I have been in an IVA for 6.5 years and paid a lot back to creditors. I am due to complete in January but have been advised by the IVA company (there was a modification when the original IVA was approved) that the creditors are entitled to 75 percent of any equity in my property and that I have to pay that back within a 12 month period. I was not made aware of that provision when my IVA was approved. What advice can you give in relation to this clause. I do not have a lot of equity in the property.
This seems a long IVA so there must have been payment breaks, NRAM or even both. However whatever the case you do have to abide by the modifications which would have been discussed with you at the original meeting of creditors. You will have signed this and the call may even have been recorded so your IP should have evidence but understandably given the passage of time you may not remember.
If there is not a lot of equity then newer proposals allow for closure but yours may be worded under the old system. However you can ask creditors to allow the IVA to be closed and they may well agree so ask your IP to put forward a variation to that effect.
Is that exactly what the modification says? Most terms say if you can't remortgage (which is rare) then your IVA will be extended to allow for further contributions in lieu of realising the equity. That usually only applies if the equity is over £5k. I would ask for a copy of the modification and evidence that it was accepted by you in the first instance.
During the final year of the Arrangement the Debtor is to pay the Supervisor by way of a single lump sum or in instalments an amount equal to 75% of the Debtor's interest in the property or sufficient funds to enable a dividend of 100 pence in the £ plus statutory interest, whichever is the lesser sum. At the absolute discretion of the Supervisor the Arrangement may be extended for a further 12 months..
This modification was agreed at the creditor meeting
I have paid back nearly 51K and my monthly contributions are £975 per month.
I have about 20k, worth of equity in the property.
This does seem to mean that you have to extend. However if the property is jointly owned and you are the only one in an IVA then you only need to bring in £7,500. It may be worth investing in a proper valuation and pay the agent for it. If they can bring the value down by providing a 'forced sale' or auction valuation then there may be no extension at all.
Hi you say in your first post you weren't aware of the modification but I'm afraid you must have approved it for your IVA to go through. Perhaps you have forgotten over the time that has passed. I'm afraid to keep your IVA going you need to find funds to pay your interest into the IVA pot. Is your property solely owned? Could the joint owner buy out your interest or a third party like a family member or friend? Agree with Michael that you might want to arrange your own valuation to see if you can argue the equity down. Also get a current redemption statement from any mortgages/secured loan providers against the property. The worst case scenario could be that your IVA would fail and you could be forced to sell the property in Bankruptcy, so recommend you try to realise this interest if you can somehow.
Thanks for the advice I cannot afford to pay 15k pay in a year and I won't get the finance because I do not have a permanent job
I do not recall ever being briefed about this modification and wasn't present at the creditors meeting when my IVA was approved. So I have made a formal complaint against the IVA company.
At this rate I am going to lose my home and this is very worrying.
I doubt if creditors will ask for bankruptcy. If you can afford payments then an extension would be an option and the property is then excluded. Your IP has the discretion to do this which while annoying would protect your home. There should be a recording of the meeting incuding what was sent to you but if not then you do have a valid argument.
My IVA company will be writing to my creditors to ask for the modification to be removed based on my personal circumstances and the I have paid back 20k more than originally predicted. I have to submit a written statement in support of this. Thanks for your guidance. I will keep you posted on any developments.
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