Questions about Individual Voluntary Arrangements and Insolvency.

Moderators: TalbotWoods, JaneClack

By Myopia
#315223 My missus has an IVA, she ran this up amd arranged it before we got together.

She s paying back £23k over 5 years

But she has £20k of equity in the house. But the house is on the CrossRail route and may rise sharply in value but that will not come online for 3 years after the IVA ends

I understand that they can take equity out but she only owns 75% of the property (she s a key worker).

Her father could possibly help her out financially, but Im not really sure about how the IVA is structured. Can she really pay back £57k over a debt of £43K? Her documents are all mumbo jumbo and she s very confused and upset.

My fear is her being saddled with some crazy mortgage at the end. Im also concerned she will be paying back ultimately more than she owes.

Im curious about this.

Is there any debt counsellors that could offer advice on the best way to proceed?

Many Thanks
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By DuffNCustard
#315233 I'm no IVA expert but the IVA cannot be structured in such a way that she pays back more than she owes!

At the start of the IVA the IVA practioner will establish what the debts are to each creditor and will determine what will be paid back, the creditors all vote on this and as your wife has an IVA her creditors have accepted the amount they will get back.

Yes in the last year of an IVA it is entirely possible that one is required to take out another (second) mortgage to pay back to the creditors. BUT getting a loan these days (and for the last 4 years) is hellishly difficult, therefore an IVA can continue for a sixth year in lieu of 'equity release'.

The best thing you can do this weekend is to get all the IVA paperwork together and sort it in an orderly fashion. Analyse it and establish facts and questions which you can then contact the IVA manager to get answers to.

Worst thing in the world is to let your imagination run riot along the ' if then else' road to nowhere.

have a look at the National Debtline website - cracking good free info

http://www.nationaldebtline.co.uk/
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By TalbotWoods
#315253 Hi Myopia

OK first things first tell her to stop panicking.

Lets look at this, she is in a 5 year IVA, with a remortgage clause, which is normally for a set value.

Now why I have said stop panicking, is in the past couple of years very few have managed to get the remortgage, so what has happened is that the IVA has been extended by a year and payments at the current level of the final year.

Secondly, though it is almost impossible for an IVA to pay back more it has been known. If the repayments over the period are close to or achieve 100% of the debt, you then have the IVA fees to add on (and dependant on the company these can vary significantly) it can result in more being paid than was owed!! If this is the case then the IVA company may have acted in their favour only and not in the clients.

If this is the case a the all the debts will be repaid fully, then maybe, just maybe a shift in tactics is needed, away form an IVA into a Debt Management Plan, because beleive me if the creditors are assures that they are still going to get al their money back they will go for it!!

As Mrs Duff has said she need to talk to the administrators of the IVA and if necessary the IP themselves to look at what is happening, but also please dont be afraid to talk to National Debt line, Payplan or CCCS if her IVA company are being awkward.

Just one though though, from what I have been reading most people on the cross rail link route (and the HS2 route) are convinced their house prices will drop in value rather than climb, as they did initially on the Euroroute!!
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By JaneClack
#315323 There is such a thing as a 100% IVA but these are only ever used when someone is being threatened with bankruptcy and needs to ring fence assets etc.

She should ring her supervisor to discuss this but if it is a protocol IVA - as most are today - then 15% equity has to be left in the property so if she is mortgaged at 85% loan to value then she would not be able to release any equity anyway. If she only owns 75% of the property anyway this will be the case. In a protocol IVA no-one ever has to sell their property if they are not able to remortgage for whatever reason anyway and the maximum period it can be extended for is another 12 months.

You say she started the IVA previous to your relationship - if you are both living in the property then her disposable income should have changed as there will be expected to be a contribution from you towards the household expenses - although obviously some household expenses will have increased. However, creditors cannot ask to see the payslips or accounts of partners.