i am in the early/mid way stages of my iva application and i today received notification from Northern Rock that my fixed rate mortgage is due to finish on 1st Dec 08. the new payments will increase by £500 (Yes £500) per month.
it was suggested i may need to change to an interest only mortgage with NR, but given the timing, is that an option, and will the IVA process take whatever happens into consideration?
i have £560 per month to live on, and with two young children, taking another £500 is an inevitable failure of the iva and not even enough money to feed one child!
If you are in the early stages of an IVA are you up to date with all your payments??
I only ask as it may be a good idea to try and get another fixed rate mortgage deal sorted out prior to your iva starting. U will probably have to go interest only. Worth thinking about.
Discharged today the 8th feb 2012. View is much brighter now.
Continuing to rebuild our credit worthiness.
Northern Rock are usually quite amenable to a switch to interest only, but it is critical that you sort this out before entering into the IVA. Give them a ring and see what options there are for - I am sure that they will help where they can.
This is a prime example of the "credit crunch" in action. More and more, whilst drafting proposals, we are seeing more and more cases with the following hideous combination:
1. A fixed rate mortgage that will end in the first 18 months of the IVA
2. A major possibility of a severe hike in payments on exit from the fixed rate and
3. An inability to go elsewhere due to negative/insufficient equity.
We specifically look for this now when drafting the proposals and try to factor this into account but it's not always easy. You need to make sure your IP tries to do this otherwise there is a huge risk of failure.
There was a time when an IVA was a great vehicle for helping debtors to keep their property. Nowadays sometimes it seems it's the property which makes the IVA hard to make work. Such is life!
Last edited by ianmillington on Tue Sep 09, 2008 11:18 pm, edited 1 time in total.
Ian Millington
Insolvency Director
PDHL Ltd (formerly Personal Debt Helpline Ltd) www.pdhl.co.uk
The obligations of Mel and I are to advise debtors on what the appropriate action is for them, in their specific circumstances. In many cases like this we are able to work around it.
Sometimes, however, there is no easy solution and in a negative equity situation we simply have to say "it's the IVA or the house". If the answer is "the house" then there's not much we can do other than recommend an alternative solution (BR or DMP but probably BR). However, if the debtor says "the IVA" and is prepared to ditch the house then we have a possible solution. It is not a nice message to deliver.
In this particular case it is difficult to see how anyone can make an IVA work, and retain the house at the same time.
Ian Millington
Insolvency Director
PDHL Ltd (formerly Personal Debt Helpline Ltd) www.pdhl.co.uk
