Hello,
The equity in a person's house is the excess of its value over the amount of any loan secured on it. For a house without a mortgage, or where it has already been paid off, it will be the total value of the property.
If you own a property, creditors would expect a proportion of any equity to be realised and paid into the IVA at the end, for the benefit of the creditors. Typically this would be up to 75% of your share of the equity.
If you have negative equity or zero equity at the beginning of an IVA, creditors may ask for a valuation of the property in the fourth year of the IVA with 75% of your share of any equity at that point, which will need to be realised and paid into the Arrangement at the end.
If the amount of equity you have in the property is more than the amount of your unsecured debts, you can't do an IVA, the creditors would simply expect you to remortgage your house to pay off the unsecured debts.
If the property is jointly owned with significant equity but only you are are subject to the IVA, then creditors will expect to see only your share of the equity go into the pot, so your partner's share remains untouched.
It would be accepted to offer a lump sum to your creditors by other means i.e family to finalise the IVA.
Kind regards,
Julia
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