Why a remortgage when my partner has already paid most of debt back?

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mel109

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Post by mel109 » Fri Jul 05, 2019 7:51 pm
Hi there, my partner started an iva with credit fix in 2014 and was told his last payment would be due in August 2019. He received a phone call the other day to say that the last payment is due in march 2020 he has already paid £5025 of the original £12,000 and is now told by the company that they are applying for a remortgage in his name to release the equity in his house. He only still owes £800 if its due to finish in march so how can they do this. It was a 5 year plan

Foggy

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Post by Foggy » Fri Jul 05, 2019 8:30 pm
During the course of the IVA the first year or so's payments pay off the nominees fees ( for setting up the IVA). Then around 15% of the payments thereafter go towards the supervisors fees ( for running the IVA). so, there will still be a chunk more of the original debt unpaid than the £800 you are thinking.

As you say, it was a 5 year plan -- but there is a clause in the proposal to release equity towards the end, which is what is happening now. There is a chance that the clause will not be triggered if there is less than £5k equity. And, if it is, that a remortgage will not be available, in which case there will be a 12 month extension instead.

Why has the arrangement been extended until next March at this stage ??
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

mel109

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Post by mel109 » Fri Jul 05, 2019 8:44 pm
Hey there, thanks for replying. It actually hasn't been extended. It was a 5 year plan. He had been told on several occasions that the final payment due was August 2019, next month and that was the end of the plan. It was only earlier in the week that he was told that the end date is March so we cant understand why this in now happening. I'm going to ring them on Monday but it all seems a bit odd as the actual first payment was officially Nov 13 but a couple of payments had been missed so it started again in April 2014 but as far as I can see now, he's into the 6th year which means he's already into an extra year which should surely override the remortage? They have never informed him of an extension.

Foggy

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Post by Foggy » Fri Jul 05, 2019 8:52 pm
Missed or reduced payments are added onto the end to make 60 payments (or the monetary equivalent), however long that takes. People often stray into a 6th year this way, it does not preclude or alter the equity release requirements--- the details of which (including the possibility of an extension) are included in the proposal he, hopefully, read, signed and agreed to at the start.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

mel109

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Post by mel109 » Fri Jul 05, 2019 9:03 pm
Ok, so I've just checked with him and he hasn't missed a payment since April 2014 which is already more than 60 payments. He agreed to pay a third of the debt which was in the region of 4500. I'm confused as to what it all means but to me this doesn't seem right. Can they ask for a release when it's clearly already in an extension?

Foggy

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Post by Foggy » Fri Jul 05, 2019 9:29 pm
They can ---- depending on the reasons for this apparent extension.

Let's forget the payments he made in 2013 and say the whole 60 months started in April 2014 --- so he should have ended in March 2019 .... so the date they are giving is 12 months later.

Dig out the Chairman's Report of the initial creditors meeting ---- the proposal might have been for 5 years ( 60 payments). but, sometimes ( especially if Northerm Rock were involved --- were they ? ) creditors amend this to 6 years from the off (72 payments). This will be detailed in that report of the meeting.

Now ... IF it was definitely a 5 year arrangement then this extra 12 months they are talking about would, probably, be the 12 month extension instead of equity release --- in which case he needn't be looking at equity release at all --- they cannot have two bites at the same cherry !

But ...IF it was amended, at the start, to a 6 year arrangement then the equity release could be looked at or a further extension applied if a remortgage was impossible.

You need to ask them why they are giving you an end date 12 months after the 60th payment and take it from there.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

mel109

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Post by mel109 » Fri Jul 05, 2019 9:37 pm
Thank you, you have been very helpful and Northern Rock were definitely not involved. As far as I'm aware, it hadn't made into a 72 payment plan. He was told at the time of taking this out that it was definitely a 60 payment plan and he has asked for balances every time he has spoken to them and so far it has all tallied up so the questions will most definitely be asked on Monday as soon as they open. Thank you again.

Foggy

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Post by Foggy » Fri Jul 05, 2019 9:46 pm
Best of luck. Please let us know how you get on.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
http://foggy.blogs.iva.co.uk

mel109

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Post by mel109 » Fri Jul 05, 2019 10:02 pm
I will, of course. Cheers Foggy 😁
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