I can see the writing on the wall

[goodd]

I have recently moved into a new home with my wife and 3 week old baby. I run my own business, and unfortunately have a large sum of unsecured debt (circa £80K).

Income circumstances have changed recently, and now it is a big struggle to pay for all outstanding debt on a monthly basis. I have never defaulted on any payments for any loans, but I can see the writing on the wall. I have consulted a financial advisor, who has found a consolidation option for me, but still this seems like a long-shot and I am not sure the right option for me.

On the information I have given, do you feel I would be in a suitable position to consider an IVA? If so, am I to assume that our home would be at risk? The home is in joint names, but the unsecured debt is purely mine.

Any help you can give would be gratefully received.

[MelanieGiles]

With debts of £80,000, you will need to be making monthly contributions of at least £450 per month to effect the minimum dividend of 25p in the £ which most creditors appear to want. Would this be affordable? And do you own the property or are you renting, and if it is owned how much equity is there to split between you and your partner?



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

[goodd]

Hi,

£450 per month would be affordable as the current quote I have for consolidation is £750.

We do own the property, and have £25K equity. However, as mentioned earlier, it is a joint mortgage between my wife and I, but the unsecured debt is purely mine.

[hara]

As Melanie Giles has indicated if you can make 25p or over I feel that iva is the solution.
I feel that consolidation loan is just a temporary soultion.

I wuold shop around for a good Insolvency practitioner and seek opinion at the earlist.

Loacl CAB may give a valuable opinion.

hara

[aguise]

I too feel to consolidate in the long run would just make things harder. Bear in mind you may have to release some of your equity(only upto I think 85% of your half) at some oint in an iva. As said ring a few companies and see how you feel, read the forum to get ideas of what it all entails.

All the best Ang

[MelanieGiles]

If you have equity in your property this will also have to be addressed in an IVA. The usual procedure now is to offer to remortgage your property during the final year of the arrangement at 85% loan to value, and then raise a sufficient sum to discharge your current mortgage and offer a lump sum to creditors from the balance.

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

[goodd]

Hi Melanie,

I am slightly confused by your last piece of advice. Are you saying that we would be forced to change mortgage lender in 5 years time to realise the (hopefully) increased equity in the property regardless of whether it is in a joint name? If so, who gets to choose the type of mortgage, who the lender is, what the terms are, who pays early settlement of existing mortgage etc?

I may have completely misunderstood you, but I would be worried about having to change the current lender.

[MelanieGiles]

Hi again

You would be in control of the re-mortgage, so it would be your choice of lender etc, but obviously the supervisor of your IVA will want to ensure that you are acting properly and in the best interests of your 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

[Sensible77]

Please also note that it is 85% of only your share of the equity, not your wife's.