no equity

[crg]

I have been reading about release of equity after year 4, I do not have any equity to release could this effect my iva proposal or could i extend my iva for 6 years instead of 5? so at least my creditors get a bit more back

thhanks
crg

[hara]

having no equity does not affect your proposal.

It all depends on how much you can return.

But there may still be equity release clause anticipating a increase in property value in future.

I am sure there will one of the exoerts to give opinion soon on forum.

hara

[catullus]

Hello CRG

There are two different types of cause that affect any equity in your home.

The first only promises to put back in to the IVA any equity that exists at the date of the IVA.Usually this is done at the back end of the IVA and sometimes can involve a remortgage or extra payments, over and above the 60 months, depending on the amount involved.

The second type of clause provides that equity is released based on a valuation normally in year 4.If you have no equity now, you may have some then and it would be necessary for you to remortgage to put that amount in to the IVA.

If there is no equity in year 4 (or even negative equity) that will not normally affect your IVA unless the creditors put a modification in to your proposal that you would have to pay a minimum dividend of x%.In that case as there is no equity you may have to make up any shortfall from extra contributions.

Of the two types of clause the second type is far more common now and indeed certain creditors have a standard modification to put the year 4 revaluation in to the proposal regardless of what the original proposal says. In a rising property market they are banking on the fact that your property will rise in value over the 4 years and create some equity that isn't there now.

Your IP will consider this matter when drafting the IVA and will advise you what is the best type of offer that you should make.

[MelanieGiles]

I'm assuming that you are not yet in an IVA? Is this correct? If not, and you have no equity, your creditors will ask for your property to be revalued during the final year and for you to consider a re-mortgage based upon 85% of the property's value. If this does not generate any payment, due to your current mortgage being higher, then there will be nothing to raise. So I would not suggest an extension by a further year in your circumstances.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk