Is it worth offering a F&F

[NearlyThere]

Hi,

I'm hoping that someone can offer some advice.

My Wife and I are in two separate IVA's and we are coming up to our 5th anniversary and have received a letter from our IP (Aperture, formerly Grant Thornton and before that it was Money Debt and Credit) asking us to provide a valuation of the house and the balance of the mortgage as there was a clause in the original IVA that if we couldn't re-mortgage after 5 years then we would have to carry on paying the payments for the next 12 months. We have completed these and sent them back but not yet had a response from the IP.

The issue is that within the last 5 years the direction of my business (Ltd company of which I am a director) has changed and I now need to apply for a PSV operators licence, which I don't believe will be granted while still in an active IVA.

Would a F&F be considered and if so how much do people think we should offer? My Mum has offered to give us the money to pay it off so that I can move the business forward.

Would we both have to do a F&F or could it just be me?

Thanks in advance

[Foggy]

Yes, you could pay off the extension with a lump summ full and final offer, which would have to be close to your payment x 12. Often you can round it down a little because they would be making a saving in administration costs -- but they won't save much to shave off just a year ( and it will add around £500 to the fees for the variation).

If your IVA's are separate -- i.e you make individual payments, you can deal with them individually. If they are interlocking -- you make one payment for both -- they would have to be separated first, which would involve extra work and your IP might not be too keen.

[NearlyThere]

Hi,

Thanks for the reply.

Our IVA's were taken out at the same time but we pay separate payments. So i'm assuming that they are separate IVA's.

What would the best way forward be?

Thanks in advance

[NearlyThere]

Also my remaining monthly payments total £4530 with 15 months remaining so what would be suitable offer, would £4000 be ok or would it be better to offer £4500?

Thanks in advance

[Foggy]

You could offer the £4k and up the offer if refused. Bear in mind that it could take up to three months to process, so pop a clause in there that the lump sum will reduce by every payment made in the interim.

[NearlyThere]

Hi,

And thanks agin Foggy for the reply.

I have put together a draft letter, does this look ok?

I am working away next week so wanted to get the letter drafted and then speak to my IP on Monday to start the ball rolling.

"Dear Sir/Madam
Further to out telephone conversation I would like to formally offer a lump sum payment of £4000 as a full and final settlement of my current IVA.
As agreed I will continue to make my monthly payment until February 2017 and then offer the lump sum and conclude my IVA.

The lump sum of £4000 is coming from my mother on the understanding that it is only available if used to conclude my IVA and any payments made into the IVA after the February payment will be deducted from the final settlement.

Once the IVA is completed all creditors are to mark any entry on a credit reference agency file relating to this account as being “satisfied” in full.

Would you please arrange a variation meeting and put this offer to my creditors.

Yours sincerely"

Should there be any timescales on this?

Thanks Again

[Foggy]

They are supposed to present a variation within 21 days, but many ( if not most) exceed this. I would just say "as soon as possible".

With regard to the reference to your creditors marking the credit files as satisfied, you can but try, although it will make little difference to your credit rating as any default is a minor matter (however marked) whilst the IVA is on there, overshadowing everything.

Otherwise, apart from a typo ( third word : "out" should be "our" ), looks OK to me.

[NearlyThere]

Thanks again Foggy

I was aware that I was pushing it with the Settled bit but hey it's got to be worth a try

I had missed the spelling mistake so I've corrected it.

I'll give the a call tomorrow and see where we go, hopefully I can move this forward

[Lisa Thomas]

Did you work out whether the extra year actually applies to you - do you have standard clauses stating equitable interest to be £5k or more and if so how much equity do you have?

Please note the variation process takes some firms months to do and then even if accepted some firms take up to 6 months to close the IVA and give you your certificate so this may not help you with your license problem.

[NearlyThere]

Thanks for the replies.

We have he Standard Clause of £5k however we have just over £11k equity in the house at 85% LTV.

So the clause will apply.

Have spoken to Aperture who initially told me there was a back log in the mortgage report dept and they were about 3 months behind!

They originally said if we applied for a mortgage and were rejected (which I expect we will be) then we would be given the option to pay either the remaining 12 months payments or 12 months as a 3rd party lump sum.

However when the mortgage team responded yesterday they said it was either pay the 12 months payments or pay the £11k EACH to end the IVA.

Is this right as if we were to remortgage then there would be a total of £11k and that would be split between the two IVA's?

Any way I have said that there is no way I can raise the £11k or anywhere near that and so would they be accept the 12 month payments as a F&F so we will see if they get back to me

[Foggy]

Frankly -- as I have not had my coffee yet --- the mortgage team are talking out of their furry little bottoms (heavily edited) !

[Lisa Thomas]

How much equity is there overall? £11k? This means £5.5k equitable interest each. This is extremely close to the minimum level of £5k!

If I was in your position I would get my own valuaiton and challenge the one that shows £11k equity.

If you can get the equity down to less than £10k you should be able to argue the clause does not kick in.

[NearlyThere]

Hi thanks again for the reply

I have been working away so just got home and sat down to look at the figures and I am getting more confused.

The mortgage team replied to me and said that they had already split the equity so they say we have (using round numbers ):
£22k equity so we spilt that to make the £11k each

however from the figures I sent them to me this doesn't add up
My figures are:
House Value: £125k
Mortgage Balance (as of July 2016): £92k

so to me 85% LTV is £106250
this minus the 92000 is £14250
which leaves £7125 each.

Just to confuse things even more Zoopla now has reduced the value of our house to £118

so to me tis now would be:
85% LTV is £100300
this minus the 92000 is £8300
which leaves £4150 each
which is below the £5k for the clause to kick in

[Foggy]

That is how most work it out -- but Aperture have a cock-eyed interpretation of the clause ( incorrect in my opinion and worth challenging).

They would use this formula:
House value £125k
Balance £92k

Therefore equity is £33,000 --- 85% of which is £28,050
Take off an allowance for fees, costs etc. will give you the £22k they quote.

Check the wording on your equity release clause ---- some talk about 85% loan to value ( the better method), some use 85% of your equitable interest ( Apertures method). Some have conflicting clauses and the best have specific reference to the method in annex 6 or 7 of the Standard conditions, or, better still, the method attached in an annex.

[Lisa Thomas]

Good advice from Foggy. You need to see what equity calculations/formula was used in your original proposals and an modifications and potentially challenge the ones they are using now if they are different.

If you can get them to agree the Zoopla valuaiton then it sounds as if you would avoid the extra year...!