The Debt Advisor Introducers

Case Study: Homeowners, IT Professional - Surrey

I was made redundant after 25 years of service as an IT professional at 55 years of age; I had a wife, children and a large mortgage. The payout didn't' last but unfortunately my 'very good' credit rating kept things afloat for probably too long, allowing credit card debts and associated interest to build up to a massive level.

I searched the internet for companies that helped people to manage debts (not debt consolidation companies as I was not in a position to borrow anymore).

At last I got help when I found The Debt Advisor. I can't remember how long I was on the phone to The Debt Advisor for, but they listened to my situation and explained many possible options, which included keeping my house.

I managed to get a job, albeit low pay, but enough to enable me to put a proposal to my creditors, to pay off a percentage of an agreed settlement figure for my debts over a five year period.

From this point The Debt Advisor dealt with my creditors on my behalf and the creditors continuous phone calls to my house day and night eased, until they ceased completely.

Clients Situation Before IVA

Total Unsecured Debt

£134,807

Surplus Income after Living Costs

£400 per month

Approx monthly commitments to unsecured creditors

£3,370 per month

Shortfall

£2,970 per month

Approved IVA Solution

40 x monthly contributions @ £400 Followed by 20 x contributions @ £200
£27,280
55% of our clients share of equity (His wife has joint ownership of the property and her share was excluded)
Property Worth Mortgage Balance Equity to be Introduced	£340,000 £261,500 £21,588
Total repayment by Client
£48,868
Dividend to Creditors
29p

Dealing With The Property in Year 5

A protocol has been agreed across the industry which clarifies how IVA proposals should deal with their property. This provides:

The client obtains a professional valuation of their property after month 54 of the arrangement for the purposes of a re-mortgage.
They obtain two mortgage quotations (this will go back to the broker who has introduced the case)
The max they are obliged to remortgage to is 85% LTV less secured sums but subject to affordability criteria.
If equity is less than £5,000 - property is excluded from the IVA
To protect the interests of creditors the Supervisor will register a restriction against the property at HM Land Registry.
In terms of affordability the increase in the client's mortgage payment (for the new mortgage) must not exceed 50% of the clients' monthly payment into the IVA.

Example

Total Unsecured Debt	£
IVA Contribution	£250
Old Mortgage Payment	£750
New Mortgage Payment	£850
Increase	£100

The proposal specifically states that they client does not have to sell their property

If a remortgage is not possible, the alternatives creditors will consider are:

Third party sum equivalent to the value of their share of the equity.
A maximum of twelve monthly contributions beyond the 60 month term at the same level as paid in the fifth year of the Arrangement.

Consent To Approval Timescales

The timescale from consent to approval generally depends on the quality of the paperwork returned with the consent in order to complete the verification stage adequately in accordance with the regulations. An ideal returned consent would contain the following to complete the verification stage efficiently:

3 months wage slips for each applicant;
3 months bank statements;
Creditor correspondence with account numbers and up-to-date balances;
Certified Identification for Money Laundering Regulations;
As much detail as possible regarding the background history with a breakdown of each creditor and any actions taken in attempt to reduce the debts;
Mortgage Statements for cases involving property with any recent valuations if available;

The process normally takes around 4 - 6 weeks as detailed below.

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