Help please----Can't see a way out

[stickman]

Spoken to 2 IP's at initial stages of poss IVA.
Debt 49k
DMP --230pmth (cancelled this month on advice of IP)
Mort+secured loan 113k @1290pmth, which is more than 40% of joint income 2945
BR not an option
Retire in 10 years
IP at this initial enquiry stage advised interest only mort/secd loan payment---no 4 year equity release

Have received great advice+support through this forum, thanks to all.
Advice to date--- as I retire in 10 yrs int only mort would be very worrying---could'nt afford such a huge increase in payments at 5 yr point(end of iva)
4yr equity release would in all probability be factored in by creditors at meeting. However as total secured debt is more than 40% of income iva unlikely to be granted(Ihope Iam wrong--advice please)
If stayed on DMP what are the chances of creditors freezing int till paid off. Obviously iva would be better but appears chances are getting slimmer by the day.

Advice greatly appreciated,
Thanks to you all.

[size5]

How long have you had your DMP for? It is true to say that the failure rate, for whatever reason, is highest in the first 3 or 4 months.

[abc]

DMP - if and I say if, interest is frozen it will take you almost 18 years to repay the debt. You mention that you retire in ten years time! The 18 years ignores DMP charges so the repayment is likely to be more than 20 years.

What is the equity in your house? Your mortgage payments seem very high for borrowings of £113k. Would strongly recommend that you speak to an independent financial advisor (make sure that they are an IFA). Subject to all the information, you might be able to drop to interest only for a period of time and your monthly repayments may drop to circ £600 per month. With the saving on mortgage payments of 1290-600 = £690 plus your dmp payment of £230 you will have £920 per month. You might be able to clear your debts within five years without the need of an IVA or DMP!

I am an IP.

[stickman]

Thanks for replying.
Neg equity in house val 120/130k ltv = not enough.
920 pmth = debt free @ 53 mths dependant on creditors freezing interest (what are the chances of that???)
Also the increase in mort payments at that point would be too much.Any ideas how much it would be with just 5yrs and5 mths to retirement???
Thanks

[ianmillington]

I assume your mortgage is a Capital and Repayment and it's so high because the targeted repayment date is less than 10 years away?

I am interested in your reference to the mortgage being over 40% of your total income. There are 2 creditors reps that, to my knowledge, have an issue with this, particularly as there's only a fairly small amount left for contributions. Others don't. It will therefore to some degree depend on who has the voting power. Can you let us know who your creditors are please?

Bear in mind also that if the mortgage is being repaid at a substantial rate, there is likely to be the prospect of a remortgage being necessary in the final year as the payments you have been making ought to have generated some equity. In line with the current protocol, the increased payments required under any remortgage cannot exceed 50% of the monthly contributions into the pot.

Ian

Ian

[stickman]

Thanks for the reply,
Creditors are
Moorcroft Recovery
Abbey
Halifax
Black Horse
Capital 1
Amex
Creation
CL Finance
Thanks

[ianmillington]

There are 2 on your list that might be problematic from the perspective of acceptance as a concept - Blackhorse and Amex. How much do they account for in total?

[stickman]

Black Horse---10.4k
Amex---1.1k

[ianmillington]

The last thing I recall, the policy of Black Horse was to reject for a debt that size. I'm not sure whether that has changed following the new protocol and am making enquiries. If it hasn't, then it follows you are going to need most of your other creditors to vote to accept. If one of your remaining creditors takes a "40%" line then if your proposal leaves the property unscathed you might get difficulties. Your IVA may well also be vulnerable to interest rate rises.

It might also be worth looking at how things would be from another perspective i.e selling the house. Not the most popular advice for me to give here but one I think you need to consider before you make your final decision.

ian

[stickman]

Thanks again,
Believe that Moorcroft have biggest percentage say of the creditors but don't know if they take the 40% line. If they did and it left the property unscathed what "difficulties" do you envisage? Also could you explain IVA being vulnerable to interest rises as I thought that the figure agreed on would last the time of the IVA. Selling is not really an option as prices here are high and it's as expensive to rent.
Thanks.

[carlmcmullen]

HI Stickman,

You say Moorcroft have more than 40% of the debt -

Has the debt been sold onto moorcroft or are they acting on behalf of creditor in a collection capacity ?

Who was the moorcroft debt origianlly with ?

[Adam Davies]

Hi
IVA payments can vary throughout the five years if your disposible income changes.If interst rate rises increase your mortgage payments then this would decrease your disposible income and affect your IVA.
Regards

[stickman]

Hi All,
Will have to check re Moorcroft but original debt was with Lombard. Also I can see that any interest rise would increase mort payment and affect iva but so surely would any increase in utilities, council tax, petrol etc, do they take these things into account also when they rise.
If so then looks like I'm sunk!!!
Thanks

[stickman]

Hi All,
Re all of above,what if I agreed to increase payments by say 30pmth annually.
If on iva =22500 at 5 yar point
If stayed on DMP = 46980 9 years providing they freeze interest and would be willing to wait that long.

[MelanieGiles]

As you have negative equity in your house, and some difficulties given your age and certain creditors, why don't you just go bankrupt? Debt free immediately, payments of approximately £115 for three years, must seem pretty attractive?

Also bear in mind that the requirement to raise equity during the final year is based upon lending at 85% loan to value and a deminimus level of £5,000 - it may be that your property will not provide sufficient value to enable any monies to be raised, but that does gamble on the property market.