Equity release

A question about : Equity release

I am totally confused, extremely stressed and at my wits end!!! I'm almost at the end of my IVA, paid in all my agreed contributions and now at the equity release stage.

In a nutshell,my property is valued at Ј297,800, so 85% of the value is Ј253,130 less a mortgage of Ј189,443 leaves equity of Ј63,687.00. Cleardebt, my IVA company, has stated that I need to pay Ј44,370.30 in order to settle my debts in full.

According to Cleardebt, my original debt Ј39,373.96 plus statutory interest calculated at Ј14,701.16 (up to 31 October 2014) totalling Ј54,075.12. I have paid Ј24,046.00 contributions in addition to Ј3,978.96 from successful PPI claims.

What I do not understand is, if I have already paid Ј28,024.96 and my total debt is Ј54,075.12 including statutory interest, how then am I required to pay an additional Ј44,370.30. That means that I would have paid Ј72,395.26, surely this cannot be correct. I thought the purpose of the IVA was not to pay back more than you originally owned and be debt-free in 5 years.

Secondly, there is no way that I can get that amount of money without putting me further in debt as I simply could not afford the repayments. Surely the IVA was not set up for that purpose. Cleardebt seem adamant that I find the money from any means possible. I'm beginning to think Cleardebt are fleecing me.

Please I really need some help.

Best answers:

• To start with, simply email them the above, and ask for a detailed breakdown of how they arrived at this settlement figure - it does seem a bit high.
  Saying that, you have to factor in how much of the ppi actually went into the iva. By the time you take away the Claims Company cut, say 35% plus vat, and your IP will typically cream off 15% of any additional realisations, you will be lucky if Ј2000 actually went to your creditors.
  Say your ip fees are Ј4000 approx right now. You also have to accept that 15%of anything more you raise through equity release goes to them as well. This is of course over and above what you owe your creditors.
  Even so, seems the settlement is on the high side, but not a million miles of either. It's what we all signed up for I'm afraid.
  It's likely to be academic anyway, as chances are you will not get a remortgage, so typically, your iva merely continues for a 6th year instead.
  In any event, the monthly repayment on any equity release is capped at 50% of your current iva repayment, with any remaining iva repayments reduced by 50%, thus making it affordable.
  ( I am assuming you have a protocol compliant iva).
  Would like to know how you get on. Please keep us updated.
  Hopefully you will only end up repaying another cЈ5,000 over the next 12 months instead.
  Best of luck.
• Thank you for your advise, I have asked for a detailed breakdown of how they reached the settlement figure however I've received nothing yet. I will contact them again and keep you updated.
• Hi there
  We were in exactly the same situation as you. Our IVA company is also Clear Debt. We ended up having to extend our agreement by a further two years..... Not great news as we thought it was all over.
  We ended up contacting David Mond at Clear Debt and he was much more helpful.
  Good luck.
• Hi,
  We're with cleardebt and entering our current last year ...already 6th...
  How come yours was extended by two years instead of normal extra one? Was it due to assets in the house plus the change from interest only to full repayment mortgage compiled?
• I'd been told by clear debt that one could try and approach creditors to see if they would except the reduced payments as near end of iva and so tgey've got most of the money.....never promised they'd agree.