It was not the best route for James Creditors and not the best route for James but the best route for his provider, this is the reason he had the Cold call this type of practise is fuelling the Cold calling industry,
The test of insolvency is an inability to service debts as they fall due, and not having more assets than liabilities - so an IVA might have been the right option at the time - however it appears to be very flawed by the basis of valuation of the main asset which is concerning to note.
Had an IVA been the right and correct option at the time there would have been no need to devalue his assetts by over £100000, although he could not pay his debts as they fell due his assetts would have more than covered his liabilities, his creditors would not have agreed for him to enter a legal Insolvency procedure to accept leass than 100p in the pound, and a DMP would have not only been best for creditors would have been best for James,
If the poster has to extend his IVA by 12 months and his payments remain at £500 per month then it has been the best route for him at the end of the day.
Saying that I don't agree with what has happened regarding the valuation.
Personally Daniel I do not see how you can make such assertive statements as to what creditors would and would not accept. I regularly get IVAs accepted where the level of assets would cover the liabilities if everything were to be sold, so long as the reasons for not wanting to sell are fully explained and correct and independent valuations are used to enable creditors to make a reasoned choice.
Before you consider referring this to the Ombudsman James - or perhaps you mean the IP's regulatory body - please do exhaust the firm's own complaints system first, as the regulatory bodies will be reluctant to hear a complaint unless you have used appropriate channels.
Why do you feel that paying £4k less than you actually borroweed is disproportionate as a matter of interest James?
Although there appears to have been an error regarding the valuation of the property, I have to agree with Melanie that this doesn't necessarily mean that an IVA wasn't the best option.
Even if you extend for 1 year, at the end of it all you have paid back only 90% of what you owed and had all interest frozen. But most importantly of all, you have protected your home, which is one of the primary purposes of the IVA. At the end of the 6 years you will be debt free with an asset worth approx £75k - I'm not sure any other route would have left you in such a strong position.
Last edited by vince666 on Thu Mar 01, 2012 6:54 am, edited 1 time in total.
It is not unreasonable to ask the question as to what interest would have been paid over the corresponding period had the IVA not existed. An almost impossible calculation of course, but as an example, if the contractual repayment of the debt was 3% per month, then payments would have been £1200 per month. If only 1/3rd of that was interest, and in all likelihood that is far too low a figure, then £400 per month interest over 72 months is £28,800. A very simple equation admittedly, and as stated previously probably a serious under estimation of the interest costs, but well worth bearing in mind when making the comparison between the IVA and the scenario where the IVA had never existed.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
Re; Melanie, paying 4k less is just merely my subjective view based on the minimal details I can see from other people's IVA. Plus, this doesn't support the selling pt of many companies which advertise the fact, that you could write off 80% of your debt. Please note, I am not complaining or bitter, I am happy my interest is frozen!!!
However, considering your points about assets, if an IVA can be agreed and the debtors doesn't have to bank their assets, for documented reasons, why did the company dramatically under value my property??? Because, remote as it may seem, in yr 4, if I am offered a proportionate remortgage I will have to release all available equity, when surely this should have been considered before the IVA??
Hi James - the advertisements can sometimes be misleading as people can believe that 80% could be written off regardless. In fact it is only if the disposable income can only satisfy 20% of the debt. As each case is assessed on its own merits there will always be situations where 3 different clients all with same level of debt can have very different levels of debt written off.
Only the company involved can answer why they valued your property the way they did as it would be wrong of us to speculate. You ask whether you should have stayed on a DMP - if you had you would not have had the comfort of the frozen interest that you are pleased about so there would be benefits either way. Depending on your proposal you should only have to release equity up to 85% of the value of your property and the increase in your mortgage payment should be capped at no more than half what your IVA payment was. Check this with your IP to clarify.
Keep us posted.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
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Hi James
You are now starting to see how it all works however Melanie was correct when she said that I could not say the proposal would never have been accepted had the creditors known the truth about the valuation I of course could never had known that it was only an opinion of an IVA novice.
Now your last question why did the company dramaticaly undervalue my assetts, I am sure it was not to push the creditors arms so firmly up their backs they could not refuse but again its only an opinion, However the debtor commits an offence, to which there is no maximum punishment if he makes false representation for the purpose of obtaining an approval of his creditors for acceptance on an IVA, I know you have not done this but it has been done,there can be no doubt about that.
James - you cannot compare your circumstances to others in IVAs. By the very nature of the agreements they are all individually tailored to suit a persons specific circumstances. Entering into an IVA does not give one the right to have debt written off, despite how you may interpret some firm's marketing thrust, it merely gives you breathing space to repay those debts to the best of your ability over a realistic timescale.
The issue of the valuation used for the IVA remains concerning - but at the end of the day your efforts to take issue over this with your IP may well result in a "he said/she said" argument - and at the end of the day you did sign the proposal unfortunately.
Hi Melanie
He may have signed the proposal however correct me if I am wrong in that although the nominee is entitled to rely on information supplied to him by the debtor in the form of a professional valuation he should remain sceptical and investigate any valuation which may appear doubtful on this occasion no valuation was supplied by the debtor at all therefore the nominee who has to be a fully qualified Insolvency Practitioner such as yourself, has failed in their duty of care to both the creditors and James himself. I think its pointless James complaining because even if the complaint is upheld James at this point has suffered no calculable loss, I just hope for him that property values remain static and the IVA goes the full distance, but this goes back to my main point he was contacted by the Cold call Industry simply because that Cold call industry knows this type of thing is still happening
I agree with you Daniel. In my practice we only ever rely on professional valuations provided by someone who actually goes out to visit the property - internally and externally. The IVA protocol stipulates that internet based valuations are acceptable however, and I know that some firms use them. I don't find them particularly accurate, but the Official Receivers offices now use internet based ones more and more.
Consumers rely on the advice provided by professionals, and cannot be expected to know all of the technicalities along with what is right and what is wrong - and as you say it is just as well James can largely repay his debts from his contributions.
