hi- im in a bit of a quandry- ive got credit card and bank debts for 15000. but also i had a mortgage with an ex, that was in both our names, which got reposessed last november, and i know for a fact there will be a mortgage shortfall of around 50k,which we'll be liable. However ex is going bankrupt, so the mortgage shortfall will fall on me! making a total of around 65k unsecured debt. im self employed, and am struggling with my 15k debt at the moment.so was thinking of doing the iva first, and then waiting to hear from the mortgage company for the shortfall, and then see what my best option is -either stay in iva, or go bankrupt. but i spoke to payplan and they said i need to find out shortfall amount before i can do an iva.but i hear it can take years for a mortgage lender to notify you of this!? so whats my best option- do i ring the mortgage lender first. or go through with an iva, and not mention the shortfall? bit confused to what my best option is! please help!!
Hi Debbie and welcome to the forum. Sorry to hear about your shortfall on your previous property. I don't think you should to go through the process of setting up an IVA without including all your unsecured debt. YOu know they will contact you at sometime regarding the debt so it may be best to contact them now and set the ball rolling.
My advice would be to look at reviews on www.iva.com and speak to another couple of companies to make sure that you choose the right company. Payplan are a great company and some of the forum members are with them, however as this is a 5 year relationship you do need to make sure you are comfortable with who you go with.
Good luck - keep posting.
Hi - if you aren't confident in the advice, it may be that you need to speak to another firm or two. Just to verify the advice or try something else that's recommended. I'm not sure on the correct procedure but mortgage shortfalls can be included once the iva is up and running. Mel has given some great advice/info about how mortgages should be treated. If you check a few posts from today, yoummight find it. x
As a rule we do need to know the amount of the shortfall to allow us to put this in your IVA proposals. As it is now an unsecured debt we require proof of it along with your other unsecured debts. If the house is already sold etc... then you should call your mortgage lender and they should be able to send the confirmation of the shortfall to you.
With an IVA you must include all unsecured debts.
Now managed by Jane Clack - Payplan Company Representative
What happens if it's not been sold until after the IVA has started Lizzy?
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
Thanks for the advice everyone! ive looked at my credit file which shows that the mortgage fell into arrears last year, and then obviously, as i said the house got reposessed- but why does it say in jan 2011 that its been settled? because i know there is a shortfall! any ideas please?
I think you need to speak to the mortgage provider to find out exactly what has happened. They should be able to tell you what the shortfall is.
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
They may have sold on the debt in January 2011. Best you contact your previous mortgage lender and find out who holds the debt now. The sooner it is sorted the sooner it can all be included into an IVA.
kallis, it usually depends on the circumstances surrounding the case. As a rule, if the house is on the market we would wait until it is sold. The main reason being we need to know the exact amount owing in order to put this in the proposals. There can be a certain percentage allowance either way, if it is more of less than this then we would need to call a new meeting of creditors.
We would say it is in the clients best interest to wait to save the potential of going through two meetings.
Now managed by Jane Clack - Payplan Company Representative
It is pretty easy to estimate a mortgage shortfall, and at the end of the day if the proposal is put to creditors on the basis that the shortfall will be what the shortfall will eventually be - and they are aware of the risk of a reduced dividend, there is no problem presenting at a much earlier stage. I can personally see no need to wait until the shortfall is crystallised by the house sale.
If this approach is followed Lizzy - why the need to call another meeting of creditors?
Due to the current housing market it is getting harder to estimate how much a house will sell for. We prefer to wait until we get confirmation of all debts before proceeding with an IVA as should the estimated level of debt increase by more than the percentage allowed in the proposals or modified it would result in the need to call a variation meeting of creditors due to the resultant change in dividend. In our past experience this can cause our clients a lot of stress and would be unfair to put them through the process twice.
If an estimated shortfall is included in the original proposals and is put to creditors on the basis that the shortfall will be what the shortfall will eventually be - and they are aware of the risk of a reduced dividend, our experience shows that it is likely the creditors will use the figures and request that a minimum dividend of this amount is achieved, again this is something that could cause the client un necessary stress and could cause the IVA to be financially unsustainable.
We can also use our past experience to see that on occasions creditors have rejected an IVA application due to an estimated shortfall, as they want to be able to guarantee their dividend and as stated above could either reject or request a minimum dividend is achieved.
Now managed by Jane Clack - Payplan Company Representative
Your experiences are clearly very different to my own, and you have some interesting views on the process. I cannot remember the last time I saw a creditor require a minimum dividend - which kind of contradicts some of the terms of the protocol - ie the 15% discretion to reduce payments if necessary etc .........
I would have thought that your clients would suffer more stress by not having their IVA put forward until a property sells, than putting forward a variation - which ought not to be necessary if the proposal is drafted correctly - once they have the protection of the IVA.
And I can safely say that I have never seen a creditor reject an IVA with an estimated shortfall, but as we are not a volume provider to the extent of the amount of cases presented by Payplan, then perhaps I am only seeing a limited side of the market.
