www.iva.co.uk

HI,

I've posted on this site before and find the information that you give invaluable as to my debt solution problems.

I am considering going for an IVA but am confused about a few things. I wonder if I could trouble you again for your advice.

My scenario is I owe 75k in unsecured dents. I have a mortgage of 90k with a property value of approx 125k at present.

My questions are:-

I realise that the 4th year equity clause would be put into my IVA but what if in the 4th year I am unable to release the 85% due to what a lender is prepared to lend me through my incoming wage? My property by then hopefully would be worth more than it is now so I would have a lot more equity.But I have read somewhere on a past post that the 12 month extra payments in lue of not being able to realise equity is only avaliable if it were to equate to the equity?
If I were to have all this equity but not be able to release it in my property then would I then be MADE to sell to release funds?

Also, when going for a IVA proposal is the equity in the property which it is NOW put into the proposal (i.e. an actual figure put forward) meaning that should I ever be able to put forward (doubtfully) a f&f settlement then the amount owed be the equity as proposed in the IVA plus 60 months payments plus IP fees and interest etc. Or would the settlement figure be as to the value of the equity in the house as it was at the time of the f&f proposal?

I'd appreciate any comments as I am getting lost trying to figure out what to do and I really want to keep this house that I am in whilst trying to pay back to my cerditors as much a is possible.

Thanks


K

If your IP uses the IVA protocol when proposing IVAs - and most IPs should but some are still not doing this - then you will be required to explore the possibility of raising additional funds during the final year based upon a maximum 85% loan to value formula.

If your are, for any reason, unable to raise the money - then the reasons for this will clearly need to be explained to creditors who will decide on an appropriate way forward - possibly by asking for a further year's payments - but definately not by selling the property.

If you put forward a full and final settlement offer at any stage during the life of the IVA, the then equity in the property would have to be disclosed and taken into consideration.

Have you spoken yet to an IP about your concerns? I do think that you would find this helpful, and it won't cost you a penny.

Hi again Melanie,

Haven't spoke with an IP yet but I will. I am just trying to gain as much onfo from this site as I can even before speaking with an IP so I know what questions to ask etc and be really clear on things thats why I appreciate any advice given.I want to go into something without any 'surprises' at the end.

You say in your post that if equity could not be realised through re-mortgage in the 4th year that creditors would explore over ways including an extra 12 months to pay. What do you think the other ways could be? I just think it would seem rather unfair to creditors for me to have this equity in the property and not be able to release it to them thats why I was worried that they would make me sell and I don't want to leave this house.

Kepler - it is really difficult to advise you on an internet based forum about something so specific as your own finances and the options available to you now and into the future.

There may be many considerations to take into account as a result of the final year equity release requirement such as

1 Additional year's contributions
2 Nothing additional
3 Borrowing money from third party in lieu of equity

Don't forget you are paying into the IVA for five years - two years longer than you would in bankruptcy. I can remember the time when IVAs were being extended from three to five years - the excuse creditors used then was that this took into account any equity. It seems that they want more and more every time.

Melanie is it possible to agree to a 6th year rather than release equity(obviously remortgaging costs more in the long term),and have it written into an iva that no matter what equity is there a 6th year of repayments would negate the need to release it?
I just cant see many folk getting mortgages of any sort during an IVA??

This is less and less likely - and given that the majority of creditors insisted on the introduction of a firm protocoal, and will modify the protocol related issues relating to equity release into a proposal document in any case, I take the view that if you can't beat them join them.

Agree with you about remortgaging whilst in an IVA = but a lot can happen over the next four years so we will just have to wait and see.

The extra year will normally come into play if there is a value on the debtors 85% equity interest. When that "interest" is valued in month 54 of the arrangement and is found to be worth nothing then in protocol compliant IVA's another 12 months of payments are applicable.

Kepler - you need to seek specific advice. Visit www.iva.com and see reviews on practitioners who can help you - their advice is free and you won't go far wrong speaking to one or two of them.