Paying off the IVA Early

[natmac]

Hi!

We entered our IVA just over a year ago, we have now got enough equity in our property to pay the IVA off (the total we would be paying if we contimued with the next 5 years plus 50% of the equity at the time of taking out the IVA) Is this something that is possible to do? Would we be able to release the equity from our mortgage or would we face credit problems?

Many thanks for your help,

Natalie

[accgroup]

Hi Natalie

You can pay off your IVA early. You should speak to your IP ASAP if this is something you want to do. Your IP will need to call a meeting of creditors to consider a "variation to the terms of your IVA". The variation would be that you are no longer required to make voluntary contributions for the remainder of the 5 years, but that you introduce a lump sum from the equity in your property within a certain time limit in full and final settlement of your debts.

So long as you are paying a dividend comparable to that under the existing terms of your IVA this should be acceptable to creditors. The good thing with this kind of variation is that you should save on IVA fees by paying it off early.

The only thing you need to worry about is whether your IVA includes a clause which doesn't allow you to vary the terms in the first 24 months. This is something that creditors are keen to put in. So check with your IP.

You can re-mortgage to release the equity in your property, the only issue will be that the rates you can obtain whilst in an IVA are not competitive with those for someone without credit problems. There are a number of lenders who deal specifically with people who are in IVAs, your IP may be able to recommend a company to approach, although the best thing to do is to ask your existing lender first and then shop around for a few other quotes/offers.

Hope this helps

AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com

[natmac]

Hi,

Thanks for your response. One of the concerns I have is that if it is brought to the IP's attention how much equity we have in the property now they may increase our payments or terms of the agreement? Is this likely to happen?

I will have a look at our agreement to see if there is a 24 month clause.

Natalie

[accgroup]

Hello

The only reason your monthly payments would increase would be if your disposable income has increased, this is usually reviewed by your IP on each anniversary. It will depend on the terms of your IVA as to what happens to the house - sounds like you were already required to realise 50% of the equity? The terms of the IVA will stay the same unless they are varied so (although I do not know the specific terms of your IVA) I think it's unlikely that your IP will try to realise the equity unless required to do so, this would require a variation meeting - creditors approval would be needed.

Hope this helps



AccumaGroup - A large insolvency practitioner service based in Manchester.
www.accumagroup.com