What to do ?

[merlin2708]

I want to pay off my IVA early, my mother will come into some money later this year and has offered to give me some to pay off the IVA depending on how much is needed to pay it off.
I pay £357 a month on the IVA (through DFD)and will have completed two and a half years when i hope to offer a settlement. The IVA was taken to cover the £75K we owed. My home is worth around £140k with a mortgage of £84k plus i have a secured loan of £55k running along side the mortgage. From what i can see i have no equity as such so my questions are these.
After the 5 years will my IVA provider still try to remortgage my home?
If i have no equity then all that i can pay them is 5 years worth of monthly payments of £357 so later this year i would still have around £10k to pay (2.5 years worth). If i offered them £10k as a final payment to pay off the remander of the 5 years of payments would they except? do you think i could get away with offering a bit less, would they except a bit less just to be able to close the IVA early and if so what should i offer them?

Any help would be most welcomed.

kind regards,
Gary.

[plasticdaft]

Was an equity release clause put into the IVA proposal??

[indebtforever]

i would contact your ip and get a settlement figure you will save a little on fees but what does it say in your report about the equity release mine is a set figure ??

[MelanieGiles]

I think £10k would be a pretty good offer to be honest - and if you submit it to the IP they will let you know whether they are prepared to put it forward.

[merlin2708]

Was an equity release clause put into the IVA proposal??

Hi,

Yeah i had a look through the paperwork and it does say something about trying to remortgage in the 4th year if there is sufficient equity to make a remortgage viable.

So unless the house prices do a U turn and start to go through the roof again then i cant see there being any equity to speak of at the moment.

Surly they cant make you remortgage if it's not in your best interests....can they?

Lets just say the interest rate goes up and i cant afford an increase in monthly payments if i have to remortgage. Or say my wife falls pregnant and wants to reduce her hours at work or go part time. If our income cannot afford an increase in mortgage payments will they still try and make us remortgage?

regards,
Gary.

[merlin2708]

what does it say in your report about the equity release mine is a set figure ??

Cant see it saying anything about a set figure for equity release in our paperwork, all i can see is it saying something about attempting to remortgage if the equity released would make it vaible......Have i missed something?

[MelanieGiles]

Gary

It seems that the equity release provision of your IVA has not been properly explained to you - and it is really important that you fully undertand what you will be required to do at that time. I think you need to discuss this with your IP as soon as possible.

[merlin2708]

I think £10k would be a pretty good offer to be honest - and if you submit it to the IP they will let you know whether they are prepared to put it forward.

Hi Mel,

Thanks for the reply,(that goes to everyone else as well by the way), i'll draft a letter to the IP then... Hope i make it sound like a good offer [:)]

[merlin2708]

Gary

It seems that the equity release provision of your IVA has not been properly explained to you - and it is really important that you fully undertand what you will be required to do at that time. I think you need to discuss this with your IP as soon as possible.

Just had another look at the paperwork....

It says after 4 years i have to take steps to try to remortgage, if i can get a remortgage and the amount of equity makes the remortgage viable then that is what i have to do. (I guess?).
It says if the remortgage is viable then an amount of equity will be paid to the creditors to effect the lower amount required to pay the full amount to creditors bound by the agreement, or 100% of any equity released by the remortgage to me.

So i guess that if there is enough equity to pay off in full the creditors then that is how much they are looking to take, or if there is only a small amount of equity that doesn't cover the full amount owed to the creditors then they will take what ever there is.

Am i right or wrong?

I assume the "full amount" is the total amount of claims logged to date? (£42,112) or is it the total amount of debt i owed when i took out the IVA? .... Ether way i cant see me having that much equity available or being able to pay a mortgage for that amount.

The main thing that worries me is if they try and force me to take out one of these "sub prime" mortgages with higher interest rates.

regards,
Gary.

[MelanieGiles]

Gary - can you type out the exact wording of that clause so that I can comment properly please.

[merlin2708]

Gary - can you type out the exact wording of that clause so that I can comment properly please.

Hi Mel,

Here goes......

"On the expiry of 4 years from the date of commencement of the Arrangement and no later than 6 months before the intended completion of the arrangement I shall commence steps to effect a remortgatge of my equitable interest in (address).
I will approach a mortgage broker with experience of successfully matching insolvent individuals with lenders and I will complete my application within 14 days . Should my supervisor so choose, I will accept his instructions to approach a mortgage broker of his choice. In doing so I will provide he broker and any prospective lenders with my full written consent authorising them to keep my supervisor fully informed of progress. I undertake to provide my supervisor, mortgage broker and any prospective lenders with my full written consent authorising them to keep my supervisor fully informed of progress.

I undertake to provide my supervisor, mortgage broker and any prospective lender with my full co-operation throughout this remortgage exercise and to use my best endeavours at all times in an attempt to complete a successful remortgatge at the earliest opportunity.

Should my application be successful, I will authorise the lender to pay to my supervisor the lower of the amount required to effect full repayment to creditors bound by the arrangement (less statutory interest) or 100% of any net proceeds due to me from a successful application.

Should a successful remortgage be achieved within the final year of the voluntary arrangement, in accordance with the terms of the proposal, it shall be at my supervisors sole discretion to determine whether income contributions shall be reduced or waived for the remaining term of the voluntary arrangement. In the event that the payments of monthly income contributions are waived, my supervisor shall on receipt of the net proceeds front eh remortgage, take steps to issue a completion cert.

It shall be at my supervisors sole discretion to decide whether I have done all that I could realistically be expected to do in order to effect a remortgage. If my supervisor considers that I have used my best endeavours to obtain a remortgage then in circumstances where I am unsuccessful in obtaining a remortgage, this shall not be viewed as a failure to comply with the terms of the arrangement."

Well that's it, clear as mud to me.

Mel,

Just one more question for you if you don't mind me asking.

Just to confirm that at the date the IVA was completed the figures were:

"We owe £75,449 but creditors claims logged to date were £42,112. There are 4 creditors who have not made a formal claim, at the date of the debtors proposal these claims were estimated to be £34,052."

Our creditors will receive 17p in the pound.

Does this mean they would be looking for us to,(if we can) repay the total of £42k or £75k from any available equity?

Kind regards and thank you very much for you help,

Gary.
(The very confused one). [:D]

[Adam Davies]

Hi Gary
A remortgage will be based on affordability,and in todays market a subprime mortgage is not easy.You will probabaly only be able to remortgage to 80% of your house value.If you are unsuccessful in obtaining a mortgage then your IVA will conclude at the end of month 60.
Your creditors have the full five years to lodge a claim,your equity release will go into your contribution "pot" and after your IP fees will be distributed to your creditors.If any creditor fails to lodge a claim after given notice from your IP that a final dividend is due then your remaining creditors will recieve a higher share and dividend.
Regards

[MelanieGiles]

Gary

That is a very strangely worded clause, which appears to give your IP and a mortgage broker of his/her choice to cook up a deal that could affect you badly in the future.

First of all don't let your IP get involved with the mortgage as this could constitute a conflict of interest. It is very difficult to find lenders who will support applicants who are in IVAs, and so long as you can satisfy your IP that best endeavours have been made then that ought to be the end of it. The clause does provide for your creditors to be repaid in full, if you were able to raise sufficient monies - but this is unlikely in the current climate.

I suggest that when the time is right you give Andrew Graveson of Brightoak a call, as he is completely independent and specialises in mortgages for people with IVAs.