Divorce settlement during IVA

[mel865]

I was awarded an IVA in January 2017.
My property at the time was owned 50/50 by myself and my husband (we had split in August 2016)
We are now at financial settlement in the divorce and have agreed a 75/25 split (75 to me as we have 2 children and he is paying nothing toward the house / debt (I stupidly took out all the debt in our relationship and when we split he refused to help pay for any of it) or children.
The court wants clarity that the deed can be split thus under the terms of the IVA and Creditfix are saying it cannot.
Surely if I am getting a higher percentage, there is more chance of the debt being paid back. I guess in a way it’s a windfall but it is merely housing my children. I will only see benefit many years down the road, long after the completion of the IVA.
If I could trust the ex and hold off a settlement until completion of the IVA, I would. But he has bipolar and as such has a track record of wrecklessness with money. He refuses to sell and I have no money to fight him in court. He has already broke into the property once and barred us entry and my parents had to fund fighting him in court to get the house back.
I’m sick with worry. What do I do?

Also, if by some miracle I get the ex to agree to sell. How does that work? The Creditfix advisor told me my creditors wouldn’t be happy about that either.

[Nicpel]

Hi, not really the same but my husband & I separated 2 years ago and he wasn't working & I couldn't afford the mortgage repayments so we sold the property (after the children & I had to go) and out if the equity we had to pay back £74k to the IVA, with only 2 years left on it. Had we have paid it off separately to the sale of the house it was only £3k.

Hopefully it'll work out better for you.

[Foggy]

If you were decreasing your share of equity the creditors might have a gripe. The IVA cannot prevent the application of a court order, if the judge orders the split. I assume you have been chatting to a call handler at CF and you need to insist you speak to a qualified manager or the IP direct.

If you sold the house now (on the 50/50 split it now is) the creditors would grab most of your share of the equity up to an amount to cover the full original debt, fees and statutory interest. If the equity share was short of this amount the IVA would still continue as now. If you get the judgement and sold then (while still in the IVA) as you say, the creditors will get 25% MORE !!

I fail to see the logic in the smoke that CF are blowing !!

[Lisa Thomas]

I'm confused too - have they advised that in writing and have they specifically explained why?

[mel865]

Thanks for the replies,

My ultimate intention is to continue with the IVA. I have a good job and I meet all payments for the house including the IVA.

All I want to do is divorce and have a fair financial settlement with the ex. We have agreed the 75/25. The judge presiding over the settlement wants confirmation that the deed can be split.

The individual I spoke to at CF couldn’t explain why. Only that no changes can be made to the deed.
I argued that I would be owning more so like you say Foggy, if I did have to sell, they would get more anyhow.

He then went on to say it may affect a re-mortgage... there is no chance in hell I’ll be able to remortgage!
Then he went on to talk about equity release... which has put the complete frighteners up me, as that’s the last thing I want to do and there was nothing in the original contract that said I had to do that.

Ultimately I want to sell this house and move away once my kids are off to university.

I didn’t think this would be the end of any dreams I might have

[Foggy]

Depending on which version of the Protocol you have will decide how equity release is dealt with .... older versions stae that if you cannot remortgage (which is usually the case) you extend the IVA by a year. Newer versions require you to seek a secured loan -- it will be in the proposal under "Equity Release". In any even the changes you propose to the title of the property still benefit you and, by default, your creditors.

[mel865]

Hi Foggy,

It states
• a third party sum equivalent to 85% of the value of my interest in the property
Or
• up to 12 additional monthly contributions, with the aggregate sum paid to the supervisor being limited to 85% of my interest in the property. (Not sure what that means)

There is nothing in the paper work stating ‘equity release’

[mel865]

Hi Foggy,

It states
• a third party sum equivalent to 85% of the value of my interest in the property
Or
• up to 12 additional monthly contributions, with the aggregate sum paid to the supervisor being limited to 85% of my interest in the property. (Not sure what that means)

There is nothing in the paper work stating ‘equity release’

Does this mean I’ll be forced into a secured loan or equity release (if so, what was the point of me taking an Iva in the first place, only to be in more debt at the end?) this was not explained, I was told that I could get a relative to pay it (no chance) but not a further loan. It is very ambiguous above.

[Lisa Thomas]

The secured loan does not appear to be part of your terms, which means the 12 month extension will likely apply.

Therefore the revision of the deed would only be beneficial to your creditors.

