Hi there. I am in an IVA with debtfreedirect and I have been instructed that I have to sell my house within 12 months and move into rented accomodation and then start a 6 year repayment programme. With the housing market as it is I have had no-one even look at the house within the last 4 months! I have seen some companies offering to buy the property and then rent back to you. Is this a good route to go down? Cheers!!
Has your IVA already been accepted? If so, why are you now being told that this is the terms of the arrangement?
Companies that offer sale and leaseback will usually only offer between 60% and 80% of the market value, so a sale at this level would be at undervalue and therefore unlikely to be accepted by your creditors.
Thanks Mel. The IVA was with the condition that we sell the house within 12 months and then start to pay for a further 6 years. 60 - 80% would not cover what we need so I guess that we will have to hope that the market picks up. We have had it on the market and no-one has even looked yet! We have reduced the asking price to under £175k to take advantage of the current new legislation with regards to stamp duty so fingers and toes are crossed!!
That is a harsh IVA - sale of the house and six years ongoing contributions. If property prices have reduced so much, then you need to seek advice from your IP as to how this affects the IVA. Voluntary arrangements prepared on the basis of property selling these days are definately uncertain.
Thanks Mel. This is the situation. We have a mortgage and a secured loan totalling about £150k combined with unsecured debt of about £40 - £50k. We have been told that we do not have to pay anything for a year but we must sell the property to pay of the mortgage and secured loan so that we can afford to pay £350 a month to the other creditors. This seemed to be a great idea at the time but now the housing market is in freefall. The house was originally valued at £180k by two estate agents and £185k by another but we have dropped it to £175k to take advantage of the stamp duty.
The 6 years was a request from Barclays ironic really as the secured loan was with them and the only debt that I have with Barclays themselves is my overdraft!
I struggle with the concept that this was a great idea at the time - but obviously your creditors did or they would not have voted to accept the IVA in the first place. Why did your IP feel it was necessary to sell the property first - why not just do a final year equity release as is the norm for homeonwers.
There still appears to be equity in your property to be realised for the benefit of creditors, but if you cannot start to make the monthly payments at the twelve month point you will need to enquire of your IP whether they feel an extension of time will be necessary.
Mel, wrong choice of words... We did not want to sell the house but it was insisted upon by the creditors. With the situation that I had got the family into it was the only option for us (other than bankruptcy).
I am most suprised to see this sort of thing being requested by a creditor. Talk about penny and bun. Were your mortage payments very high compared to your income?
Then I can see their reasoning. Presumably you could rent locally for a lot less than £1,400 which is far too much to pay for housing costs at 70% of your salary.
I smell the 'sale' of an IVA and the procurement of 5 years fees.
Demand that your Supervisor calls a meeting of your creditors to vary the terms of your IVA. Ensure that a detailed written account of your circumstances are attached to whatever 'report' your Supervisor submits. If they refuse lodge complaints with their governing body and the OFT, and contact a solicitor.
If you have a really close family member or good friend can they buy out your equity - loan or remortgage? and then go bankrupt. What are the proposd nominee and supervisor fees 'anticipated' to be over the IVA term?
Do debtfreedirect still live in Dickesian times? Obviously!
I don't agree with that - the debtor put a proposal forward, and due to his housing costs being 70% of his total earnings, creditors modified the proposal to require the property to be sold.
This has nothing to do with the "sale" of an IVA - it is to do with the debtor's choice to exercise their right to accept a requirement of their creditors in return for them accepting a financial settlement.
I agree a variation is required here - but the poster needs to work with his IP to put things right. No-one predicted a fall in the property markets as we re currently experiencing.
I might be looking at this the wrong way but surely the idea of an IVA is predominantly that you can reach an agreement with your creditors that means that you can keep your home.
If you are going to have to sell it anyway wouldn't it be better to consider bankruptcy as a solution instead of tying into an IVA for six years?
I am sure that this was considered by the poster at the time of their creditors meeting, as the majority of people would probably have plumped for that route.
One other factor which motivates people to propose IVAs is that they want their creditors to be repaid as much as they can afford. So perhaps this is what led to this decision on the day of the meeting.
Yes Melanie ... and it shows the sense of honour that we folks that enter into an IVA are demonstrating in trying to do the best for our creditors and face up to our responsibilities eh. [:)]
