Hi all, I've just got my draft proposal and having read and re-read it I think I know what I'm signing up to, although offering just 21p dividend worries me!!! One paragraph that I cant get my head round is regarding equity release in month 54 as it states...... If I am unable to obtain a new mortgage to release the equity required, this will not be viewed as a failure to comply with the terms of the IVA and my supervisor will have the discretion to consider accepting one of the following alternative proposals....
1 - a third party sum equivalent to 85% of the value of my interest in the property or .....
2 - 12 additional monthly contributions (with the aggregate sum paid to the supervisor being limited to 85% of my interest in the property)
Does this mean that either a 3rd party can pay a lump sum for me and if not, I just continue on the same monthly payments of what I am paying at that time for a further 12 months? or will my payments be increased
The 2nd option has thrown me with the "The aggregate sum being limited to 85%" = can anyone explain this bit to me please?!
Feeling a bit dizzy with it all, not sure if its nerves or a giddy relief at the thought of there being an end to it all (hopefully!!!) Just keep telling myself that they would not waste their time putting my proposal forward if they thought it would be rejected!!! well thats what I have read on here hundreds of times anyway!! Ha at least its keeping my mind off other things for the time being, no room in my tiny mind at the moment for anything else!
Thanks
This is why voluntary arrangement terms and conditions should be carefully explained to clients by their IPs personally before they are sent out for signature. If this has not happened in your case, then I suggest you arrange a meeting with the IP or a senior member of their staff to go through things with you.
The treatment of the family home in an IVA is one of the most important things that we shoudl ensure our clients are fully aware of. Let me give you an example which may help you to understand some of the terms.
Say your house is worth £100,000 during the final year of the IVA, and you have a mortgage of say £70,000. Then you will be required to re-mortgage up to 85% loan to value, so with these numbers up to £85,000. This would be firstly used to repay the existing mortgage - ie the £70,000, leaving £15,000 to be paid into the IVA. That is the theory, but in reality it is unlikely that anyone will allow you to remortgage during and IVA and thus there has to be some counter provisions such as:-
1 You finding someone to lend you the £15,000 - it the third party sum
2 Or you make additional payments during a sixth year in lieu of this sum, or up to the maximum if you could pay it off earlier. The reference to the aggregate sum means that you will never pay in more than 85% of the value of your property, less the current mortgage.
All of this should have been set out for you in an explanatory letter, giving you examples of the amount that you may be required to raise in the final year. I certainly would take more time to understand this before you sign on the dotted line!
They are complicated documents! Fortunately I had a little bit of legal training so managed to trawl through but it's tough going. I think Mel has explained it beautifully!
Congrats on getting your final docs once they're back you'll get your date, so the end is in sight!
"It is never too late to be what you might have been"
Fiona
Is it also correct to say that if there is no equity in the property (or less than 15%), then you would not be expected to continue for the extra year?
I think it depends upon the individual proposal - mine states that if we have less than £5k equity then the IVA will conclude, otherwise it will be an extra 12 months.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Yes I believe that's right. If there's equity you can't release then you normally make another 12 months payments. If no equity in the property I think the IP can ask for the IVA to be closed then without the 12 month extension.
my proposal states if the equitable share is less than 5k then the iva concludes at year 5. Not sure if this means 5k each(in interlocking ivas) or 5k total though.If more than this there is another 12 months to pay.
My proposal does state if less than £5000 equity then my IVA is concluded, but if there is more then £5000 then I have to try and remortgage or do the extra 12 months, however there is another paragraph which states my new monthly mortgage payment after remortgaging should not be more than 50% of my IVA payment but then doesnt say what happens if it is which I would assume it would be more !!! Got a telephone meeting in the morning with my CCCSVA supervisor to discuss it all then its signed and straight off to the post box with my very important envelope!!!!
Good point about affordability. Any new borrowings are limited to not costing more than 50% of your then disposable income. So if you are paying £400 per month into the IVA, the new mortgage payments must not cost more than £200.
So the level of the new mortgage would be tailored to the maximum you would borrow to a maximum cost of £200.
