Hello,
My partner and I are just about to enter an IVA, we have our proposal ready to sign.
We owe £26,500.00. Our monthly income is £2870.00 and our expenditure £2585.00. Our IVA payment on the prosal is £286 per month.
Howver I have just realised that our mortgage is due to decrease to base rate + 2% which will make our monthly payments roughly £300 less than the figures given for the mortgage on the proposal.
Would I need to disclose this? Also if I did disclose are we likely to be refused an IVA as our monthly payment would then be around £500 a month and 60 x 500= £30,000 which is above what we owe!?
My concern is that the mortgage is likely to go up so we wont always have this spare money, though when the practitioner reviews the IVA next year will they see that we have been paying less on the mortgage and request the money from us?
We dont mind paying more, but worry because we will have more for roughly a year until interest goes up....we will be refused the IVA. We cant pay the debt in a reasonable time without the interest frozen.
If your mortgage is due to decrease immediately then you should inform your IP who really should have noticed this anyway. If however, your current deal expires at a later stage it would not be necessary to inform the IP until the change actually happens as no one knows what the base rate will be in the future.
It is highly unlikely that base rates will remain at 0.5% for five years so there will have to be flexibility in your IVA to allow for this. It would be silly to enter a DMP now knowing that interest rates are going to increase in the next year or two and you will need an IVA at this time. Discuss everything with your IP particularly in relation to timing issues and hopefully your IVA can proceeed.
The change in my mortgage is due to start next month. I have spoken to the company who are putting my proposal forward and they have stated that I should proceed with the higher mortgage figure even though it changes next month. I have been advised to save the difference incase in a years time when the IVA is reviewed they ask for it?!
Also,my partner is looking to take up photography. Would everything he earns need to be declared and taken due to it being another income? Does this have to be declared and what happens if it isn't declared?
Hi
I don't agree with the advice that you have been given by your IVA company.
Your DI will be almost 600 pounds and clearly too high for an IVA to be a sensible option.
Consider a debt management plan
Regards
If your partner is taking up a profession he must notify HMRC within three months or he will incur a fine of £100. Depending on his expected profits he may have to begin paying Class 2 National Insurance and HMRC do provide very good information on new businesses. If however it is a hobby there is no such requirement.
As to the IVA payments it is likely that he would have to pay over some of the profits [if any] but this would only be decided once the tax returns have been submitted and agreed. If your partner is starting a business in this financial year there is a possibility of a liability to HMRC which would need to be addressed in the IVA. Your IVA should be able to explain how this works.
Absolutely - why have a formal insolvency process regstered against you when you could have an informal arrangement acceptable to all creditors. Use the extra money you have wisely until mortgate rates are amended and you can make great inroads into those debts if creditors are sensible and don't charge interest in the meantime.
Many Thanks for responses.
We would be more than happy to pay overpayments but without interest frozen we are not getting anywhere. Our main creditor is Northern Rock who have actually increased interest due to receiving smaller payments each month, so being in DMP we now owe more than we originally did!
Without the interest we would happily pay the debts on our own fully, but at the moment the only way for that to happen is an IVA?! : (
our DMP is with CCCS although the company we are using a different company for the IVA. They have said to keep the figures for the proposal at £982 rather than £623 which we will soon be paying on mortgage. We have been told we dont need to worry declaring the mortgage change as the rates will change
Which company are you using, and why did you decide against using CCCS for your IVA as a matter of interest? Concerned that your IP is leading you into potentially making false representations to your creditors - be careful!
A copy of your proposal will go to the secured creditors as well as the unsecured. If N Rock are your mortgage holder as well as one of your largest unsecured creditors they will immediately see that the payment listed is wrong. If the mortgage company is not one of your unsecured creditors they still may notice the discrepancy which could jeopardise your IVA.
The fact that your DMP did not work is justification for proposing an IVA even if you do end up paying in close to or even more than you owe. Creditors can hardly say that you would clear the debts in five years when the debts went up while you were in a DMP.
I still believe an IVA is a reasonable option for you but full disclosure is required and payments can be adjusted later as and when the Bank Of England starts to increase rates again.
So, what is the view on the proposal going ahead with the higher mortgage figure £982 rather than what it will be next month £623? The IVA company are aware and are happy to go ahead with the higher figure to get the IVA granted. I assume interest rates will soon go up so it will even itself out again. I will not have the extra disposable income for long so really need to be in an IVA. A DMP is really not suitable.
Is what the IVA company doing allowed? Should I sign the papers and go ahead with proceedings...we are really confused. I dont want to get in trouble!
I appreciate that this is confusing Carla and personally I would not sign the paperwork knowing it to be incorrect. Have the proposal redrafted and the IP can highlight the fact that the change has only come to light.
Once interest rates do start to rise there will be a lot of IVAs that will need their payments adjusted but no one seems to know when this will be. Furthermore in the next five years you would hope your income will increase and this may offset some of the increase in mortgage costs.
Finally, your IP can normally reduce your contributions by up to 15% without having to notify creditors so the first increases will not need another creditor's meeting. Ask your IP company why they will not adjust the payments to reflect your true mortgage costs but do not sign a legal document knowing it to be misleading.
