Do i must release the equity 6 month before the end of IVA?

Get expert opinion. This is the place for new questions to be posted.
  • 1
  • 2
17 posts Page 1 of 2
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 4:59 am
If I enter an IVA, do i must release the equity 6 month before the end of IVA, does that mean I have to pay more than agreed total amount for IVA?

For example, if I have signed up to pay 100/ month, so the 5 years, I will pay 100x12x5=6000. If I have to release my equity( 5000), that means total Iva is 11000?
User avatar
Foggy
Forum Expert
Posts: 26257
Contact
by Foggy » Tue Apr 17, 2018 6:58 am
During an IVA you still owe the full original debt, plus fees and interest .... you will pay the agreed monthly amount, plus any PPI refunds, overtime, windfalls for the agreed term. If you have more than £5k of equity you will be required to try to release that ... at the moment most people cannot and have to do an extra 12 months instead. Some firms will ask you to take out a secured loan instead, so this is something you need to ask about before you sign up, as not all firms do ( you want one that doesn't!).

Only at the end of the IVA is anything you haven't paid off written off.
User avatar
Lisa Thomas
Industry Expert
Posts: 6723
Contact
by Lisa Thomas » Tue Apr 17, 2018 8:22 am
The valuation and equity calculation usually has to be revisited at month 54, depending on your terms.

On the basis you probably can't remortgage and don't want a secured loan then the likelihood is that your IVA will be extended for 12 months an you will paid another year of contributions (if your interest is worth over £5k).

Check your terms to be sure.
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 12:57 pm
Foggy wrote:
During an IVA you still owe the full original debt, plus fees and interest .... you will pay the agreed monthly amount, plus any PPI refunds, overtime, windfalls for the agreed term. If you have more than £5k of equity you will be required to try to release that ... at the moment most people cannot and have to do an extra 12 months instead. Some firms will ask you to take out a secured loan instead, so this is something you need to ask about before you sign up, as not all firms do ( you want one that doesn't!).

Only at the end of the IVA is anything you haven't paid off written off.



Thanks Foggy,

Is That’s means IVA won’t reduce my total debts, rather on top of that I have to pay the IVA charge(included in the total amount).
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 1:06 pm
Lisa Thomas wrote:
The valuation and equity calculation usually has to be revisited at month 54, depending on your terms.

On the basis you probably can't remortgage and don't want a secured loan then the likelihood is that your IVA will be extended for 12 months an you will paid another year of contributions (if your interest is worth over £5k).

Check your terms to be sure.


Thanks Lisa,

I have a house worth 330,000 and I own about 210, 000 mortgage now, if I sign up IVA now, by five years paying more mortgage, My equity will increase. In my case will remortgage or release equity more likely to be accepted?
User avatar
Foggy
Forum Expert
Posts: 26257
Contact
by Foggy » Tue Apr 17, 2018 1:17 pm
summer376 wrote:
Foggy wrote:
During an IVA you still owe the full original debt, plus fees and interest .... you will pay the agreed monthly amount, plus any PPI refunds, overtime, windfalls for the agreed term. If you have more than £5k of equity you will be required to try to release that ... at the moment most people cannot and have to do an extra 12 months instead. Some firms will ask you to take out a secured loan instead, so this is something you need to ask about before you sign up, as not all firms do ( you want one that doesn't!).

Only at the end of the IVA is anything you haven't paid off written off.



Thanks Foggy,

Is That’s means IVA won’t reduce my total debts, rather on top of that I have to pay the IVA charge(included in the total amount).


To be honest, it all depends on how much you pay each month .. but over the whole IVA it will reduce your debts as long as you complete the IVA successfully.
User avatar
Shaun Vickery
Industry Expert
Posts: 695
Contact
by Shaun Vickery » Tue Apr 17, 2018 1:42 pm
Realistically, by the time you are required to look at releasing equity, there is likely to be a re-mortgage and/or second charge mortgage 'secured loan' available to you. I would therefore factor this in to your thinking. Your creditors are unlikely to be willing to walk away from all of the equity in the house when they are being expected to write off a significant amount of debt but there are various clauses which should limit the amount you actually have to raise.
User avatar
Lisa Thomas
Industry Expert
Posts: 6723
Contact
by Lisa Thomas » Tue Apr 17, 2018 1:45 pm
It depends on what terms your chosen IP uses for you.

