Our IVA started back in May 2007. Due to family circumstances it was agreed for us to be given a F&F and for us to sell our property and move in to rented to clear the F&F, mtg and secured loan. Due to housing situation we find that we have still not sold our property and because of the dramatic drop in property prices can no longer afford to clear all debts if we did sell.
We have a review on 24th of this month and I have asked that we start making contributions and take house of the market.
What I need to know is........
The F&F amount agreed, is this to be repaid over the remaining 3ish years? (to the end of the 5 year IVA)
Can the F&F be negotiated as it is £24k and we can not possibly afford to repay this amount over either the 3ish years or even 5 years?
Your IP will probably have to completely vary the existing IVA, if there is no longer any hope of providing the equity you originally pledged to creditors.
This is not your fault, as everyone knows what has happened to the housing market since May 2007 - but the sooner it is addressed the better. How much disposable income do you have available to offer to creditors - and I am suprised that this was not asked to be paid into the IVA until your property had sold.
I would suggest that the IVA now be varied to provide for ongoing contributions until the house is sold - but your IP will need to get the property revalued to see what surplus equity is likely to be available.
Thank you for your quick responce....
To be honest there is no equity really. House price has now dropped to £139,995. We have £89k on mtg, £35k on secured loan and obviously we would probably not get the asking price. The value has dropped £40k since going on the market and it is really not viable to keep it on now. I asked to make contributions and was told that could not once offered F&F.
Surplus income is £330pm.
You can start to make contributions at any time into an IVA, on a voluntary basis, so I am not sure why you received that advice. If the IVA is now to be changed from a full and final offer to one of ongoing contributions, your IP will need to call a meeting of creditors to agree that.
How much do you actually owe to unsecured creditors, and when is your secured loan due to conclude?
Not sure of precise figure owed...is approximately £60k.
The secured loan is due to finish with mtg. 20yrs.
Scarey figures once you see them in black and white
Melanie is right - you need to discuss with your IP the appropriate way forward - this might involve a variation to your original proposal (as varied, if it was varied)so speak to him/her without delay.
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.
Have discussed options with my IP and to be honest am a little upset and confused and to what to do for the best.
Basically she has said that our surplus income of £336 is only 13-14p in the £ and too low for creditors as there is no equity in property to release now prices have dropped.
If we rent our surplus will be even less (as fortunatly on variable rate).
She has now said to consider bankruptcy...how would this work?? Surely the creditors then end up with nothing, once mtg paid and secured loan paid.
I can not understand the logic. Surely they would prefer a min of £336 for 54 months than nothing!
After these comments we could really do with some advise as what to do.
The creditors agreed to an early F&F as we have 3 children and are in a 2 bedroom house. The IP even said why would we change our mind about going into rented...we have only done this to try and give the creditors more money as if we go into rented we have even less surplus.
We are honestly trying to do what is best all round as do not want this debt hanging over us forever
Yes - your creditors would rather see some return rather than nothing - and I am suprised with this reaction to be honest.
Whilst the dividend is low, these events are not of your making, and IPs have to be flexible enought to adapt to market conditions and advise their clients accordingly. It is your right to put the offer forward, and it is not your IP's decision but that of creditors.
I suggest that you insist on the variation being put forward, to see what creditors decide.
Exacltly what I keep saying, as if anything out of the ordinary occurs we are going to really come unstuck...At the moment nothing seems safe, job markets and all, no one would have predicted that woolworths would not be here, so who knows what is around the corner.
We currently pay just over £300 on mtg and £375 on secured loan..it is not rocket science that if we pay £800 on a rental we are going to have even less surplus income. Whist we appreciate that the creditors let us have a F&F so early into the IVA as I was pregnant and space an issue, no one knew that our house price would drop £40k from when first on market. We were going to clear mtg, secured loan and IVA, but now we just can not do this. So yes last year should we have sold at that price and paid off everything we would have definately been better of than the situation we find ourselves in now. I do not want to start adjusting out income and expenditure to 'make it look good' as suggested and end up shooting ourselves in the foot in the long run.
