www.iva.co.uk

Hello everyone, firstly let me say that this is a fabulous idea and it is nice to know that there are people out there that are on the other side of the IVA and are willing to help as well as people who are going through it!

My question is I am coming up to me second year in IVA and am worried about the 4 year clause in my house. I understand that when they take money out of my house that it will be the end f the IVA but are they likely to take as much out as possible and 'sod the consequences' for me? The last thing I need is to have a huge burden of a debt with my mortgage and having to pay a huge amount back each month to them for the next 25 years.
Please help!

Hi yankeegal and a warm welcome to the forum

The thoughts you are having now are presumably thoughts that you had when you entered into the IVA two years ago, when you accepted the terms. What has happened, apart from the obvious credit crunch of last year, to make you question the implications of this requirement? And what led you to take out the IVA as opposed to other options available such as bankruptcy or debt management.

I was wondering the same too.

Will they take equity (assuming that there is some by then) to cover the balance of the IVA or to cover the balance of the debts ?

There must come a point where insisting someone release equity would leave them worse off than they would have been ? With the housing situation as it is, I would have thought that this would have been a little risky ???

Hi yankeegal and a warm welcome to the forum

The thoughts you are having now are presumably thoughts that you had when you entered into the IVA two years ago, when you accepted the terms. What has happened, apart from the obvious credit crunch of last year, to make you question the implications of this requirement? And what led you to take out the IVA as opposed to other options available such as bankruptcy or debt management.

Oh dear have I done wrong!!! I was deeply in debt (around 30, 000) I was a single mum with a house and didn't want to lose it. I wasn't really told about any other options which didn't involve losing my house.
The reason why I am wondering about it now is because I eventually want to move abroad and need capital to go with from my house. I was in a desperate situation and had to go ahead with the IVA as the debts were just piling up and it scared me.
Even if I have to wait a few years to build up capitol I am scared that they will take more money out then I can afford. I did ask this at the beginning but they said they wouldn't....and like I said I was desperate to stop the debts. What are my options now??

No you have not done wrong - but it does sound as if you may not have been fully advised of all options when you took out the IVA.

How much equity is there in your property now, and what provisions are there (if any) for you to release equity during the course of the IVA?

I am not able to release any money at the moment because I am in a fixed rate mortgage. I have about 40,000 on the mortgage but there would be penalties if I left early plus I would have to pay other charges to end it early. I would maybe get around 70,000 for the house if I sold today. I am hoping that the house prices go down by the fourth year!
Is there anything else I could do then. I did press on this point with the IVA supervisor and he said that when the money is released from the house that I wouldn't have to pay the IVA anymore so whatever mortgage rise I would get I could pay it from the £300 I was giving them. Do they have a right to tell me how long I can take the mortgage out over, because I do not want another 25 year one.
Thanks

As you have more equity in the property than you actually owe to creditors, I think the best thing to do is to carry on with the IVA and wait and see what happens in the mortgage marketplace over the next couple of years. The IP has little influence over the typr of mortgage you eventually taken oyt, but will need to see the money you have pledged to your creditors.

The first time I was told about the 4th year equity clause was when they were going through my modifications and I questioned it.I still struggle to understand and worry about it, but at the time I was so grateful the IVA ad been accepted I decided it was a reasonable thing to ask.Now I wonder if we should sell early and rent.Then I wonder if we can as the modifications say something about no changes for the first 24 months?

I cannot stress how important it is to understand the creditor modifications carefully at the time of your creditors meetings, especially when they relate to something as precious as your home. I would not personally look to selling now and renting, as it will be very difficult to then get back onto the property ladder.

Thanks for your advice Melanie. Does that mean that if I wanted to take the mortgage out over a shorter period with a higher payment they would not be able to take over the amount of the IVA I am currently paying back because this is what was suggested. I was told that I could just use the payment from the IVA that would stop to use for the overpayment in the mortgage. This way I wouldn't have the debt over 25 years and could maybe only have a mortgage for 15 for example. I figured they would have more of a say in the mortgage because of the amount of money I would be able to afford each month and how that would effect how much extra I could remortgage it for. Sorry for all the questions but you are a 'human' in an alien world who is being very helpful!

CAT - I was EXACTLY the same, so pleased to be out of the debt circle that even though I did question several times the equity clause I trusted the supervisor as I was in such a vulnerable position and was too scared NOT to go ahead. It does seem unfair though that home owners have to do this as non home owners are offered the same style deal. Mind you I was told that my IVA would stop if I released equity out of my house in the fourth year so I guess I am paying out in a lump sum what I would have paid out in the fifth year.

I'd still like to know whether the remortgage would be to cover the balance of the IVA or the entire debt please.

If it's the former then that wouldn't be too bad - if it's the latter, it could be a problem, especially with the uncertainty in the market for housing AND jobs.

they should of told you the minuim of equity you would have to release into the iva ,but when your house gets revauled that could rise,and i think its only 85% that you have to remortgage too.

Thanks again for the replies, as for joh71262's question I am going to email them and ask what the deal is. I have looked through all my papers and originally when they have to do the assessment between bankruptcy or IVA they assessed my equity in the house and only found 7,000 after charges. Will find out definately though that way I will have it in writing too!

Hi Melanie, again sorry for the hassle.
Would I be able to remortgage the house at any time and just make them a settlement offer? Once my fixed rate mortgage is up I would have the flexibility of sorting it all out in one go!