www.iva.co.uk

Hello, my brother is currently in year 6 of his IVA and due to finish in November this year. It was extended due to equity in his house, he also had a 3 month extension due to covid.

Unfortunately he lost his wife last September, he also has an endowment mortgage which has come to an end and he owes £80,000. His house is worth approximately £180,000. He wants to sell his house to pay of the equity and he has seen a mobile home he would like to buy for £80,000 so he does not have a mortgage. As he wouldn’t be able to get one now he is on his own.

My question is, how can he go about this so he doesn’t have to pay the equity to his creditors. His debt was £22,000 and he has paid back £5,500 he pays £87 a month. My dad has offered to gift him the £600 to enable him to pay off the next 7 months he has left. So he can finish the IVA and then arrange to sell his house.

However after approaching the IVA company today they have emailed and advised the following:

There is no fixed ‘settlement figure’ applicable for the full and final. Creditors are likely to accept/reject a reasonable offer after considering the amount and source of funds being used to settle the IVA. Taking the above into account, the higher the offer put forward, the more inclined would the creditors be to close the IVA early. Bearing this in mind, it is up to you to advise how much your third party would be willing to propose.

He can’t afford any more than what my dad has gifted him.

Any advise on this would be appreciated.

Bear in mind as well that a meeting sometimes takes a couple of months to set up which will obviously mean a couple more months payments might have been made.

Also, there will be a restriction on the sale of his house until the IVA is completed and this will have to be removed.

I think the offer sounds a good one, explain the position (not about the house though). about his personal loss and he just wants to put this behind him and move on. Your father will have to provide a bank statement (money laundering issues) and it is your full and final offer and you insist they put it forward.

The £600 being offered is, basically, what the creditors would have got anyway, over the next 7 months, so, normally, such an offer would be looked at seriously -- although I have seen even more generous offers refused. Unfortunately, in this case, with 7 months to run, it is a bit late in the day as these things take 2 or 3 months to get off the ground, so you will only be saving 5 or 5 months and costing the creditors around £500 extra in fees, which will not make them happy. Added to this there is likely a restriction on the property to be sold, which is released when completion is finalised --- which could be up to 6 months after final payment is made ( though often 2 or 3 months).

I would be inclined, if at all possible, to ride out the IVA, let it finish naturally and get clear of the arrangement before selling the house and going forward from there.