Can I sell my house?

[richard726]

I completed a 5 year IVA but company want to extend it another 12 months as I can't remortgage. I rent my home out but want to sell it to clear all my debts including IVA outstanding balances. Is this possible?

[Foggy]

It is possible, but you will need your conveyancer to work with your IP, as there will be a restriction on the title. The equity will first be applied to your IVA up to the amount of the remaining full debt and fees, which could, according to the figures, eat all of the proceeds.

Another way to approach this is to speak to your IP offering to sell the property in order to make a full and final offer to cover the remaining payments stipulating that, if the offer is rejected, you will not sell. Unfortunately, with only a year to run, this offer might not appear too attractive to creditors and they might just want to let the IVA run. --- It could take 2 or 3 months for the offer to get put to creditors and then, they would have to wait for the house to actually sell and then another 3 months in the conveyancing process ---- it could well be a very expensive way for you to save a month or two in the end.

You could, possibly, raise a secured loan on the property to cover the remaining payments --- which would be at higher rates right now, but you could refinance, at better rates, that when the IVA clears your credit records.

I believe one of our members, Shaun, a whole of market broker, has dealt with this scenario before. His contact details are in his profile page here: memberlist.php?mode=viewprofile&u=22837

We do have another whole of market broker, in the form of Ryan. I am not sure if they also do these 'early exit loans', but worth an ask: His details are at: memberlist.php?mode=viewprofile&u=18488

[richard726]

Thank you for your reply, very much appreciated. What I can't understand is that my initial debt was about 14k and over the five years of paying £115 per month 3k only has been to my creditors. Rest has been eaten up by the greedy iva company. I have roughly 60k equity in my house so to sell it I would have enough to clear the debt in full. However, the iva company just want me to try and remortgage which would result in more unnecessary debt to myself when they are supposed to do the opposite,correct? Please let me know if this is wrong as I'm losing my mind with it all.

[Foggy]

At the start of the IVA you run up Nominees fees for the preparation of the agreement --- these are usually around £1750 and are paid first --- then there are supervisors fees, which are usually taken as an ongoing percentage of the money you pay in --- usually between 15 % and 20 %, as well as various disbursements.

On the grand scale of things £115 is close to the lower limits of IVA viability.

You say "greedy IVA company", and I can see where you are coming from, but it is the case that many smaller firms are going out of business as these fees barely touch the sides, leading to the large 'IVA factories' moving in (think Insolvency Ryanair or Easyjet), and customer service declining rapidly.

The IVA company want you to remortgage because that is what you agreed to do -- they are there to see that the terms are followed. To pay up early requires a full meeting of creditors again and the creditors will have to agree to the change in the contract --- lots of messing about for little gain.

All that said, there are currently amendments issued for IVAs during the Covid Pandemic, see: https://www.gov.uk/government/publicati ... a-protocol currently in force until the end of April. These say that the 12 month extension should be applied to Protocol IVAs, rather than jumping through the re-mortgage hoops.

Bottom line, the choice here is to pay 12 x 115 = £1380, either as a lump sum ( if they agree to put a variation forward --- and, at this late stage I can see why they would rather not), or sell up and loose the bulk of your equity to the IVA.

[richard726]

Once again, thank you. You certainly know your stuff . You say the bulk of my equity but if my total debt at the start was £14k and I've paid £3k then £11k would still leave me with £49k if I sold and made £60k? Am I missing a trick, sorry for the repeated questions but I am seriously stressed out with it all. Thanks in advance.

[Foggy]

OK --- so total debt was £14k. Add on around £4k in fees, makes £18k less the nearly £7k you have paid in, means they will take around the £11k you mention to pay everything off. They could also go for statutory interest, which is calculated as simple interest on the daily reducing balance ---- but around ( very roughly) another £3k.

So you are looking at paying either £1380 in extension payments or between £11k and £14k in equity to end. Not the bulk, I admit, but a somewhat larger chunk.

[richard726]

Thank you, I feel alot more informed and "in the know" now. I understand what you are saying completely. Even if they put my monthly payments up I'll still be better off financially than selling my property. One final query if you could put to bed is that after the final 12 month extension can the creditors still claim money? In other words is it FINAL final?

[richard726]

Would it be possible and likely to be accepted if I offered £5k for example as a final settlement offer to wrap it up?

[Foggy]

You can offer what you wish to get the IVA closed early ... it will be up to the creditors to decide 'yay' or 'nay'. After the extension is dealt with your creditors will have no further claim, apart from anything that might have been missed during the IVA that comes to light ( that multi-million lottery win or Great Aunt Maud leaving you her Picasso from the downstairs loo) or, going forward, PPI refunds --- they will still belong to the IVA trust, if you ever get any. Other than that ... debt freedom beckons !

[richard726]

Top man, you've been a great source of info and help. Have a great weekend, thank you.

[Foggy]

No worries -- have a great weekend too.

[richard726]

Hi guy's, hope all is well. I have signed my draft offer and it's been sent to my creditors. I was wondering how long a wait it will be now before I get an answer be it a yes(fingers crossed) or the other?!
TIA

[Foggy]

As soon as they circulate the offer to creditors you should be given a date -- around 3 weeks hence.

[richard726]

Thank you Foggy, you've been a great help through this process. I just wish I knew about this forum sooner to be honest. Keep up the good work guy's.