My husband is about to say goodbye to his failing business (ltd. co.) and look for paid employment instead. His company owes him £27K but he will never get that back on liquidation. His personal unsecured debts are approx £45K, through loans and credit cards.
We have lived together for 9 years (married this April), although I have never had my name on the mortgage - mainly through inertia. The mortgage is £45K and the property is probably worth £120K. This is our home and to have to lose it would break our hearts.
I am soon moving to a new job which means I can easily afford to take on the mortgage and household expenses. We have considered me taking on a new mortgage to buy him out (for the current mortgage amount of £45K), which means that my name is solely on the mortgage. Obviously this means he would be disposing of an asset for less than the market value.
If my husband opts for an IVA for his unsecured debts, would they still be able to demand an equity release in the 4th year, even if the mortgage had been in my name for 4 years? Is there another option as regards the mortgage, ie should I have my name put on the current mortgage as joint holder instead? Our priority is not to lose our home which we love so much, but my husband simply cannot service his debts.
Im no expert but i think your husband would be classed as not insolvent because of the equity in your house and so he would not be legible for an iva not %100 sure but sure an expert will be along shortly.
I agree Hallway. With the amount of equity in the home, there is enough there to more than pay the unsecured debts.
I think they would be expected to remortgage and pay off the debts.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Thanks very much for the advice so far. I guess my real question is: would anything be gained by transferring the mortgage from his name to mine before an IVA were applied for? Would this avoid any requirement to release equity, or would the property still be considered liable to satisfy his debts?
Difficult one, which I think one of the technical experts will be better answering.
I take it that none of the debts are joint ones?
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Just to clarify our real dilemma: should I take out a new, larger mortgage that would pay off my husband's debts (but which would be much more expensive, especially as I'd be paying all of it myself for at least a while!) - or do we transfer the current mortgage to me (which means he'd effectively be disposing of an asset at less than its value) and try for an IVA?
I'm guessing that even if it's in my name, he would still be considered as having an interest in the property, having lived in it and paid towards it for years.
Would an IVA be possible in these circumstances? And if they pursue him for some of the equity the 4th year of the IVA, what would this mean in practice?
It seems unwise to convert what are currently unsecured debts into a secured one, which is what would happen if we (in fact I) got a larger mortgage. And of course who knows what would happen to future interest rates ...
We just don't know what to do for the best, our priority being to stay in our home.
The technical experts do look on here frequently, one of them will answer your question shortly as I am not 100% sure and don't want to give you a wrong answer.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
You won't be able to get the property transferred to you, and then your husband offer an IVA to creditors, as he will have wrongly dissipated an asset to you for lower than the true value.
In truth, your husband is not insolvent and could afford to repay his creditors out of the sale proceeds of the house, or a remortgage of the said property. You may well be able to get his creditors to accept lower settlement figures, and this is always worth trying, but do make sure that creditors are fully appraised of his situation in order to allow them to make a commercial decision as to whether to accept the offer.
I think your best bet at the moment is to explore a re-mortgage of the property where you acquire his interest and use the money to pay off his creditors. You should then be entitled to a larger equity share based on those borrowings.
Andrew Graveson of Brightoak is an experienced mortgage broker in this field, who I would recommend you have a chat with to explore options. You can find his details on the experts section.
Thank you Melanie, and kallis3, you have been very helpful. It's good to know where we stand, and at least we are lucky in that we do have the option for me to get a larger mortgage to repay the creditors. I will speak to a mortgage broker.
It may well be that you have a 50% equitable share in the property (did you help with the original deposit?) That being the case if your husband entered into an IVA he would only have to contribute 85% of his equitable share in year 5 (by sale or re-mortgage). You need to speak to a reputable IP - visit www.iva.com which lists a selection of the good guys and gals. Good luck.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
Obviously if you do have that 50% equitable interest then your husband is insolvent and would be able to offer an IVA.
Regards, David Mond, Insolvency Practitioner for over 46 years. Personal Insolvency Practitioner of the year 2012, Personal Insolvency Practitioner of the year finalist 2013 & 2014 awarded by Insolvency & Rescue Magazine and 2015 finalist for Personal Insolvency Firm of the Year.
If you only married in April this year, I think you would really struggle to claim a beneficial interest in the property - unless as David says you had contributed to the purchase or had directly contributed to any improvements made to the property. You may like to seek proper legal advice on this issue before proceeding down any route.
I've been living in the property since 1999; my husband has been living in it since 1995, I think. Since I came along I have been paying half of the mortgage, through money I gave to my husband. My name has never been on the mortgage though, mainly due to inertia as I said.
We have been considering a DMP as an alternative - what are your views on this?
The only problem with a DMP is the amount of time it can take to pay back your creditors, sometimes a lot longer than an IVA. It is also an informal arrangement with your creditors, so there is a possibility that they may not freeze interest or stop charges.
I think you should check out www.iva.com or give Melanie Giles a ring (she comes highly recommended), so your options can be discussed.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
