how much would be my share of equity?

[sco]

Hi, I am in the process of divorcing my partner and will be leaving the family home. As we have children, the house will not be sold and a 25-30% charge will be placed on it which will be paid to me once the children reach school leaving age. I currently owe £25k of unsecured debts and will be moving into shared accommodation. How will this share of the property be taken into an IVA application? I expect the share value to be around the same value of the debt. Also how much would I expect to pay in monthly payments and how if I am expected to release equity in my share, how much would it be?

[MelanieGiles]

Hi sco and welcome to the forum

You should not agree to a charge over your property when you have debts and are considering insolvency proceedings. Has your solicitor been made aware of your financial situation? How old are your children now?

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

[sco]

Hi Melanie,

At present I do no know what other options I have. I do not wish for the house to be sold and displace my children who are 7 and 14. I have mentioned the option of bankruptcy to my solicitor and he naturally became concerned about my ability to pay him and said I would have to pay in advance for his services, which I am having to pay on credit card.

If I choose and IVA, will the charge on the house be considered as equity? Once the charge is in place the house cannot be sold until the children reach school leaving age which is a good 10 years away for the youngest.

If I choose bankruptcy, will the receiver treat the charge as a tangible asset and expect the house to be sold to recover it?

Please can you explain why I should not agree to a charge in this situation?

Thank you

[MelanieGiles]

In both bankruptcy and IVA proceedings, creditors will be unhappy with a charge created at a time when you are insolvent and ought to be considering their position as well as your personal one. At present you have assets which, if realised, would cover your debts.

The Official Reciever, in a bankruptcy scenario, may well challenge the Consent Order you enter into in this regard - there have been a few successful cases in the Courts recently in this regard - and if successful your debts could be paid in full. It will be difficult to counter this under IVA proceedings, unless you are able to offer a very good dividend return.

Is your wife in a position to purchase your share of the equity now?
















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

[sco]

No, she does not work at present. She is heir to an inheritence from an elderly relative though. I would anticipate she could receive this in the next 1-2 years. This would cover my share but I expect she would not want to buy me out with this money.

I am currently able to pay the debts and I am not defaulting any creditor. I am currently paying £600pm in monthly payments though which is crippling.

I will be renting a room shortly which is all i can afford and after all reasonable living expenses, I am left with £40-£50 pw to cover additional expenses (Clothes, childrens expenses).

[MelanieGiles]

Would she consider selling the property to release your share?

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