I do not know what to do!

[rpw]

Hi - I need help - Sorry this is a bit long and drawn out but I thought it best you had as much information as possible.
I entered into an IVA in March 2007 - owing 60K.
The IP company seemed genuine and helpful right up to the creditors meeting. The day before the creditors meeting they even phoned me to tell me the monthly payment would need to be increaced by 8 pounds. It all seemed to be going great. My only reservation against taking an IVA was my property. I made it clear from the outset that I did not want this to be included. However, at the creditors meeting the '4th Year' clause was sprung on us. We felt trapped, were given no help from the IP and signed because it seemed the only option.
Thats history now but I am really worried about the house. The IVA wants a valuation and ALL equity repaid.
I am seriously considering going bankrupt. I know they get the house anyway but at least I can cut my losses, rent a property and start again. In 4 years I will be at an age where I could only get a 15 year mortgage and if the value of my house increaces, so does the amount I need to borrow. The costs may be so high that I cannot meet their demands and they IVA fails anyway.
I have a wife and three children and they are my driving force for trying to get this sorted. I'm worried about the 'stigma' associated with bankrupcy - local press notice, etc. I really am worried sick about this and dont know who to turn to for advice.
I recently contacted another debt counselling company, who suggest remortgating the house now on a 100% interest only mortgage and offering a full and final settlement but I do not want to get myself into even more debt.
My wife and I are contacting our local CAB to see if they can help.
I am considering going back to the IP and asking their advice but I feel they mislead us in the first place and when I really needed their help they did not offer any.
Are IVA's renegotiable? - If the creditors thought the IVA was going to fail, could they possible remove the '4th Year' clause or only ask for a reasonable proportion of the equity to be repaid?
There are other issues too - The IVA has no flexibility for 'unforseen circumstances' and my car is on its last legs. I would quite happily lose the car to continue the IVA - It would make life difficult but I could cope. Its just that if I am willing to do this and in 4 years I will lose everything anyway, what is the point?
Any help you can give or contacts would be really appreciated - I do not know what to do!

[MelanieGiles]

Hi rpw

Can you please post the exact wording of the creditor modification on the forum. I fell that it is very unlikely that creditors want 100% of your equity, but would like to read the wording myself. Do you remember which creditors proposed this modification, and which IP firm are you using?

IVAs are definately renegotiable, but at such an early stage in yours there will some concern that you did not consider the modification carefully when you agreed to it at the meeting. Please take your own IP's advice on this.

With regard to the car, were you not provided with a car maintenance allowance? I usally provide at leatst £35 per car, and again if the car was old or unroadworthy at the time of entering into the IVA, how did you believe it was going to last for five years?

I really do accept that the benefit of hindsight is a great thing, but IPs really must discuss these issues with their clients, rather than putting together proposals which have a risk of a failure due to unforseen circumstances.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[jpj]

Your equity release will be at the start of year 4 (I presume) As you have nearly done a year of your IVA already ,your equity release will be in 2 years time,not 4.
I would be surprised if your house rises in value at all over the next 2 years! ( some are talking of no rises this year,others talk of house prices falling 10% over the next 2 years)
You might not even have to do equity release in 2 years time!
Were in times of uncertainty !

[Beechy]

http://www.propertysnake.co.uk/ have a look at this to see how house prices are doing in your are

Dave Beech

[jpj]

What a fantastically,interesting,depressing site!!

Its a sod when your 3 million pound pad in Holborn drops to one and a half million !! ( I feel for the sellers...I really do!

Well Im only down a mere 13% in my area so things could be worse!!

[ellie 553]

that property snake site is quite out of date. I accepted on offer on my house of £142500, down from £159,950 since october - its still on that site at £165,000 - anyone want to make a better offer??!!

[jpj]

We can probably get the Holborn house for £900k by now then!!

Would love to make you a higher offer Ellie...unfortunately COMPUTER SAYS NO!! )

[rpw]

Reply to Melanie Giles
Thanks for the quick response.
Only one creditor voted - RBS represented by Tenon
IP - Gibson Booth
The house clause is:
The property of XXXXX to be included in the arrangement. The property is to be professionally valued within 3 months after the fourth year anniversary of the arrangement and the debtor's equitable interest is to be realised and paid to the Supervisor before completion of the arrangement. If necessary the arrangement can be extended with the approval of 75% of the creditors voting to allowan equivialnt sum to be paid by way of ongoing contributions for a period of up to six months.
I have done some research and discovered the 'equitable interest' should only be based on the Loan To Value (85%) as this is all I am likely to be able to get a new mortgate for - Any advice?
I have been told that because my mortgage provider is one of the major mortgae companies, it is unlikely they will grant a mortgage because of the IVA and that I willl need to source a mortgage from a lesser known (more expensive) provider?
Also, the IVA contains a clause that any wage increaces (including rate of inflation) need to have 50% paid into the IVA. This means the IVA agreed does not take into account inflation for five years. Bearing in mind Elec prises are rising by at least 10% this means any increaces need to be met from the small amount of 'disposable' income left when the IVA started.
I take your point about the car but I could not have bought a newer one because I was already in debt.
I have been to CAB today and they advised me to return to Gibson Booth and explain the problem. They feel it would give Gibson Booth an opportunity look into my options and give advice on the the best way forward. Other sources say Gibson Booth will do what is best for them????? Ahhh!
I still dont know what is best!

[MelanieGiles]

Well that is not what the modification says - it says the equitable interest which has no 85% limitation due to your ability to borrow. is the property jointly owned? If so, this only would relate to your interest.

I personally struggle to understand why an IP would allow a client to be drawn into such a penalising provision, when the only real way to realise the full equity would be to sell. I think that they need to advise you on the appropriate way forward now and the sooner the better - a variation of the IVA seems inevitable.

What do you think the value of your equity in the property is now?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Adam Davies]

RPW
You will ony be able to remortgage an amount that meets the affordability criterea of the mortgage company.Your IVA allows for a one year exstension if you are unable to obtain a remortgage offer.
Go back to your IP and clarify the equity release modification and,as Melanie states,ask for a variation to sort out the 85% loan to value issue.
Regards


Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

This IVA only allows a six month extension, so if the equity is a large sum it may be impossible to pay over such a short period.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[rpw]

Hi - Thanks for the advice.
The IVA and mortgage are in joint names.
We had it valued just before Christmas and if we sold it now and paid off the amount outstanding on the mortgage, it would leave us with 35K equity (assuming it could sell in the present climate). Is is worth considering offereng a final settlement by doing this and then renting a home. It would avoid bankrupcy and get rid of the IVA - Are they likely to accept? That would mean we would have paid 40K of the 60K owed (not including the IP's fees).
In the post today - I received documents from the IP wanting a detailed breakdown of Income/Expenditure for the 1st Anniversary review. Funny - They did this on our behalf last year when we first approached them.
Anyway, I think our only option is to go back to the IP, tell them our concerns and the fact that we are considering defaulting on the IVA and see what they say. Their fees are in excess of 8K and for that sort of money I would expect some 'helpful' advice - Is this to much to ask of them?

[Adam Davies]

Hi
Are you saying that they filled in your original income and expenditure for you ?

Andy Davie
IVA.co.uk Spokesperson and Website Manager

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

Your IP is there to help you to resolve this situation, and is directly resposible to your creditors to do so.

It sounds as if you have the makings of a good offer there, but you will need your IPs support to put it before creditors. Good luck!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[rpw]

Hi - We did it together - They advised me of 'suitable' amounts to include.
I will make an appointment to see the IP next week.
Thanks for your help so far - I will keep you posted.