I want to sell my house 6 months into IVA and settle the IVA

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Iwanttobreakfree
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by Iwanttobreakfree » Fri Mar 16, 2018 5:44 am
Hi completely new to this... I’m in much need of advice and clarity.
I have been in my current IVA for only 6 months now and my circumstances have changed I’m looking to sell my house and move in with my partner and children and settle my IVA.
I approached my IVA firm and asked them how much I would have to pay to settle. I have ~£60k equity in the house (at the time of taking the IVA out it was not plausible to sell my house) the original debt was ~£42k, since only being in the IVA for 6 months I have paid ~£4k back so far.
100% settlement figure that has been calculated from accounts is £50k!!!
I am devastated at this as I thought the figure would be the 42k minus what I’ve already paid in maybe plus a little amount of interest but not +£8k??!! I was hoping the sale of the house would leave me with ~£20k to set up with my partner somewhere new, or to provide a share of my own into his mortgaged property, but this situation now after fees etc will leave me with ~£8k of my own, which yes is a plus and I’ll be IVA settled but the amount of sentiment the house holds it is not worth selling up to come away with that amount. Sorry for the waffle but could anybody please shed some light into why/how the settlement figure is so much higher than what I originally started off with only 6months ago?
Extremely grateful for any facts/advice :)
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luluj
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by luluj » Fri Mar 16, 2018 6:53 am
You always owe the full amount of original debt plus IP fees and Statutory Interest.
You could seek a full and final offer asking for statutory interest to be taken off due to early repayment to creditors but it is not guaranteed.
You also have to remember that your credit files will remain showing the iva for 6 years from the start date - therefore you may find it uneasy to move forward financially with your partner in that time.

What about renting your property out and moving in whilst the iva continues?
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kallis3
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by kallis3 » Fri Mar 16, 2018 7:43 am
First payments are always fees.
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Foggy
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by Foggy » Fri Mar 16, 2018 7:53 am
On a debt of £42k. on an IVA which has been running a year ( a very rough doodle calculation ) would take around £8k in fees, maybe £500 in disbursements and £5k in statutory interest ... less the £4k already paid .... would be around £55,500 .... so they are not far off !

A cheaper way, as suggested above, would be to offer to sell the house for the purposes of making a full and final offer (NOT settlement). If the offer is not accepted you will not sell ! This amount would be based on what the creditors are expecting to get. If your payment is around £650 a month and you have a 5 year IVA (plus 12 months for equity) they are expecting another 66 payments -- or £42,900 ... and will be saving on administration fees, etc. So you could make an offer below £40k. It's all in the wording and timing.
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kallis3
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by kallis3 » Fri Mar 16, 2018 8:50 am
Don't forget you will have a restriction your house which your IP will have to arrange to have removed.
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Lisa Thomas
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by Lisa Thomas » Tue Mar 20, 2018 10:16 am
You have possibly asked the wrong question to your IP - 'settlement' is payment of total debts, interest and cost in full whereas a full and final offer is completely different.

See here:

https://youtu.be/h4dozq9aGak

As Foggy suggests you could propose a variation to sell the property and use the proceeds to pay an amount equal to what you would have paid had the IVA continued in the normal way but based on my calculations you will pay c£36k over the next 4.5 years and this doesn't include the assumed 12 month extension (c£44k?) so I suspect creditors may well want most or all of the equity and you will be no better off and will have lost the property.

This will also leave you at the bottom of the housing ladder and unlikely to buy another property for about 5 years.

Could your partner move in with you instead?
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