I have an IVA with Payplan. In started in 2012 with around £85k worth of debt. My ex-wife and I are looking to sell our old family house. We have agreed to sell for £356k with the outstanding mortgage of £212k.We also have around £25k in CCJs secured against the house through a charging order. The IVA with interest will be around £105k in total. If my share of the equity(after mortgage and CCJ) is 30% what would be the minimum offer I could make that might be accepted? Thanks.
If you sell the house whilst in an IVA the IP will take whatever equity is needed to pay your original debt, plus fees and possible statutory interest. They are entitled to the money in this scenario and you cannot use it to fund a F&F.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
As Foggy says you need to get this resolved beforehand and get agreement from creditors. If the charging orders are against you then they should be deducted from your share of the equity and not the joint amount. Any decent IP should be able to explain everything and put together a proposal acceptable to yourself, your ex and your creditors so that should be your first port of call. Get redemption figures for all the secured debts and evidence of whose names they are in.
Thanks for the reply.
In terms of the IP just taking it all Im not sure thats what payPlan have actually said. While yes they can say that would cover things as the equity is in joint names there a number of scenarios Id like to play out as such below, working on sale price £356k, outstanding mortgage £212k, CCJ.charging orders £22k, fees etc c£5k leaves £117k to be split.
The IVA settlement figure I am chasing from PayPlan but will be around £100-105k including interest:
1) If my ex and I take 50/50 of whats left post the above(so £117k) that leaves me with £58.5k, then its up to 85% of that which is just under £50k and obviously around 50% of what is owing on the IVA....this is what I suppose the IP and creditors would ideally want.
2)I Spilt the equity 70/30 in my exs favour so thats around £35k left for me. The issue is with this as above if the take 85% thats almost £30k leaving me with around £5k to move on which is pretty much nothing even if Im looking at renting and getting new stuff(Im leaving the majority if not all household stuff to the ex as she has the kids)
3) My ex gets 100% of the equity as a final settlement with her so I don't pay any alimony as such and pay for the kids through maintenance we agree per month. It means that she then cant chase me for anything down the line and other than the kids we are completely done financially. It means I wake away with zero to start afresh but means in the future I don't have to worry about paying for her until she finds someone else and also means i can probably keep the child maintenance slightly more reasonable as Ive given her the lot. This is probably the the IPs and creditors worse scenario as they would technically get nothing.
There are obviously other scenarios and a mixture of all the above but sticking to those are they all first legitimate and legal as such? If I was to suggest scenario 3 while they may be unhappy could they stop this and force me to take some equity to pay at least some of the IVA.
If i was to go in with Scenario 1 or 2 but say I didn't want to offer the full amount but say 50 or less to creditors (which PayPlan have said i can offer "what I like" but obviously at what cut off would most creditors think not a chance, is 50% reasonable or not?)
My basic issue is I don't want to pay 100 or even 85% as the equity is being split, if we had been together then fine as only my share would be effected and would could use my exs share going forward. As it is she walks away with at least 50% and I could walk away with zero or £5-10k tops after 14 years in a mortgage which I paid, having to set up again and currently with no job(which Im guessing has to be taken in to consideration as does the fact I have no saving or any other form of income)
Obviously I know no matter what the amount Id still have to pay the rest of the IVA(or declare myself bankrupt which frankly is looking more attractive as nothing to lose) but its really what is the minimum people think creditors would accept and do they take it to account divorce, child maintenance, no job, no savings and technically no place to live(currently with parents but that cant last....Im in my 40s!!) so would have to rent short term.
In a nutshell they can only follow what a court decides re erquity split. If you just go ahead they will want what they are due i.e scenario 1 and you keep paying the IVA until the end. The ultimate weapon they hold would be to make you bankrupt, which would look promising with that sort of equity. The OR has the power to overturn any arrangement, other than one ordered by the courts, and claw back the monies owed.
What you could do is leave ownership of the house "as is" and OFFER to sell for the purposes of making a full and final offer only. You base the amount of the offer on the number of payments left, plus 12 in lieu of equity, multiplied by your monthly payment amount. So the creditors are getting what they signed up for. Stipulate that, if the offer is rejected, the house will not be sold and the IVA will continue as at present. If they accept, you can sell the house, pay the F&F and divvy up the rest as you wish. If they refuse -- back to the drawing board at that stage.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Thanks for the reply.
I know scenario 1 is what any creditor will always want as that gives them the biggest payout.
If the agreement between myself and my ex is sanctioned by a court(and it would eventually have to be at the final divorce stage) are you saying that this can be ignored or overturned? If so does that mean they can basically invalidate any divorce settlement that they are not happy with? I just find that a huge thing to potentially do as it would mean that we would need to go back and start again, costing us time and money, plus it pretty much says that a divorce is not really final until an IVA payment is agreed and paid off? Have you or anyone else heard or know of this happening?
Also in terms of bankruptcy if they were to do this, as you say with the equity in the house that may be attractive to them again they can only do that from my share surely and not my ex or will a bankruptcy not take that in to account?
On the "as is" offer that sounds good but would they accept that as my calculations are this. I have 36 payments left, plus 12 in lieu so thats 48 payments. My monthly payment amount is £252 so thats £12,096 in total if i have your working correct. Thats obviously pretty much the best case scenario as its far less than I would have ever thought of making.
I can stipulate that the sale is based on there acceptance, if not we wont sell and they will have to wait for this over the next few years. My question again is this scenario sounds good in principle but is this likely to be accepted? I know some creditors, especially those with smaller amounts may do, but unless the ones that are owed a substantial amount go for it Im guessing it would be rejected. Its really what people have found works, I think this may be an initial offer, but if its rejected as you said its back to the drawing board and 2-3 months lost.
Very much trying to get a gauge from you and others what there experiences have been, obviously knowing each case is very different, but there must be a route that works more times than not for instance.
A full and final is often accepted, as it provides a degree of certainty (bird in the hand) and also will save the creditors and IP 4 years of admin costs. It is even more attractive where there is a possibility of an IVA becoming unstuck due to circumstances beyond your control. At the end of the day they are getting what they signed up for and saving money in the process!
As an example --- I owed around £60k (about a third of that to one creditor). About half way through my then wife decided to up and leave me and our son (6 at the time). We were in interlocking IVAs. We did a review and it was apparent, with funding two homes, that we could no longer afford the IVA payment (£450 a month). Our predicted dividend was in the region of 30% and, at the time of the split, due to PPI and overtime we had paid around 29%. We basically asked the creditors to "call it quits" and accept the payments made to date as a full and final. They accepted ! Admittedly I had a lot of support from my IP, which counts for a lot, and Payplan seem less supportive of the individual. But there is no reason why an offer of £12k wouldn't be acceptable.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Thanks both, very, very helpful. Its a shame PP are not the most helpful, only when they are chasing you!
I will go down the route you suggest, lets see what comes back but if i can get this all done for in/around £12k that would be a huge bonus for me going forward.
Ill let you know how I get on and thanks again.