If your IP is being difficult about it perhaps you will need a formal variation of creditors to approve it although I would have thought the Court can make any ruling it likes, without 'permission' from the Supervisor.

[Foggy]

Hi Foggy,

It states
• a third party sum equivalent to 85% of the value of my interest in the property
Or
• up to 12 additional monthly contributions, with the aggregate sum paid to the supervisor being limited to 85% of my interest in the property. (Not sure what that means)

There is nothing in the paper work stating ‘equity release’

Does this mean I’ll be forced into a secured loan or equity release (if so, what was the point of me taking an Iva in the first place, only to be in more debt at the end?) this was not explained, I was told that I could get a relative to pay it (no chance) but not a further loan. It is very ambiguous above.

Up until 2014 the Protocol said, basically, "remortgage or extend" ... some IP's tried to interpret the "third party sum" as a secured loan, but were not well received. The upshot of this was that they specifically introduced a secured loan option after 2014, which some IP's include. but som still do not.

[mel865]

I’ve just received this in response from CF... I am none the wiser!

Your share of the property is an asset of the arrangement and subject to the IVA trust, it is not a free asset for the purposes of the divorce.

If you were to consent to the order that could amount to a breach of the arrangement by dealing with property outside the terms of the arrangement. Such a breach could result in your bankruptcy.

Whilst I understand the reason for the consent order, I am afraid it will not be possible to sign it. In doing so you would put yourself at risk in terms of a potential breach of the IVA and bankruptcy proceedings.

[Foggy]

Although the property is subject to the IVA the IP is free to permit you to deal with the property (especially to improve the creditor's position ) ..... if he hasn't got the chutzpah to do it himself he can (and should) seek a variation meeting for the creditors to decide. An alternative, which could also be put as an option at the meeting would be to agree that the equity clauyse will be triggered in due course and for the creditor's to acknowledge that a remortgage just isn't going to happen and impose the 12 month extension now and release the property from the IVA. Make sure that any variation on that track expressly releases the prioperty and proceeds from the IVA.

[kallis3]

Have you actually spoken to the IP? If not you should insist you do.

[mel865]

By way of an update;

The plot thickens... Firstly, I have been told that I cannot speak directly to my IP... they are far too busy to deal with individual cases! Secondly, the department I can speak to is based in Mauritus so I have a window of opportunity once a day when our time zones align for a conversation and the individual I am speaking to there (a nice chap) doesn't really have a clue!

So, what has been discovered; I entered the arrangement with the full disclosure that 50% of the property was owned by my ex husband. The calculations within the payment reflect this (they mention the third party interest in the property) and this is acknowledged within the first paragraph of the proposal (jointly owned). However.... when one looks under assets they have stated that the property is solely owned! This is why they are refusing to a split on the deed. So I went back to them with this information (yes, I know I should have read it thoroughly before signing... but I was in a desperate situation and theres a lot I don't remember about that time) they have admitted the liability for this typo and have now stated that; 'As discussed, the ownership of the property is a matter of fact and the requirements for the Order to be compatible with the IVA will remain the same despite the error in the proposal. The error is irrelevant in this circumstance.'

So here's where we get to the sticking point... 'the requirements for the Order to be compatible with the IVA' - no one is willing at CF to tell me or my solicitor what those requirements would be! My solicitor and I want to work with CF to get the consent order in a shape that is acceptable to them and fulfils all of my contractual obligations... but no one at CF seems to be willing to help. The CF solicitor that both I and my solictior has spoken to has been incredibly unhelpful... I believe one of his comments was 'I am not going to write the consent order for you'. He was not being asked to write anything, he had actually been sent through a proposal of the changes that would hopefully make the consent order compatible. All my solicitor was asking was his approval of those changes or advise in wording that would be acceptable if not already... am I asking too much?! At the end of the day I am in no way ignoring my obligations to my IVA, so why is asking for guidance a problem. I really don't know where to turn to next.

I asked to speak to my IP and the response I got was that above... they're far to busy to handle cases directly.
All I want is a consent order that protects the house from my ex-husband which is afterall an asset for the IVA.

Any ideas would be greatly appreciated.

[Foggy]

I am sorry, but I cannot understand what the problem is from Creditfix's point of view. They and their solicitor are making everything unnecessarily complicated !

Your inability to speak to your IP is completely unreasonable (and not due to him being "too busy", but due to the firm taking on too much too quickly and trying to run the company like a cut price airline).