Hi,
I am thinking about entering into an IVA.
I have debts totalling about £70k and I pay about £1,550 per month to clear this. My questions are
1. I have a mortgage with my partner and have equity, we will have to remortgage at the end of year 5 to release equity? Is this a case of definitely have to and if I did how much would I need to release?
2. If I have shares will I be forced to sell them?
3. I earn a bonus thorugh work, will I have to tell them when I get a bonus and use this all to pay off the debt?
If there is equity you would be expected to try and release some. It is limited to 85% loan to value and cannot increase your mortgage payments by more than 50% of your IVA payment. Your partner's share is unaffected and in truth where there is equity most IVAs are extended as mortgages are almost impossible to get. This may change in the future.
If you have shares you would almost certainly be asked to sell these. If these are part of a SAYE scheme then the funds on maturity would go into the IVA but shares that mature afterwards would be yours to keep.
Any bonus is dealt with under what is called the 10% 50/50 rule. Bascially you keep anything that does not increase your net take home pay by more than 10% and everything above this is divided equally between you and your creditors. This is usually looked at on a monthly basis.
Contact an insolvency firm for full advice and I am sure you will find the right solution.
Last edited by Michael Peoples on Fri May 22, 2015 1:42 pm, edited 1 time in total.
Thank you, so if I had £70k equity and the value of my property increased what would this mean?
If I kept my shares as a certificate would they know I had shares to sell?
Lastly, I have a joint account where all the bills come out but not told my partner. If went ahead with the IVA could I get my payment to come out a different account and how do they review my account
It does not matter about the actual cash amount as the equity release is based on 85% loan to value. If you have a £30k mortgage and a property worth £100k then that equity is substantial as is your share. However if the property is worth £300k and the mortgage is £230k then the amount you could raise is a lot less even though both properties have £70k equity.
Even if the property increases and there is double that equity in month 54 the provisions still apply. You cannot be expected to increase secured payments by more than 50% of the IVA payment regardless of how much equity there is in the property. This is to safeguard you.
It is up to you to disclose any assets and the IP firm will ask. If you deliberately lie this could lead to prosecution as the IVA is a legal document so better to list everything and not worry about what might happen if you fail to disclose.
The joint account is fine but if it is with HSBC they may ask for it to be closed even if not overdrawn. If overdrawn it would need listed and your partner would be liable for the debt. By all means open a new account in your own name to pay the IVA and do so now before any damage is done to your credit file. Open the account with a bank to whom you owe no money.
Finally, your partner should be advised as there is a property and the IP will want to register a restriction against it. This has no value but alerts the IP if anyone tried to sellor rerfinance the property and this restriction needs signed by both parties. If you do not want your partner to know anything this is risky and some firms will act if the partner is not informed in case anything happens later and they get sued.
Would my partner need to sign a form in this case and speak with the IP?
So if my house was bought for £250k and a mortgage of £180k. It's valued now at say £350k what would this mean? And is it only in year 5 they ask for equity release?
Lastly, if I got two/three years into an iva and wanted to make a settlement can I do that?
I would add to the excellent advice given my Michael that, if you have any joint debts, your share will be in the IVA, but the other party will still be liable and be pursued for the whole debt.
There is a large element of trust in an IVA, but dire consequences if that trust is abused.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
You have to be honest with those people who are financially linked to you.
The board unfortunately gets a lot of posts where this has not happened.
Also bear in mind that for you this is a 6 year process at least. There will be a lot of things that you cannot do which your partner can plus it places a massive strain on relationships.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
Your partner does not need to speak with the IP but we would usually recommend that they at least consider independent legal advice. The IP will happily speak with them but as the IP is acting for you it is often worth your partner obtaining advice from somewhere else. This is more for their own peace of mind than anything else.
Your partner also needs to know because they may feel that bankrupcty could be a better option and they could deal with your share of the equity now. This is unusual but at least if your partner knows they can make up their own mind as to what to do.
I do agree that keeping things from a partner is a bad idea and if for example something went wrong at a later stage and the IVA failed the fallout could be a lot worse than dealing with the issue now.
I appreciate that this is very stressful but if handled correctly you and your partner should be fine as should the family home. I hope it works out for you.
As an aside, I once had a client who had not told her husband about the debt problems and I advised her to do so. She was terrified but after the kids had gone to bed she poured him a beer and told him the whole story. He burst out crying and said 'I knew something was wrong for a while but I thought you were having an affair. It is only effing money we are talking about and that can be sorted'. It was the best thing she could have done.
Thanks for all the advice here. I finally plucked up the courage to tell my partner and she was completely understandable and helping me get things sorted.
It's such a relief to get this out in the open.
In all honesty I do not think I would of said anything had IT not been for this site and the comments above.
I thank you
