Hi.
We have 2 payments left on our iva. 6 months ago we got a valuation for our property and there is some equity that could be released. We applied for a remortgage but
we weree turned down. Our iva terms state that we have to seek to remortgage. It
doesn't state that we will have to extend by 12 months of we can't remortgage.
Pay plan have contacted us and told us that unless we sign a variation form we could be
made bankrupt. The variation form is open ended with no timeframe of any extension .
They are also pushing us to put in writing that we agree to an extension.
The only clause we have in our terms says that they can ask for a variation of
circumstances change and it's in the best interest of both parties.
We aren't getting any clear answers from pay plan as to why we need to sign to agree to an extension if it's not in the original proposal. They just say we can make you extend or the iva will fail. Any advice would be greatfully received
I think that the 12 month extension was bought in when it was realised that people in an IVA were unable to re-finance to release equity.
It would be foolish (in my opinion) to refuse to pay another 12 months. They could fail your IVA based on the failure to raise finance on the equity. You will probably find that 12 months of your IVA payments is better than taking out further finance that would probably cost you more in the long run.
I think there are some finance companies that will give a secured loan to people in an IVA but probably at a high interest rate.
Hopefully one of the professional experts will be able to answer this in more detail later - just wanted to respond and bump up the post.
It is unusual that you have the equity release provision, without the backstop to extend the IVA if you cannot raise the money - however if this is the case in your particular IVA ask your IP to confirm under which provision they are relying on when they threaten you about bankruptcy proceedings, and get this highlighted to you in writing.
I am also at the same point at my IVA with payplan and I have also read through my proposal and it does not mention a 12 month extension, although I was told when I started my IVA on the phone that this is what normally happens if you can't remortgage. I will be happy to accept 12 more months but I am really worried about being made bankrupt after coming all this way.
It would make the IVA pointless.
Hi
Exactly, what would be the point of struggling through an IVA only to be made bankrupt by something out of your control
I would do as Kazzafunk advises and bite the bullet for a further twelve months, much better than the delay and uncertainty of challenging Payplans decision [even though it seems unfair]
Hi Dawn. I couldn't be categorical about this without sight of your paperwork. However, on the face of it, you sought to remortgage and have, therefore, complied with the terms of the arrangement.
If the proposal was badly drafted and contains no backstop terms in the event that an attempt to remortgage failed, that is not your problem and your IP cannot bully you into seeking any variation.
As long as you have complied with the terms agreed between yourself and your creditors that is the end of the matter.
All of the foregoing is, of course, dependent upon the exact wording of your proposal.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by Andy Davie
Hi
Exactly, what would be the point of struggling through an IVA only to be made bankrupt by something out of your control
I would do as Kazzafunk advises and bite the bullet for a further twelve months, much better than the delay and uncertainty of challenging Payplans decision [even though it seems unfair]
Regards
The major flaw here appears to be that the variation that Payplan are proposing is, again, too woolly and open to wild interpretation.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Hi. I am also in the same position but our IP will not put forward a proposal of a 12 month extension. Unless we come up with a better offer he wants to recommend a petition for bankruptcy. Why are so many companies suddenly threatening this when five a years ago ivas were recommended to avoid bankruptcy? Has something changed as I have fully complied and feeling really stressed with these developments?
here is the wording regarding equity release on my i.v.a. :
As can be seen in appendix a the property of ....... is jointly owned with .........i estimate the current value to be £130000 the mortgage is based at ...... for the sum of £ 116,553 ( now (94,700)
In month 54 of my arrangement a valuation will be carried out on the property .
If that valuation shows that 85% of my interest in the value of the property is £5000 or less then i need contribute no more to the arrangement in respect of the property.
If that valuation shows 85% of my interest in the property is £5000 or more , I will seek to re-mortgage my share of the property subject to the following conditions:
The re-mortgage will be at a maximum of 85% of the value of the property.
The costs of the mortgage will be deducted from the mortgage proceeds.
The increased amount that i have to pay because of the re-mortgage will not exceed 50% of the monthly contribution to the arrangement.If the increased amount that i have to pay because the re-mortgage means the dividends to creditors falls below £50 per month after fees , monthly contributions are stopped and the i.v.a. is concluded.
We are being told that because of clause 1.15 they can enforce an extension.
Clause 1.15:
Creditors Meeting: As a general rule the supervisor will manage the arrangement, at his discretion, in the best interests of the debtor and the creditors. Should any circumstances arise where he feels the Creditors should be informed or consulted , a circular will be sent to all creditors. Should there be any significent changes to the original proposals, a variation meeting will be called and 28 days notice must be given.
The Circular we have received says:
For the purpose of considering a proposal by the debtor regarding the equity in the property, not be enforced.
The supervisor shall be entitled to an additional £500 excluding v.a.t.
Should the meeting be rejected by creditors , the supervisor will withdraw from the arrangement, declare the arrangement as failed and petition for the debtors bancruptcy.
It goes on to say how we have tried but been unable to re-mortgage due to the current economic climate .
Due to the circumstances the debtor is no longer in a suitable position to be able to comply with the approved terms and conditions of the voluntary agreement and as such, the scheme ought to be varied . The debtor will continue to maintain his monthly payments to the conclusion of the voluntary arrangement.
There is no time scale given on the circular we are expected to sign and we are being pushed to write them a letter stating that we are offering to extend the i.v.a.
We are not being given any clear advice from the supervisor except sign the letter or you may be made bancrupt ( we were not told this at the beginning of the i.v.a.)
Sorry this is so long.
We are unsure of the best step to take and feel like we are not being told the whole picture.
Thanks for reading.
Check your Chairman's Report to see if creditors proposed any modifications with regard to the equity release provisions. If not, then it seems that a meeting does have to be called, in which case the IVA Protocol terms should be suggested.
What is the current valuation for your property and how much do you owe on the mortgage?
I am sorry -- but that clause, as quoted, is extremely badly drafted.
It reads that the debtor must SEEK to re-mortgage and gives no provision for action if a remortgage is not forthcoming.
If if were in my proposal I would maintain that I have complied with the letter of the arrangement by seeking a remortgage and that is the end of the equity matter.
The IP is now seeking to cover his / her tracks with a variation which should have been written in and agreed in the first place.
As a compromise, for the smooth running of the IVA, and as a gesture of goodwill towards the creditors I might have agreed to a variation seeking to extend by 12 months, per current protocol ---- nut simply that --- no woolly wording and no threat of bankruptcy. The intention should be merely to bring the proposal back up to protocol.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I know from experience of dealing with these situations that fear of the unknown and feeling out of control is the biggest issue for most people. It seems, as you say that they are relying on the catch-all clause and what's in the 'best interest of debtors and creditors'. I suppose you could take the view that you expected to have to release equity when you entered the arrangement and, whilst it's no fault of yours that you can't, it does play into your hands to a certain extent. A 12 month extension may not be that bad but if you prefer closure the alternative would be to consider raising funds with a secured loan and using this to offer a 'full and final' amount to settle the IVA now. If you did this you could look to settle it with a remortgage in 12 months time and your total mortgage at that point will be lower than it would have been had you been able to get the remortgage to satisfy the terms of your IVA now.
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
Its seems to me the majority of ips are taking the micheal regarding equity and just do what they want to get extra fees.........it really needs clamping down.
Villapb, not sure I entirely agree. the purpose and spirit of an IVA is so that you repay as much as you can reasonably afford. Either a 12 month extension or a full and final offer will undoubtedly repay far less than creditors will have originally expected when the IVA was approved.
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
Wayne, one of the other experts will be far better qualified to confirm but I understood that your IP was unable to refuse to present a proposal to creditors. Melanie/Andy?
Specialist Mortgage Advisers. Highly Commended at the British Mortgage Awards.
