My brother is in trouble with his IVA.

[cliff]

Hi My brother has just called to say that he in trouble with his IVA. He has just cincluded the admin process and apparently agreed in the IVA to sell his house within 6 months of the IVA commencing. He did not however appreciate what he had agreed. The debt he owes is in around £50,000 most of which ios due to the HMRC. His property has about £60,000 of equity within it.

He believes that he can ring fence part of the equity from a sale by a claim from his wife who is not on the deeds for 50% of the matrimonial assets. Could she also register an interest that effectively stops the property being sold?? Could he in fact arrnage to have say several phases of payment as the value of his property increase by remortgaging say £30,000 now and a further £20,000 in say year 5 of the IVA?? Thanks

[rich25]

i thought he would just remortgage earlier and address it, rather than going down the iva route.

[neverending]

Hi
I do not fully understand your brothers situation but one thing that I do know is that if he has not had his creditors meetng and it has not been confirmed at the county court then he is legally entitled to walk away from whatever he has agreed to.
regards

[finebridge]

Hi,
It would be a good idea for your brother to contact his IP and let them know his worries. I cannot comment on what offers he may be able to come up with to suit his creditors as I do not know all his details but it may be that he can amend his proposal before it is sent to creditors.
As neverending has stated your brother can pull out of the arrangement pre meeting of creditors.
Kind Regards
Nicola


Finebridge Ltd
22 Laud Street, Croydon, CR0 1SU
0800 180 4212
www.finebridge.co.uk

[MelanieGiles]

Hi cliff

As your brother's major creditor is HMRC, they have a standard modification requiring a property to be sold within 6 months or then put to public auction. I assume this is why the IP has included such provision into the IVA proposal.

I question whether he really needs an IVA at all, as you are saying that he has an asset of £60,000, but debts of only £50,000. In this case he is not insolvent and therefore should not be proposing an IVA in the first place. The voting team at HMRC are very professional and experienced, and will probably throw this out if it is presented on this basis.

It is possible that your sister-in-law may have a claim against the equity under what is known as the "equity of exonoration", however she will need to prove that she has contributed financially towards the house costs during the time that she and your brother have been living as man and wife. Why was she not on the deeds in the first place?

Your option of £30,000 now and £20,000 in year 5 is not workable and will not be acceptable to HMRC. I suggest that your brother rethinks his offer, and gets a second opinion from an IP who is experienced in dealing with self-employed people. I cannot be convinced that an IVA is right here.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk