Mis-sold IVA - is there a way out?

[seylectric]

To cut a VERY long story short - this is a follow on from a bankruptcy back in Dec 2006 - we were advised by the solicitor we hired to fight the bankruptcy but who did nothing, to go for a Fastrack IVA, that is an IVA taken out after the bankruptcy. He recommended an Insolvency Practitioner who basically gave us 6 months to refinance and pay off the debt (£22,000) or a further six months in which to sell the house to pay it off.

 

The first six months has passed and we are now being told that we MUST put the property up for sale within 14 days or they will claim the IVA has failed and apply for repossession.

 

However, the main issue is that we have been unable to refinance because the the IP told us we have to pay off the whole debt BEFORE the bankruptcy can be annuled. I have since found out that this is not the case, and the bankruptcy HAS been annuled, but because of the current credit situation in the UK we can not now obtain the finance that we would have been able to six months ago had we been given the correct information.

 

So that's the first point on which we were misled.

 

Other points include:

 

* We were told a creditors meeting was required, and have been charged for this. Apparently a meeting was NOT a requirement.

 

* We were told at the time that the IVA term had to be a maximum 12 months, although I now know that we could have asked for longer. Ideally I would have liked to have been given two years as I could raise the money in that time without refinancing.

 

* No mention of repossession was ever mentioned if the IVA failed.

 

* We have been put under a lot of undue stress and strain as a result of the situation they have put us in.

 

Can we get the IVA cancelled, and what would happen to the debt if we did? I understand the original creditors could reapply to make us bankrupt, but I am in a position to pay them off (£6,000), but not the extra costs, i.e. trustees, official receiver, creditors solicitors costs etc. I know we can make an official complaint but the important question is what position does that leave us in?

 

It is my belief that the IP is responsible for putting us in an untenable position re. refinancing when if they had offered us a two-year IVA to begin with instead of claiming that 1 year was the maximum we would not have been in the position of needing to refinance and/or sell the property. We are both around 50 years old and would struggle to get another mortgage with the IVA on the records so that really is a last resort for us.

[Parkvale]

You should first complain to the Insolvency practitioner acting for you, to see if they accept

any liability. I very much doubt they will and they will most probably say that you willingly entered into the agreement. That leaves you the option to complain to the Financial Ombusd man Service or the I P's own regulatory body. I am not 100% sure, but there are legislation changes with regard to the proposing of IVA’s to be put into practise shortly that will require the IP to confirm in writing the advice provided to an individual before he commences work. Those individuals will then have to confirm that they have understood the advice and the course of action which is being proposed in order to make a reasoned decision. This is required to eradicate those firms who only offer one particular solution, and especially where bankruptcy may well be financially advantageous to the debtor compared to an IVA.

The points that you raised about a creditor meeting and the IVA term of 12 months. Also the mention of repossession and how did the original solicitor advise you ? Were all these points put in writing to you ? It would greatly strengthen your case.

I fully understand your present predicament and the worry, stress etc you must be going through. Good Luck.

 

Edited July 9, 2008 by Parkvale

[seylectric]

The solicitor originally advised us to go for the IVA because it would be a cheaper option than remaining in bankruptcy, mainly because of the trustee costs. At no point was any right they might have to repossess ever mentioned, when the IP came to our house at 9pm one night the contract was already drawn up. No discussion ever took place about the fact that we could have asked for a longer term, we were basically told that it had to be settled within 12 months (prior to signing) and the IP basically pushed it along, going on about it was the very last day my partner could sign as the documents had to be in court the next day as we were out of time (though when I phoned up to check the next day I was told she had gone on holiday for a few days; good for her), and that she still had an 80-mile drive home and it was late etc. etc. Nothing was ever explained to us, except that when I asked what happened if we did not have the money in place after six months - which I told her was unlikely as I planned to raise it myself rather than remortgage - she said "Nothing to worry about, you can always extend it".

 

No question that the IP will not accept any liability, you can take that as a given. However the important point for us is, can we cancel it, i.e. make some sort of claim through the authorities or whatever that we were mis-sold the IVA, mainly on the fact that the IP was (and still is) claiming that the bankruptcy cannot be annuled until it is paid in full, and that that information has been given to companies we have spoken to over the phone when asking if we can refinance (i.e. they have said "no" because my partner is still bankrupt, or a discharged bankrupt as oppose to being in a IVA, and we have been told that basically there is "no chance" of a remortgage BECAUSE of this (incorrect) fact.

 

The other, probably more important point, is if we CAN get the IVA cancelled, what happens then as we technically still owe the money? What I am getting at is I would really like a 2-year deal which would be easily manageable and had we been offered that in the first place we would not be in this position now, and that is wholly down to the wrong information (in the case of the annulment issue) and lack of information (in that we were misled into believing that the maximum term for the IVA is 12 months) given to us by the IP.

 

I will be writing to them for their comments before making an official complaint, but it's getting some reliable professional advice (without being fleeced again) that is the difficult part and that's what we need the most at the moment.

[seylectric]

Update: The IP now says that the agreement is a standard IVA, not a fast-track IVA (FTVA).

 

However it is my understanding that once in bankruptcy (as is my partner's case) you can ONLY have an FTVA. If that's the case then surely this IVA is invalid/null and void?

 

Any help appreciated.

[p365]

I understand that if the IVA fails then the IP's have to then apply for another bankruptcy order. Which you can then appeal against and hopefully gain further time to re-negotiate an extension to the IVA with your creditors agreement. If you are bankrupt the creditors will get less money so i don't see why they would not allow you the extra time if they can see a chance to get their money.

 

It would seem that the lawyers were hoping to get their share of the IVA in as fast a time as possible. I think you should take advice from another party as their advice doesn't seem to be sound. Unless they have the "put your property up for sale after 6 months" as a clause in the IVA then surely they should be applying for bankruptcy now although if you have a 12 months IVA until 12 months has passed it probably hasn't failed.

 

I have been in touch with some mortgage brokers who seem to be able to source deals even now so that might still be an option.