www.iva.co.uk

I live in my mortgaged property,my wife lives in a council flat with 3 kids. I am currently in an IVA when I was seperated from my wife and the property I own is in my name only. One condition of my IVA proposal was to release 100% available equity from my property in the 4th year. Does my wife have any equitable/beneficial interest in the property that entitles her to 50% of the equity in the property? She contributed the initial 5% Depoist when I purchased the property. Can the IP make the entire 100% of the equity available to the Creditors without considering my wife's equitable interest, she is threatening legal intervention to protect her equitable interest for the sake of our 3 children through a Family lawyer? Thanks for your replies and advise.

The basic answer is yes, your wife would have an equitable interest in the equity of your property. When you are married it doesn't matter whose name the assets are in as effectively everything goes "into the pot" to be divided upon a divorce and the starting point is always an equal division of all assets between the two of you although there are a list of other factors under s.25 Matrimonial Causes Act 1973 the Court has to consider. Have divorce proceedings been filed yet? Your wife's solicitor may be advising her to register a restriction aginst the property to prevent disposal of any equity without her prior consent/court order.

No. We are not divorced ,just separated (due to my bad financial state of affairs). How would she enforce her right of beneficial interest to restrain the IP from disburing 100% of the equity in the property to my creditors? With the Creditors getting only my share of 50% of the equity because of my wife's beneficial interest nullify my IVA ?

She can apply for a restriction notice to be put on the title deeds which means you will be unable to remortgage until the matter of equitable interest is resolved.

Whether this will nullify the IVA will depend on the terms. I assume there was a remedy built into the IVA in case you weren't able to release the equity. Does the terms of the IVA require you to pay 100% of the equity you can release in year 4 ??

London Coool
You may have to extend your IVA if you are unable to release the equity in the final year, but this will normally be for no more than a year.
Regards

I am suprised that this was not addressed when you agreed to the modification relating to equity release, and your wife's agreement sought.

Gizmo's advice is absolutely correct, and this will affect your ability to raise the equity you have agreed to raise - but the modification says 100% of the equity - which means your share. Your IP will need to alert creditors to your wife's claim when he/she next reports, to manage their expectations.

I hardly feel that this is an IVA failure point, unless you guaranteed a dividend payment at a certain level, which was reliant upon you releasing a certain figure for equity.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Melanie wrote:

I hardly feel that this is an IVA failure point, unless you guaranteed a dividend payment at a certain level, which was reliant upon you releasing a certain figure for equity.

I never guaranteed any dividend payment of any certain amount.If the Creditors failed the IVA due to variations in the expected equity release from 100% to 50% (due to my wife's beneficial interest)what would they gain if they made me Bankrupt?

Storm wrote:

Does the terms of the IVA require you to pay 100% of the equity you can release in year 4 ??

Yes.The orginal proposal by Payplan did propose 75% equity release in the 4th year based on an evaluation done in the 1st year. But HSBC's Reps-TDX insisted during the meeting for a 100% equity release during the 4th year based on the evaluation doen in the 4th year. I queried it to my IP but he stated it was a standard requirement since I would not be able to get more than 85% LTV on the property if I remortgaged. I'm lost here.

London Cool
Quote "Yes.The orginal proposal by Payplan did propose 75% equity release in the 4th year based on an evaluation done in the 1st year. But HSBC's Reps-TDX insisted during the meeting for a 100% equity release during the 4th year based on the evaluation doen in the 4th year. I queried it to my IP but he stated it was a standard requirement since I would not be able to get more than 85% LTV on the property if I remortgaged. I'm lost here"
I would interpret the 100% clause as the total amount that you can release from a remortgage going into your IVA.
For example house value 200k,remortgage at 85%ltv =170k,existing mortgage 150k so total amount raised would be 20k and all of this would go into the IVA.
Regards

Correct - this firm's modifications require a professional valuation to be carried out followed by the obtaining of two offers of remortgage. You will then need to accept the offer which provides the most money and introduce 100% of the money raised.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

MelanieGiles wrote:

Correct - this firm's modifications require a professional valuation to be carried out followed by the obtaining of two offers of remortgage. You will then need to accept the offer which provides the most money and introduce 100% of the money raised.

Melanie, can I ask an Estate Valuer of my choice to carry out the valuation. My IP was trying to market their special in-house Estate Agent who would handle my IVA-Re-mortgage deal to me. I would have prefered an independent valuation.

You can choose your own valuers and use your own independent mortgage broker, and should not feel obliged to use one recommended by your IP if that does not feel right.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk