David Mond wrote:
Melanie is right and without your specific details it is impossible to advise.
Fair enough. However, my original question was really to see if there were any precedents around where people with similar clauses hadn't managed to raise the 85% by remortgaging and the extra 12 months didn't make the IVA reach it's target dividend.
One thing though if you do decide on BKCY then there is the possibility of an Income Payments Agreement being made that will require you to pay over about 70% of your net disposable income for 3 years.
Which is *exactly* why I'm considering it 2 years down the line as I don't want to be forced into it 6 years down the line.
Discuss everything with your Supervisor (IP) who will I am sure advise you correctly.
I'll try and speak to the IP - although I've only been able to get hold of their "representatives" so far who give nothing but woolly answers which contain less information than that provided here! My level of contact with the IP himself was 30 minutes *after* the meeting whereby he rang me with the list of variations to go into the chairmans report and asking if I accepted them.
If only this forum had been around 2 years ago....
Last edited by nervousperson on Sun Jan 11, 2009 3:24 am, edited 1 time in total.
I am not sure whether there are any precedents as this new 85% position started from February 2008. However prior to that there was roughly a requirement to re-mortgage (or sell) to raise 75% of the equity within the house. Previously it was based on the value at the time the IVA was entered into but with property prices rising the banks wished to take advantage of getting "more" out of future property rises and that is where the 85% came about but based on a valuation in the final year and subject to loan to value and the increase in mortgage installment not to exceed 50% of what was being paid in the previous 4.5 years. Now today property prices are falling and the worst scenario is that there is no equity or if there is any equity, no one can get a mortgage so another 12 months of contributions in lieu could happen.
I don't believe any creditor would accept any variation at the moment to change this type of arrangement. It is too early and you should wait and see (as advised by others). You can of course discuss the position with your Supervisor (IP) and see what he/she advises and/or what he/she is prepared to do.
Last edited by David Mond on Sun Jan 11, 2009 5:19 am, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Prior to the advent of the IVA protocol, the majority of IPs were drafting their proposals along the lines of a revaluation during the final year, with an equity release at 85% loan to value, because that is what creditors have wanted for a long time and have been modifying IVA proposals to suit that requirement. As David has stated - there were also modification clauses at 75% loan to value as well, although in my experience these were far rarer.
I am now dealing with such cases - four years on - and clients are finding it difficult to raise the money due to a depressed property market and the lack of mortgage funding available. In general, creditors are allowing the IVA to conclude without the equity sum, but in certain instances this is covered off by the request for an additional year's contributions. It is tedious for clients to have to pay for an additional period, however perhaps this is better than being forced to take out additional mortgage lending which will take far longer to repay back than 12 months.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
MelanieGiles wrote:
Prior to the advent of the IVA protocol, the majority of IPs were drafting their proposals along the lines of a revaluation during the final year, with an equity release at 85% loan to value, because that is what creditors have wanted for a long time and have been modifying IVA proposals to suit that requirement. As David has stated - there were also modification clauses at 75% loan to value as well, although in my experience these were far rarer.
I am now dealing with such cases - four years on - and clients are finding it difficult to raise the money due to a depressed property market and the lack of mortgage funding available. In general, creditors are allowing the IVA to conclude without the equity sum, but in certain instances this is covered off by the request for an additional year's contributions. It is tedious for clients to have to pay for an additional period, however perhaps this is better than being forced to take out additional mortgage lending which will take far longer to repay back than 12 months.
Hi Melanie
I am surprised some creditors are, as you say, allowing IVA's to conclude at 5 years without the equity sum. For those situations where an IVA is extended by 12 months, would you still be expected to contribute 50% of overtime/windfalls etc. ?
Thank you
Our IVA has the equity clause, which if we can't remortgage, will be extended by 12 months. We still have the 50% clause.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Ours make no mention of extending another year although I'm sure that would not be a problem. One thing which has struck me about ours though is that the ONLY mention introducing 75% equity is in Clause 5 of the proposal (drafted by IP of course) which states "I propose to remortgage at the end of year 4 to introduce the sum of £10,500, the being 75% of the estimated book value".
At no point were we (IVA is joint with my wife) advised verbally or in writing prior to setting up IVA that it could be 75% of equity full stop.
The summary which is dated the day our IVA came into effect states that only £10,500 will be introduced - no mention of 75%!!!
It was only when they sent us the Annual report at the start of Year 4 did they require us to re-mortgage to "realise 75% of the available equity"
I will be writing to them this week anyway. Need to raise this point with them diplomatically I think. With hindsight (wonderful thing), can't help thinking our IVA was a tad "mis-sold"
We are supposed to release £14,000 each, or 85% LTV in year 4, or continue with the payments for 12 months.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Please darlo70 type here exactly the wording of your clause 5 as your annual report cannot overide what is in your proposal unless you have had a variation since or a modification at the original meeting.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Clause 5 of our proposals is as follows
"I jointly own the property with my wife/husband. The house was purchased for £75,000 and is subject to an outstanding mortgage of £67,500. I propose to remortgage at the end of year 4 to introduce the sum of £10,500, the being 75% of the estimated book value"
So although there is reference to 75%, it reads almost as a matter of fact comment with the emphasis being on the £10,500. Like I said though, never was 75% discussed. The only figure discussed was £10,500 with no suggestion that this could be varied
I appreciate it was not discussed but it was recorded in your proposal and presumably you read it all over before signing.
Secondly as I see it you are liable to re-mortgage and put in £10,500 at end of year 4. If that cannot happen because either the value of your property has fallen and there is insufficient equity OR if the value is still there but you cannot get a re-mortgage - then at that time you will need to discuss with your Supervisor (IP) and decide what can (if anything) be done. It may well be a variation to suggest a further 12 months of existing contributions could be put forward OR any other practical suggestion which will get the support of your creditors.
Last edited by David Mond on Sun Jan 11, 2009 8:17 pm, edited 1 time in total.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
David Mond wrote:
I appreciate it was not discussed but it was recorded in your proposal and presumably you read it all over before signing.
Secondly as I see it you are liable to re-mortgage and put in £10,500 at end of year 4. If that cannot happen because either the value of your property has fallen and there is insufficient equity OR if the value is still there but you cannot get a re-mortgage - then at that time you will need to discuss with your Supervisor (IP) and decide what can (if anything) be done. It may well be a variation to suggest a further 12 months of existing contributions could be put forward OR any other practical suggestion which will get the support of your creditors.
Thanks David. Yes and I am annoyed at myself for not querying it but like I said it read more as a matter-of-fact comment and was certainly never explained. I know I could never prove it but it seems pretty obvious to me now they omitted to go into detail when so much else was discussed for a reason. The significance of the 75% only dawned on me little over a year ago through browsing forums like this.
With the credit crunch I think "why even bother trying to re-mortgage?"
My house is 2 bed, we have an 8 year old son. We had a daughter in year 1 of the IVA who will be 4 this week. They share a bedroom and although they get along very well, they are beginning to get in each other's way a bit. I think I should just offer to continue for another year, put house on market and make an F & F should we sell. In all seriousness, don't think I am that fussed about hunting out a new mortgage for a 3 bed house in current climate. I'd be happy to rent and ride it out a little then come back in as a 1st time buyer
Not a bad suggestion - but see what (a) you can get for your house (b) what it would cost to rent and (c) what could be offered in a F&F. Good luck.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
