could I be made to sell my house?

[wisewoman]

I am interested in an IVA.I do not have any arrears on the house, only credit cards.However, I read that I could be asked to remortgage it, or have a legal order put on it.As I do not earn enough to remortgage, could I be made to sell it. Your help would be appreciated.


Thank you

[odowning]

Thank you for your enquiry.

As part of the IVA agreement, if there is equity in your property which is more than the offer you are making in payments monthly to your creditors, the IVA will not be the best option for you (creditors decline IVA).

Example:

£30k debts - Equity in home £50k. Creditors will turn IVA down and consider Bankruptcy as they will gain all their money back in a shorter period of time(dependant on O.R. fees and Bankruptcy tax.

As you say, you can not re-mortgage at present due to affordability. There maybe a time during years 4 or 5 of the IVA where you CAN re-motgage. At this point you might be able to offer a Full and Final settlement of your IVA (paying the plan off early).

The idea of IVA is to make payment affordable to you. Creditors are loosing money therefore it is only fair if you can re-mortgage that you do at a later date (during the IVA).

If in year 5 you still can not re-mortgage, the IVA will complete and your house will not be touched.

For more information on IVA please visit my website www.insolvencynetwork.co.uk or www.r3.org.uk

Regards

OD.


Insolvency Network
Free National Advice
If you are not speaking to an Insolvency Practitoner - ask why! DO NOT pay Fees to Debt Management Companies - visit cccs.co.uk

[Oliver]

To add to ODs response, if you have equity in your property at the time when you propose your IVA then your creditors will normally always want you to agree to a remortgage (normally in the 5th year - you could choose to do this sooner if it were possible). If you can not afford to do this now, then you are playing a risky game entering into an IVA in the hope that your income will improve over the next 4-5 years. If it does not and you are unable to release your equity, then your IVA will fail because you are unable to meet the terms which you agreed at the beginning. You would probably be made bankrupt.

Note: If your income is relatively low, but you do have anough disposable income to sustain a re-mortgage you might still be able to do this with specialist help. However, you should only consider it if the end result is that all your unsecurred debt is paid off (either in full or as part of an IVA agreement).

The key here is how much equity do you have in your propoerty compared to your debt? If there is any significant equity but you are unable to release it, then IVA may not be possible. However, before makeing a decision, you need to speak to discuss all your options with a specialist.



If you would like further information about IVAs or other debt solutions, please feel free to contact us.

James Falla
www.thomascharles.com

[ClearDebt]

Ask yourself - Should I sell the house? You don't say how much equity there is in the property. Downsizing may be all you need to do to get your debt back into manageable proportions or, at least, make an IVA much more achieveable.

We are not saying you must sell up - the tone of the original query makes it sound like you don't want to. But, do look at it as an option.

Better advice could be given if you were to reveal the value of the house, the size of the mortgage, the total value of your debts and the surplus income you have every month. And - very importantly - are ANY of your debts OTHER than the mortgage secured on the house. That could make things less easy to work out.

If in doubt, or if you don't want all the readers here trailing through your affairs, seek professional advice. Or, you could always try the questionnaires on our site - you get a report on your options by return email.

Good luck - whatever you decide,

Andrew

ClearDebt
www.cleardebt.co.uk