Iana
When you have an asset, such as a property, and have incurred debts which you are unable to repay, your creditors have the right of recourse towards your assets in the event that you default on repayments. If you are currently insolvent, your house may well be at potential risk from the following actions:-
1 A charging order. This can be applied for by any unsecured creditor, which requires a Court Order. The effect of a charging order is that the creditor achieves secured rights over the property - and you may well have to make ongoing repayments or face possession proceedings against the property. The creditor will then be paid out of the sale proceeds.
2 Repossession by the mortgage company. This can only be done if you are more than three payments in arrears with your mortgage. As a mortgage company is a secured creditor, their rights are unaffected by either bankruptcy proceedings or an IVA. Your mortgage payments must therefore be the most important payment you make each month, as this keeps a roof over your family's head.
3 Bankruptcy proceedings. In the event that you are declared bankrupt, your assets will vest (be transferred) to a Trustee in bankruptcy, who will be allowed to sell them after the first 12 months.
As James rightly points out, an IVA will proect you from 1 and 3 above, but if you default on the IVA payments, then the equity in your property will then be up for grabs again.
Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at:
http://melaniegiles.blogs.iva.co.uk