Release equity in last year?

[mel.d]

Hi. Sorry if this is a stupid question but still learning about IVAs! Why does equity in your home have to be released in the 4th or 5th year? Does a bulk payment at the end have to be made or something? My partner looks after our mortgage and all details and he would not be happy to do this. We sort out our own money/debts etc... and although being my partner this would cause some serious problems!... I think this is my main concern about an IVA. People say an IVA does not touch your mortgage or home but it obiously does if you have to do this?

[MelanieGiles]

Hi again mail - no questions posed on this forum are stupid - do bear in mind that there are a lot of other people who probably have the same questions but are afraid to ask!

Equity has to be released as the creditors would be entitled to that money were you to enter into bankruptcy proceedings, and an IVA is meant to offer at least what would be anticipated to be recovered under those proceedings. You would usually be required to effect a re-mortgage or sale of your property to raise the money in a lump, but if the amount is relatively modest you could also ask for your IVA to be extended by one further year and make ongoing contributions to address the equity. If your partner is not likely to be amenable to this, then an IVA is probably not the best solution for you.

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

[mel.d]

Ok. I definately do not see bankruptcy as an option and do not even want to contemplate that. I think an IVA is suitable for me it is just the equity release that is going to cause problems. I have just posted another Q (sorry have alot in my head to be answered) if the amount that I owe in total is £30k which actually seems quite low compared to other situations I have read about on this site, would I still have to release equity or is it a realistic option for the period to be extended or me to take a bulk payment by other means? if I can make a bulk payment in the 4th or 5th yr without touching equity looking at the total that I owe, if I can pay £400 each month (TBC) what sort of bulk payment would I be looking at? Thanks.

[MelanieGiles]

Mel

Can you confirm the present value of your property and the amount you owe on the mortgage and any secured loans. I am assuming that the property is jointly owned? Is this correct?

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

[mel.d]

The property is jointly owned although we are not on the best of terms and have not been for some time. The present value of the property is approx £270,000, I think we owe £236,000, we do not have any loans secured on the property.

[MelanieGiles]

Hi mel

So your share of the property, after taking account of notional costs of sale would be about £13,000 at the moment. So this is the amount that you would need to be offering as a starting point to creditors. Of course you do need to bear in mind the property may increase in value over the next four years, and that your mortgage will reduce if you are paying it on a repayment basis, making the equity larger each time you make a payment.

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

[mel.d]

So if I was to compare being blacklisted and an IVA, with both you cannot get credit (which would not be expected and understandable), Blackilisted is for 3 years and after you can rebuild you credit, IVA is for 5 yrs. Both show up on your credit file. Blacklisted you would not touch your house in anyway (is that right?) where an IVA you must release equity. Blacklisted affects alot of employment areas but not sure if I am obligated to inform mine? IVAs do not affect employment as much! Then you have the informal payment plans which are not legally binding but usually involves a third party but can go on forvever and your credit rating etc will go along with it until the debt is cleared. With a £30k debt where I have juggling repayments for quite some time but think I have finally sunk, what is really the best option? (Blacklisted I have always viewed as the FINAL no other way out option available! Also please clairfy any other points that I have not included in the complarisons above to help me decide the best option. Thanks.

[mel.d]

Hi. Sorry I DON'T MEAN BLACKLISTED I MEAN 'BANKRUPT'!!! Thanks.

[mel.d]

Hi Melanie. Firtsly, I would like to apologise for the never ending questions that I seem to have at the moment, and all I am sure you have answered before. Ok. I have read about Informal debt repayment plans, IVAs, Bankruptcy, and still have many questions but the one now on my mind is - if I can get a Informal Repayment Plan agreed would that usually be a less serious option to take rather than an IVA (hope that made sense?). Thanks.

[Adam Davies]

Mel
Hi
If i read your posts correctly you have approx 30k of debts and about £400 of disposible income.
You have a choice of a debt management plan or or an IVA.
DMP; You could pay your debt in full over 6 years if you could get your creditors to agree to stop interest and you will not have to release any equity.
IVA;Will cost approx 8k,meaning that your creditors will receive only 16k,just over 50 percent.They will probably get the remainder from your equity release.
I feel that the equity release is a problem for you so you may be better looking into a DMP.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[mel.d]

Thanks Andy. How do I get creditors to stop interest or is that where the third party comes in. I am speaking to Thomas Charles tomorrow and hope they will be able to get things moving? I probably have about £500 disposable income each month. Based on the details I have given would you say that a DMP would be the better option for me? Also do I have to include all of my debts in a DMP as with an IVA? Thanks.

[MelanieGiles]

Thomas Charles will probably refer you to an insolvency practitioner who will be able to help you to formulate an IVA if that is the route you have chosen. With £30,000 worth of creditors, you will be paying in a similar amount to your IVA so your creditors may feel that a DMP is a better solution for them, albeit it may take longer than the 5 years to repay them in full due to ongoing interest and charges.

Mel - we can give advice over the options available to you, but no professional company is going to advise you which route to take. Only you can take that reasoned decision based upon where you see your future. Have a good chat with Thomas Charles tomorrow to see what they have to say.

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