www.iva.co.uk

Why do IVA's ask for equity release in year 4, if it's unlikely you will be able to obtain a re-mortgage due to credit record? I've assume the equity in my house if I was able to release it, would exceed 50K far more than by original un-secured debt to start with. Do they expect you to use some subprime(high rates) mortgage so they can get at the equity? So confused, did try to speak to IP but not giving any solid answers, all ifs and maybe's.

Hi Gl and welcome to the forum

These days this is far more common to be looked at within the final year, and this is a pretty usual provision in most IVAs which is designed to provide a maximum return to creditors not just from your income but from your assrts as well.

You do need to get your own IP to explain this fully to you - I am surprised that this was not done at the outset of your IVA, assuming that you are already in one.

As Melanie says, it's quite normal for this provision to be included in order for Creditors to agree to your IVA in the first place. You shouldn't ever repay more than the original debt plus any fees, for example charged by your Supervisor, but it's reasonable to expect you to repay what you can. There are normally governing rules to ensure that you don't have to agree to unreasonable measures in order to release equity and you should speak to your Insolvency Firm about this. It may however be possible for you to negotiate with creditors at the appropriate time in order to agree a 'full and final' offer, albeit that this may not be as much as they originally expected.

thank you for your replies.
The equity release amount stands at £7279. I believe they are currently getting a divi of 69.5p in the £. Monthly payments being £284. With the equity in my house far exceeding this amount and not really wishing to change to a higher rate mortgage, current rate 2.5% with 15 years left. What amount would you estimate to be a fair a reasonable offer to finish the iva. I assume this is going to be the best option than re-mortgaging to a far higher rate (seen 8.5%).

It would be wrong to switch your entire mortgage to subprime rates so if you cannot raise the funds for a full and final settlement from family and friends you could consider a secured loan for what is needed. The main mortgage would then remain at the current rate.

As Michael says, this may be an option which wouldn't tie you in with an expensive Early Repayment Charge so it leaves your options open moving forwards.

Hello,

I wonder if anyone can advise me what a reasonable offer would be for a full and final settlement for my IVA. Mother-in-law may be able to help but needs to know how much. Spoke to my IVA who are not really forthcoming, but said just make a offer and they will consider it.
I currently pay £258 a month with 6 months left for the 5 years completion. The IVA does mention a equity release amount of £7279 lump sum. It also mentions that if I'm unable to re mortgage then it may be extended for another 12 months or introduce funds from a third party.
The equity in my house is around 55K to 65K with a mortgage of 63K still left @ 2.5% interest.
I'm thinking of offering around £7000, which is 77% of the equity release amount and the final 6 payments. Is this a fair offer which would be considered and acceptable if not what should be offered?
Based on them receiving the full 7279 and 5yrs payments of £250 it gave them 60.4 pence in the £.
Bankruptcy would have gave 53.9 pence in the £.

If you continue as is you have 6 payments plus a likely 12 month extension. So 16 payments at £258 would bring the creditors £4644.

You are very unlikely to remortgage.

An offer in the region of what the creditors would normally get is the usual starting point.

Just looking at the figures regarding the dividend calculation this Full and final offer of 7K, would give approx 55.4 pence in the £, still higher than bankruptcy figure of 53.9.

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Foggy

If you continue as is you have 6 payments plus a likely 12 month extension. So 16 payments at £258 would bring the creditors £4644.

You are very unlikely to remortgage.

An offer in the region of what the creditors would normally get is the usual starting point.

Thanks for this, so maybe £4,600 would be considered then and deemed reasonable? I just thought due to the amount of equity in my house, they would be looking for me to get a secured loan for the £7279 regardless of me unable to re mortgage.

As your IVA is older there is no compulsion to get secured lending. The pre 2014 Protocol agreements usually state remortgage, third party funds (by which they mean friends and family) which they cannot compel, or a 12 month extension.

The most likely outcome would be the extension.

So £4,600 would get them what they are expecting and, in the process, save them a chunk in admin fees.

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Foggy

As your IVA is older there is no compulsion to get secured lending. The pre 2014 Protocol agreements usually state remortgage, third party funds (by which they mean friends and family) which they cannot compel, or a 12 month extension.

The most likely outcome would be the extension.

So £4,600 would get them what they are expecting and, in the process, save them a chunk in admin fees.

That is brill, I will go with the 4600 then. Just one more question, is how long does it take them to remove the charge against the house once FF payment is accepted/paid?

Remember though that creditors don't always make what we would see as the sensible choice and support from your IP is the key.

They remove the charge when they issue the completion certificate. Depending on who you are with, this could be weeks or a fair few months ( they allow for 6 in the arrangement).

You need to check and see if there is a minimum dividend requirement in your IVA which could have been based on the estimated equity release. If this is the case creditors may look for more especially as it seems you have the equity available to be released. Hopefully this is not the case and creditors accept the full and final offer.

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Michael Peoples

You need to check and see if there is a minimum dividend requirement in your IVA which could have been based on the estimated equity release. If this is the case creditors may look for more especially as it seems you have the equity available to be released. Hopefully this is not the case and creditors accept the full and final offer.

Hi, thanks for your reply. Looking through the IVA agreement I can't see it states a minimum dividend, but it does refer to one when comparing IVA divi to the bankruptcy divi and why the IVA is a better option. I'm just worried that due to the amount of equity in house, they will try and force a secured loan for the equity release amount on me, although it,s slightly higher than another 12 mths payments 7279 compared to 3096 (12*258). Foggy mentioned the shouldn't be able to do this but sure I've seen others with the same IVA company being forced down this route, instead of 12 month extensions. Would you agree 4600 would be fair F&F offer?