Do second jobs have the same bonus as overtime

[donna.s]

I'm about to enter into an IVA. My husband and I both work full time but have considered taking second jobs to improve our financial circumstances. This of course adds a lot of pressure when you have young children and it doesn't appear that doing this would better our position as any money earned from this would be used to increase our monthly payments to the agreement. Do second jobs have the same bonus as overtime ie you can keep fifty percent of the earnings?

[MelanieGiles]

Hi donna

If you are doing second jobs then this class as your income and will be taken into consideration in determining your disposable income in total. If you are already in an IVA and struggling, then discuss this with your IP as you obviously don't want to be working extra hours just to hand the lot over to creditors.

If you are not in an IVA, only take on part-time work if you feel that you need to, as again you will be working directly for the creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[donna.s]

Thanks Melanie

I have another question - would I be required to remortgage up to 100% equity after 4 years and would I be forced to do this with a high interest rate because of my credit history. I'm worried that this will just put me back to square one with not enough money to live on.

[MelanieGiles]

Hi donna

In my practice we look at the equity position at the time the IVA is presented and try to address it at that stage. So long as your IP has put forward a sensible proposal, they ought to be able to argue against the 4th year revaluation for you, as it is unfair to have this black cloud hanging over you for the next 4 years. Often this is done by extending the arrangement into a sixth year, but this is sometimes better than facing paying an increased mortgage for a much longer period.

What has your own IP done within your IVA propsals to address the equity in your property, and what is the value of your house now and the amount you owe to the mortgage company?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[donna.s]

Hi Melanie

I'm in the very early stages at the moment collating all the paperwork required. It was this particular element that put me off the IVA initially and I looked at a secured loan of 125% to consolidate but ofcourse the interest rate was extremely high (11.7%) which made the monthly payments too high so I now feel that the IVA is my only root but am worried that I will be in this position in 4 years anyway.

My house is worth approx £130k with a mort of £96k (interest only) and a secured loan of £20k.

Thanks

[MelanieGiles]

Hi donna

Then you have £14k equity in your property, which equates to approximately £8,000 after taking account of costs of sale. If I were your IP, I would suggest that this be addressed by extending your IVA to six years, which avoids an unecessary revaluation and equity raise during the final year, which leaves you with higher mortgage payments into the future.

Do remember that your secured loan will continue to reduce over the period of the IVA, so there is nothing stopping you raising equity during the final year and paying the IVA off early.

What does your own IP say?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[donna.s]

I have just spoken to Debt Free Direct who are looking to organise this for me and they have advised that until they get the paperwork back they can't advise me on this but will contact me for a thorough assessment when they receive all the documents required.

[MelanieGiles]

Good luck!!!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

Melanie
Your approach to the equity release is refreshing and would be great if it became the norm in the industry.
This is the one area of the IVA procedure that seems the most mis-understood on this forum,I struggle with it myself.To agree an equity release at the time the IVA is taken out,to be released in the final year, is the best way forward for the debtor.They know exactly where they are and how much,approx,it will cost.
With valuations in year 4, followed by equity releases, the amount to be made available is unknown until then.Also the amount of remortgage is unknown and could be substantial.
Finally it seems strange to insist that a person agrees to increases their debt,within a legal agreement, without telling them by how much.

[MelanieGiles]

You are absolutely right, and that is why I am pleased to be able to report that all efforts by our regulators (see my latest blog you will be interested!) to persuade creditors to see equity dealt with at the beginning of the IVA are likely to become the norm.

The only reason that people get lumbered with 4th year revaluations, is that the IP's don't bother to address the equity within the proposal. Times are a-changing, albeit a little slower than we would like!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk