Advice needed going into last year of IVA

[Chief77]

HI All,

Hoping you can offer some advise as as i'm sure many of you know, being in an IVA can be dark challenging times and I really want to just move on,

Current position

IVA started in September 2013 which was extended for a further 12 months to 72 months. I have just made my 60th payment (5yrs).
My original debt was £20k however DFD incorrectly included an amount twice which I have mailed and called numerous times about (now to Appeture) and get no response. They therefore have the total debt at £24k which is clearly incorrect if they were to look at it (so I probably have been overpaying in affect but that's not a concern).

I also have an HMRC overpayment to my ex included in my IVA but doesn't that get paid back by an adjusted tax code and shouldn't be in the IVA?

I have paid a total of £7500 into the IVA to date (which I know will include fees etc)

I do not have 15% equity in my house. I tried speaking to Appeture regarding this and they are advising a different equity rule which is completely different from what is in my contract with DFD. They advise that I need to attempt to release funds in Feb 19. As per the contract, I will not have sufficient equity to release funds and I assume that the IVA will then finish at the end of 72 months.

I have approx. £1700 of payments to make to the final 72nd payment that I believe I need to make.

My current work place is struggling and their have been a lot of redundancies and I may be at risk and could end up going bankrupt after sticking this IVA out for over 5 years. However, I have been offered a new job just over 100 miles away which would mean that I would need to rent an additional property (just myself Mon-Fri). Two properties and the monthly IVA payment and the concern that after all you may end up losing your house anyway, and that there is a possibility that the IVA can go onto 84 months (which I cant believe is possible?) leads to worrying times.

Given that there is a risk of not being able to complete my IVA if I remain with current employers, but I can continue if I relocate - can I look at making a F&F offer at this time? If so, I am not sure what the calculation would be (OS payments or balance). I have kept my IVA from family and friends as didn't want to worry anyone but if there is a chance to get settled I may speak to my parents to see if there is a possibility of a gift to end this.

Please can anyone offer some advise, hope above is sufficient info?

Thanks
B.

[Foggy]

On the equity release clause - the trigger is not 15% equity. It is if equity exceeds £5,000 based on 85% LTV. If so then the extra 12 months in lieu of equity will come into play.

You say the IVA started in 2013 and was extended by 12 months. When was it extended and why ?

A F&F is based on the amount of outstanding payments (including the extra 12 months in lieu of equity, if they apply, which is yet to be determined). It is common practice to assume they will be added, unless it can be proven that the clause will not be triggered.

[Chief77]

On the equity release clause - the trigger is not 15% equity. It is if equity exceeds £5,000 based on 85% LTV. If so then the extra 12 months in lieu of equity will come into play.

You say the IVA started in 2013 and was extended by 12 months. When was it extended and why ?

A F&F is based on the amount of outstanding payments (including the extra 12 months in lieu of equity, if they apply, which is yet to be determined). It is common practice to assume they will be added, unless it can be proven that the clause will not be triggered.

Hi Foggy,

The original agreement was accepted on the basis that it was extended 12 months to 72 months, I assume for no other reason than to pay more back into the IVA
My property is worth £150k, and i have a mortgage of £138k.

So potentially even though I think unlikely equity can be released, with worst case of an additional 12 months my final payments would be approx £3400 - so i could potentially put an offer to them of £3k?

[Foggy]

Hi Foggy,

The original agreement was accepted on the basis that it was extended 12 months to 72 months, I assume for no other reason than to pay more back into the IVA
My property is worth £150k, and i have a mortgage of £138k.

So potentially even though I think unlikely equity can be released, with worst case of an additional 12 months my final payments would be approx £3400 - so i could potentially put an offer to them of £3k?

OK -- so, in effect it was a 6 year IVA (usually done to increase the dividend, especially if a creditor was NRAM / Northern Rock). So, yes, it can be extended to 84 months by the action of the equity release provisions.

Aperture have, in recent years, taken an unusual approach to equity calculation and did use an inventive interpretation, contrary to the one usually used and outlined in some proposals in annex 6.

The way most would do it would be £150,000 x 85% = £127500 ... with an outstanding mortgage of £138k ... negative equity, no extension triggered.

The way Aperture have used would be £150,000 - £138,000 = £12,000 x 85% = £10,200. Equity clause triggered ..... but ...... The £5k trigger is your share of equity. So, if the IVA is in your name only and the property in joint names, your share would, here, be £5100 --- just over the trigger. Get that valuation, credibly, a little lower and even here you could fail the trigger.

Anyway ----- assuming the trigger applies and the 12 month extension means payments due of £3400, then an offer of £3000 should be looked at seriously.

[Chief77]

Hi Foggy,

The original agreement was accepted on the basis that it was extended 12 months to 72 months, I assume for no other reason than to pay more back into the IVA
My property is worth £150k, and i have a mortgage of £138k.

So potentially even though I think unlikely equity can be released, with worst case of an additional 12 months my final payments would be approx £3400 - so i could potentially put an offer to them of £3k?

OK -- so, in effect it was a 6 year IVA (usually done to increase the dividend, especially if a creditor was NRAM / Northern Rock). So, yes, it can be extended to 84 months by the action of the equity release provisions.

Aperture have, in recent years, taken an unusual approach to equity calculation and did use an inventive interpretation, contrary to the one usually used and outlined in some proposals in annex 6.

The way most would do it would be £150,000 x 85% = £127500 ... with an outstanding mortgage of £138k ... negative equity, no extension triggered.

The way Aperture have used would be £150,000 - £138,000 = £12,000 x 85% = £10,200. Equity clause triggered ..... but ...... The £5k trigger is your share of equity. So, if the IVA is in your name only and the property in joint names, your share would, here, be £5100 --- just over the trigger. Get that valuation, credibly, a little lower and even here you could fail the trigger.

Anyway ----- assuming the trigger applies and the 12 month extension means payments due of £3400, then an offer of £3000 should be looked at seriously.

Thanks Foggy. Mortgage is in my name only.

IVA was previously through DFD so I completely understand Aperture have their own way of doing things but they cannot vary the equity clause from what is clear in the agreement, I woudln't think they would have a leg to stand on. They have taken over a mutual agreement from DFD with clear terms from DFD, it cant be changed after 5 years to whatever their back of a fag packet terms could be surely?

[Foggy]

They cannot change the terms -- but some agreements were badly written so that the clauses could be interpreted differently and they tried to exploit that difference. Many actually have the calculation actually embedded in the agreement, either by an example or reference to annex 6 (where it is set out in the protocol) and, for years Aperture, in their former guise as Grant Thornton toed the line and used the commonly accepted (and in my opinion, correct and how it is intended) interpretation --- of which they themselves were co-authors as members of the body that reviewed the protocols.

[Chief77]

They cannot change the terms -- but some agreements were badly written so that the clauses could be interpreted differently and they tried to exploit that difference. Many actually have the calculation actually embedded in the agreement, either by an example or reference to annex 6 (where it is set out in the protocol) and, for years Aperture, in their former guise as Grant Thornton toed the line and used the commonly accepted (and in my opinion, correct and how it is intended) interpretation --- of which they themselves were co-authors as members of the body that reviewed the protocols.

Thanks again