My husband and I are currently repaying an IVA. We have a mortgage of £150,000 but house value now £80,00. After another attempted burglary at our home we are at our wits end and are contemplating voluntarily surrending our home. If we do this, does the debt from the shortfall become unsecured? If so, could it be incorprated into a bankruptcy order if we decided to go down that route?
Any advice much appreciated. Thanks
Hi Shauna, yes the debt would become unsecured, however, if you wanted to remain in your IVA your IP would need to hold a variation meeting to include this debt into the IVA and creditors would have to agree. If you went down the bankruptcy route the shortfall would fall into the bankruptcy, but you must ensure you do not sign any paperwork from the lender, it has been known for lenders to insist that people sign a form which basically makes them agree to still be liable for the shortfall debt so be very careful.
Have a chat with your IP about your plans and take their advice
We have had many similar thoughts, the advice above is spot on. All I would say is take a lot of time over this decision as it will have long term consequences (you will struggle to ever get another mortgage). If you are happy to rent for the rest of your life it's not a problem. You may get another mortgage one day but would need around 50% deposit from what I hear.
I would echo the concerns to be careful. We voluntarily offered our house back to the lender in 1988. We had insurance to cover any shortfall to the mortgage company but then the insurers wanted to claim the shortfall off us. They didn't contact us until 7 years after this by which time we were living overseas. We paid for a few years and then stopped as I don't think they can claim back after a 12 year period.
Hi Shauna welcome to the forum. Discuss this with your IP so they can help you with your options. Good advice from Lem - you do not want to do something that will leave you in a worst state but it does sound like being in a home with high negative equity that isn't offering you any peace of mind as a home either would be a good reason to start somewhere else, especially when you are already addressing your other debts.
Hopefully you have a good IP experienced in this and who will help you either by seeing if it can be included in your IVA or who will assist you on the bankruptcy proceedings. Keep us posted how you get on and I hope they have caught the criminals who thought it was ok to invade your home.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
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