Standard 'protocol terms' have the equity/extension clause as standard. R3 terms do not.

So if you use standard protocol terms you will have a 6 year IVA.

Your chosen IP will be able to explain it to you.
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 3:36 pm
Shaun Vickery wrote:
Realistically, by the time you are required to look at releasing equity, there is likely to be a re-mortgage and/or second charge mortgage 'secured loan' available to you. I would therefore factor this in to your thinking. Your creditors are unlikely to be willing to walk away from all of the equity in the house when they are being expected to write off a significant amount of debt but there are various clauses which should limit the amount you actually have to raise.


Thanks,Shaun,
If that is a case, would be better for me to borrow money from my relatives to offer one off payment with all the creditors before I considering IVA, with my equity, at what kind of rate discount should I propose to them ?
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 3:42 pm
summer376 wrote:
Shaun Vickery wrote:
Realistically, by the time you are required to look at releasing equity, there is likely to be a re-mortgage and/or second charge mortgage 'secured loan' available to you. I would therefore factor this in to your thinking. Your creditors are unlikely to be willing to walk away from all of the equity in the house when they are being expected to write off a significant amount of debt but there are various clauses which should limit the amount you actually have to raise.


Thanks,Shaun,
If that is a case, would be better for me to borrow money from my relatives to offer one off payment with all the creditors before I considering IVA, with my equity, at what kind of rate discount should I propose to them ?

Also I have been paying the interest for those debt for few years.
User avatar
Foggy
Forum Expert
Posts: 26257
Contact
by Foggy » Tue Apr 17, 2018 3:42 pm
summer376 wrote:
Shaun Vickery wrote:
Realistically, by the time you are required to look at releasing equity, there is likely to be a re-mortgage and/or second charge mortgage 'secured loan' available to you. I would therefore factor this in to your thinking. Your creditors are unlikely to be willing to walk away from all of the equity in the house when they are being expected to write off a significant amount of debt but there are various clauses which should limit the amount you actually have to raise.


Thanks,Shaun,
If that is a case, would be better for me to borrow money from my relatives to offer one off payment with all the creditors before I considering IVA, with my equity, at what kind of rate discount should I propose to them ?


If that is a possibility it is certainly worth considering -- far less hassle than an IVA .... but, of course, your creditors have to agree. In an IVA creditors typically get between 25% and 50% of the debt back, but it takes them 5 years and costs a bit in administration costs. You need to offer the best you can and only you know how much you might be able to raise / afford.
User avatar
Shaun Vickery
Industry Expert
Posts: 695
Contact
by Shaun Vickery » Tue Apr 17, 2018 3:43 pm
Do you mean as opposed to entering the IVA at all?
User avatar
Lisa Thomas
Industry Expert
Posts: 6723
Contact
by Lisa Thomas » Tue Apr 17, 2018 3:47 pm
If getting a lump sum from parents to settle creditors you might be best off doing a deal direct and avoiding an IVA altogether...
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 4:41 pm
Shaun Vickery wrote:
Do you mean as opposed to entering the IVA at all?



Yes, that’s what I meant
User avatar
summer376
Posts: 8
by summer376 » Tue Apr 17, 2018 4:44 pm
Foggy wrote:
summer376 wrote:
Shaun Vickery wrote:
Realistically, by the time you are required to look at releasing equity, there is likely to be a re-mortgage and/or second charge mortgage 'secured loan' available to you. I would therefore factor this in to your thinking. Your creditors are unlikely to be willing to walk away from all of the equity in the house when they are being expected to write off a significant amount of debt but there are various clauses which should limit the amount you actually have to raise.


Thanks,Shaun,
If that is a case, would be better for me to borrow money from my relatives to offer one off payment with all the creditors before I considering IVA, with my equity, at what kind of rate discount should I propose to them ?


If that is a possibility it is certainly worth considering -- far less hassle than an IVA .... but, of course, your creditors have to agree. In an IVA creditors typically get between 25% and 50% of the debt back, but it takes them 5 years and costs a bit in administration costs. You need to offer the best you can and only you know how much you might be able to raise / afford.



Thanks,Foggy, you are a great help
  • 1
  • 2
17 posts Page 1 of 2
Return to “Ask IVA Forum and Industry experts”

Who is online

Users browsing this forum: No registered users and 10 guests