Full and Final...IVA??

[WhenInAHole]

I'm currently in the process of re-mortgaging through PayPlan's brokers to do full and final settlements on the debts in my DMP (plus a CCJ). These are a mix of joint and sole debts between myself and my partner total about 85K.

Now the process they usually do is a negotiated full and final settlement but I know from reading on here sometimes people do this as an IVA. I wonder what the advantage/disadvantage to this would be. Payplan say they usually pay around 80% and we can afford to re-mortgage to this level.

Be interested in any experiences and advice!

[kpw]

Hi You have to consider your best interests here. Realise that payplan are a creditor funded organisation and will look to the interests of the creditors. Are they asking for £66-£68k from remortgage? That debt will be secured against your property, and will you be able to maintain the higher mortgage payments especially if your circumstances change and/or interest rates go up. You are already on a DMP paying reduced payments because you cant afford higher payments. So all you will be doing it putting it on your mortgage and risking your property. Of course pay plan would like you to do this as they will receive a healthy remuneration from the creditors but is it in your interest. Melanie would be able to give advise as to a realistic proposal to creditors based on what you can afford through he IVA route taking into account your equity. If equity is an issue then continuing a DMP would be an option but look to Full and final settlement options later. Payplan may not be the best people to work in your interest to do this.
Best of luck

[WhenInAHole]

Thanks KPW, Yes I'm aware that Payplan is "creditor funded" which is one of the reasons for my considering an IVA..in fairness to them it was me who approached them about a remortgage as we have had to reduce our DMP payments as my wife is on maternity leave. Their mortgage broker side has been very good and doesn't charge any broker fees etc.

Yes the re-mortgage would raise around 68K in equity and this is a big part of my problem, too much equity. Enough to pay the 85K in full which has really meant a traditional IVA hasn't been an option. That said the way the debt is split between myself and my partner might mean something can be done.

I will see what Melanie is able to advise. Thanks for your help.

[WhenInAHole]

Bit more info..

Around 90-110K of equity (current 170K mortgage)

Debts

Partner 12.5K
Me 37.5
Joint 26K

[MelanieGiles]

Do I understand that you have debts of approximately £76k and equity of at least £40k each? If so, your partner could afford to pay their debts in full, and you could then also pay yours as you would not have the joint debts to consider?

If this is the case, an IVA is not appropriate so direct offers of settlement to the creditors is probably a better way forward. If Payplan think that they can broker you a settlement at 80% I would stick with that - as a credible insolvency practitioner will have to show your creditors the true position and then it is questionable whether a short settlement is the right thing for them.

As a matter of interest why were you put into a DMP in the first place if you had this level of equity available? And how much are you going to be raising from the remortgage?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[kpw]

Hi
I still think that you will be overcomiting on a remortgage as your current mortgage is high. With your wife taking maternity leave you will be faced with a drop of income and an increase in expenditure. I would look to a reassessment of what you can afford to pay on a DMP and at a future date look to raising funds to offer to creditors as full and final settlement offers. They will certainly accept way below the 80% that payplan are currently offering, especially if the debts have been passed onto debt collection copanies.

[WhenInAHole]

Sorry my debts are 47K so actually around 85K in total debts. We had about 70K of equity when we went into the DMP and it might have been a mistake and a remortgage would have been a better idea but we had just moved and I had just started a new job.

However at least our ruined credit rating has prevented the situation getting worse and we have actually paid some 14K of debt off..

Looking to raise about 68K and providing it goes to offer we have a good fix at around 6.5% for 3 yrs

[MelanieGiles]

If there is any doubt about you getting your creditors to agree to a full and final settlement, I would seriously consider the merits of the IVA procedure.

I feel one of the real benefits of IVAs is that creditors have to make a decision on the day of the creditors meeting, thus affording you certainty and ensuring that all creditors are treated equally. Without wishing to encourage you away from your curren advisor, it might be appropriate to get a second or a third opinion before confirming what you intend to do.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[WhenInAHole]

Thanks KPW...I plan to take the mortgage interest only for the 3 year fix period and remortgage back to repayment then when income is higher (and my wife working more), but my income is quite high anyway and has good growth potential. I've worked the whole thing out for 3 years assuming no earnings from my wife (although she will be earning something) and I can get the mortgage based on my salary.

We have negotiated lower DMP payments (although the mortgage is lower still) but have some quite large creditors who I think may go to Charging Orders soon and with the current credit squeeze the mortgage I'm after has gone up 1% today although I can still get at the old rate.

That said I have though about trying to negotiate a better settlement than PayPlan, they don't have to do it we can just take the remortgage money.

[WhenInAHole]

Thanks Melanie but would my case possibly be suitable for an IVA give the level of equity? I'm certainly happy to take advice and don't have to take this mortgage or I can take it towards a full and final IVA.

[kpw]

Hi
If you are able to afford remortgage, and by sounds of it you can and your future income potential is good, then it looks like you have a manageable solution. going for the interest only for 3 years is to be recommended and I wish you best of luck

[Adam Davies]

Hi
I think that you have a sound solution to your debt problems and would suggest sticking with payplan and their 80% pledge.
As long as you do not rack up unsecured debt again,and it,s doubtful given your credit status, you should be fine.
Good luck

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

If you have debts of £47k and equity of only £40k then you technically would be eligible to propose an IVA. If you feel that a DMP is a better solution for you, then I hope that this can be concluded for you quickly.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp