be concerned that this is being varied so early on, and will want to understand from you and your IP why budgeting errors may have been made in the first place. Alternatively if there has been a change in circumstances, then this does give good grounds for an early variation.
Your IP may also be able to agree to a reduction of up to 15% of your agreed contribution, if it was proposed under the IVA protocol - but you would need to make up any missed payments during an extended sixth year if you wished to avail of this provision.
Creditors will rarely agree to less than 85% of your equity interest in the final year of your proposal (subject to LTV) unless there is a significant special reason such as "special needs" of someone living in the property for example.
I agree with Melanie that it is too early to propose a variation unless there has been a significant change in your circumstances since proposing your IVA. Good luck.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
mohib wrote:
I am currently in an IVA paying approx 30p to £1 to creditors for substantial debt amount and have been for 6 months. There is an equity release clause in year 4/5 to release 20k from 2 properties; 1 which I 50% own and the other I transferred my 50% to my wife for no cash and is the property we live in.Also majority of my IVA payments come from family benefits rather than my own employment income. But since my IVA was proposed both property's values have plummeted due to the state of the economy, and I am not sure whether 20k can be raised in year 4 or 5 if there isn't much equity by then. Also I am finding it hard to maintain the monthly payments with my other monthly outgoings. Can I ask my supervisor to put forward a new proposal to the creditors with lower monthly payment and less equity release? Obviously the dividend to creditors will reduce but they will get back more than if I went bankrupt. Do you think in the current economic climate more than 75% may vote in favour to an IVA if they know they will get less in bankruptcy? Lastly if I can't do a new IVA proposal with my current IP can I approach another IP to propose an IVA for me if i don't want to go bankrupt without much cost or shall I stick with current IP?
Is this allowed?? I didnt think it was.
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
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From what the poster is saying, this property is caught under the usual equity release clause in any case, so the fact that he has transferred the property to his wife is actually making no difference to the outcome for creditors.
Provided it is the 85% of total equity not just his share!
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
