told I am unable to go for an IVA is this correct

[traceyk]

I have 62500 debt with 7 creditors, I could afford to pay just over 300 per month in an iva but have been told that becuase my joint mortage and secured loan payments total over 40% of our joint income I am unable to go for an IVA is this correct

[Oliver]

No this is not correct as there are instances whereby someone paying over 40% of their income on mortgages and secured loans can propose a successful IVA . Some IPs will decline cases where someone's secured loan and mortgage payments total over 40% of their income because they feel that the creditors will reject the case as they will say that the person has over expended themselves and should sell the property. However, with the recent huge increases in the housing and rental markets many people need to pay more than 40% of their income on rent or mortgages in order to live in the places where they work. A great example of this is the South East which has very high mortgage and rental costs which could often mean that someone would have to pay 40% or more of their income to live there. Therefore each case should be judged on it's own merits. Don't give up the search, we have had many clients whom are paying more than 40% of their income towards their secured loans who have had IVA proposals accepted.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[jamesfalla]

Hi Tracey

I agree with Oliver. There are a number of the larger IVA companies who seem to be having difficulties getting creditors to accept IVAs where mortgage payments are greater than 40% of income.

However, in my experiance smaller IP practices are able to successfully negotiate with creditors and get these case through.

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[traceyk]

Thank you Gentlemen, you have given me a glimmer of hope -we are at 45.8% so only just over the 40%, just need to find someone to take me on now! Otherwise its a debt managment plan into my 60s!

[MelanieGiles]

If your mortgage is presently a repayment mortgage, you could try switching to interest only to release some more money for creditors and reduce the percentage of your housing costs.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[iva_squirrel]

Good morning,


I thinking changing your mortgage to interest only is a very good idea.

An interest only mortgage is a mortgage where you only pay back the interest on the loan, and none of the capital debt is repaid directly.

Once you get to the end of the mortgage term, you will pay back the capital payment in full.

The advantage of this type of mortgage is although you are still making monthly payments into an investment fund, these payments are likely to be a lot lower than the monthly mortgage payments you would pay on a normal repayment mortgage. Your interest only payments will be low each month and so you can release some more money for creditors.

Kind regards,


Julia

For more information about IVAs, please visit my website:
www.supersonicsquirrel.net

[traceyk]

This has been suggested to me, is the suggestion that we switch to an interest only payment for the term of the iva and then go back to an IVA? Otherwise I am unable to see how this owuld improve my situation as I would still have the capital payment to make at the end of the mortgage term

[iva_squirrel]

Hello,


I guess you could change it back to repayment as soon as your IVA is over.

Regards,


Julia

For more information about IVAs, please visit my website:
www.supersonicsquirrel.net

[MelanieGiles]

You absolutely must change it back to repayment as soon as the IVA is completed, and pay even more each month towards reducing the capital to make up to the five years when no capital has been repaid.

Tracey, you really should seek advice from a reputable mortgage broker if you are thinking of changing this, just to be on the safe side and to ensure that you are not prejudicing your position in the future.

Good luck

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

Traceyk
Your figures of £300-£325 will only return about £11k to creditors once IP expenses are taken out.This will be approx 18% of your debt and will not be enough.Therefore you should look at an equity release alongside this[if you have sufficient equity]

[MelanieGiles]

But if you switch to an interest only mortgage, this will increase your disposable income, which is what I am suggesting. You really need to give this some serious thought, as your main problem here is the ratio of home borrowings to income.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[traceyk]

Have sorted everything out with change of mortgate to interest free will save 175 per month and this will get me out of the hole. Interestingly enough, only one company that I spoke to told me about the scale of the charges. The other two just said that their fees would ocme out of the monies I paid and left me thinking that the three hundred and oddments would have been ok. Luckily, thanks to this forum, I found someone who gave me all the facts and has instilled a good deal of trust in me toward them. Will keep you updated on progress

tracey

[Oliver]

Glad you found a solution Tracey, all the best with the IVA and please keep posting.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp