Not all IVAs are protocol and HMRC reject the whole protocol idea anyway so if they are a creditor they will demand a sale of the property if the clients cannot remortgage or release equity. They will accept a lower amount by way of secured loan if it is 'best offer' but a twelve month extension when a client can easily raise equity is not best offer.
Lem.
Every protocol IVA where there is a property includes a remortgage offer as standard. If the client obtains a mortgage they will still be turning unsecured debt into secured debt and putting the home at risk so there is no difference. Therefore every IP is advocating equity release when the proposals are drafted.
I understand that Michael and I have no issue with that but in my experience of having a mortgage for almost 20 years and also having had 2 secured loans in the past, a mortgage interest rate tends to be pretty fair in how it increases/decreases, ie following BOE or LIBOR rates closely (in the past anyway), whereas secured loans, again in my experience, tend to haul you in a fairly decent interest rate to start with and then the rates only go one way, up up up, constantly without any seeming correlation to any UK interest rate at all.
The experience I have had in the past leads me to say that if this is what is potentially facing me at this stage of our IVA (although we currently have no equity) then in all honesty I would prefer to go fail the IVA and go bankrupt, start again than taking on a secured loan on top of my mortgage that could potentially lead to further debt issues for us in the future.
Also, at the beginning of an IVA, currently at any rate, people cannot get a remortgage with any lender, however, if you are now saying that there is a secured loan provider who will offer a secured loan for people with adverse credit, then surely it needs to be offered as an option to people with significant equity considering an IVA looking at this as an option to offer a F&F IVA as opposed to paying out for 5 years and then taking on further secured lending to finish?
Last edited by lem on Thu Oct 18, 2012 5:14 pm, edited 1 time in total.
Still not sure how to play this one. Not really brave enough to risk IVA failing and having more problems if we are forced into bankruptcy. We have no preferential debts eg HMRC it is all just banks and credit cards etc.
Will speak to lender and see if loan will be fixed rate. IP is currently checking if it is a protocol iva but must admit she didnt sound impressed with what I had to say, albeit I was very polite. I appreciate all your help.
Michael makes good points about the position of HMRC. If they are an influencing creditor, they will generally not accept the protocol terms - but in my view all other non-protocol cases - and in reality most non-protocol cases presented now include the protocol equity release provisions in any case - ought to be varied to accept the additional year and not a release of equity. If creditors do not feel that this is best case, then they will say so by rejecting. Loan and credit card lenders are likely to vote for extension in my experience - and I have varied several cases on this basis.
My house was specifically excluded in my IVA, I would have gone straight down the bankruptcy route instantly if my IVA was not accepted if it had any sort of equity clause included.
Last edited by herbekj on Thu Oct 18, 2012 8:22 pm, edited 1 time in total.
Last Payment - November 2011 - Completion Certificate received 2 weeks after last payment, Removed from Insolvency Register within 4 weeks after last payment.
Am going to try for an extension of 18m offering 800pm. That way they are getting 14400 as opposed to 14500 on the secured loan route. I would really like to do it in 12m but cannot afford to go any higher and dont think they will like 9600. I can't risk it failing which I suppose is a risk if they see that we currently have the means to make the payment. We can't guarantee our jobs beyond 18m and really can't risk being saddled with secured lending for many years.
Do any of you IPs think that 12m at our current rate would be a dodgy offer?? Our IP has said that they will not take into account any points that we put in a letter at the creditors meeting, they will simply say the debtors owe x amount and are offering x amount, do you accept yes or no! Thanks for your advice. I really wish I'd found this forum years ago.
I do wonder if in a few years the miss selling of IVAs will rear its ugly head!! As lem said had you known a secured lender would be offering finance then should they not have done so prior to taking out an IVA? It's scary really because there is only one way the interest rate can go, therefore meaning secured loans or mortgage payments could rocket! You would benefit from assuring yourselves that should the interest rate increase, you can still afford the payments! Otherwise you will be back at square one! Having found this forum albeit too late I def think people should consider bankruptcy aswell as an IVA! I get the feeling that IVAs are becoming increasingly more harsh! What is the failure rate of IVAs? Does anybody know? Also companies now should be advising potential clients to claim ppi before entering such an arrangement as its quite disheartening to hear of those ending up paying 100p plus the fees etc!
The reason most of us are here is because we couldn't get any more credit of any sort be it secured or unsecured and why is it disheartening that people end up paying back their debts in full? That was the intention when we took the original credit out so why should an IVA be any different?
Absolutely, but now secured lenders are coming out of the woodwork!! It's disheartening as having claimed PPI and paid back the debt could have made a difference to somebody having to enter an IVA! if you can pay your debts in full plus interest and fees then should you have been sold an IVA??! Principle the same as selling of PPI! My thoughts only!
The failure rate of IVAs is around 30% but reducing given the widened use of the IVA Protocol and a more flexible attitue from creditors. Most good IP firms are enquiring about potential PPI claims prior to presenting IVA proposals, but at the end of the day people do need to take responsibility for their own financial affairs and explore these options as well.
Good on you for wanting to repay as much as possible - and the 18 month suggestion may well be acceptable, but I would not offer it in the first instance. You could keep the extra money up your sleeve if they reject - I have actually offered longer periods of time in variation meetings for my own clients, and had creditors actually reduce the term to no longer than 72 months - so worth a try.
Reading your initial post, had me reaching for my IVA contract T's & C's!!! Whilst it's a little way off for me, I too will likely have to attempt equity release in month 54. I also would prefer the 12-month IVA extension, rather than paying back my original debt+fee+interest etc. for the next 15 years via remortgaging.
I assume you too have checked your contract terms, if not well worth looking over: Does your equity release clause mention attempting a 'secured loan' and/or 're-mortgage'?
My contract specifically requires me to attempt a 'remortgage'. From what I understand, a 'mortgage' and 'secured loan' at 2 separate legally defined products.
Therefore, if my IP tries the 'go for this secured loan' approach, I think I would have reasonable grounds to refuse, arguing that the request falls outside the terms of contract.
Would be very interested to see if the experts here think that could be a valid argument?
Really concerned that this may be the thin end of the wedge: Theoretically, if the repayment is affordable, paying credit-card interest rates on a secured loan for up to 15 Years? Sounds like a real money-spinner for the banks etc. if it's allowed to take off.
Don't get me wrong: I entered into an IVA agreement fully aware that I might have to attempt a remortgage. But I may have chosen an alternative debt solution, if I thought there was a reasonable probability of having to pay back all my original debt + a disproportionate amount of interest.
My opinions are just that: Based on my experience and being a self-employed IVA customer.
I agree that this would be a valid argument. Five years is long enough to be in a formal insolvency process, and by offering a sixth year of payments this is more than enough.
Hello Uptomyneckinit and thanks for your feedback.
I have checked my paperwork and it too only mentions remortgage with no mention of a secured loan. We also received a letter from our company back in the spring reminding us that we need to explore the options of remortgaging and asking us to send in mortgage statements etc which we duly did.
Our t&c's also say that as long as we have attempted to remortgage, even if we fail, this should not be seen as a failure of the IVA.
Our arrangement also does not have an additional 12m clause in it, so in theory, if we fail to 'remortgage' that should be it. (Although we would be willing to pay additional payments if it meant the difference between a successful conclusion and a fail - not than we can see how it could come to that having checked and rechecked everything).
Melanie - thank you again for your words of wisdom, it is comforting to know that there are people like you out there who have our interests at heart too.
