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Hello me again just wondered if anyone could give me advice on this situation.

I moved house in Oct 05 and got a Let-to-Buy mortgage for 70k and left my previous property tenanted rented out @£900pcm which covered the mortgage payments.

Previous property

1st mortgage 60k = £300pcm
2nd charge 60k = £600pcm

New property
Mortgage 70k = £400pcm

In April 2006 my tenant left and I realised I was already in financial trouble with about 50k of Credit card and personal loan debts costing about 2k per month and as I could not afford an extra £900pcm payment on top of this I surrendered the keys to the old property to the 1st mortgage lender.

Two months later in July 2006 I took out an IVA an put the 50k unsecured debts into this for a £400pcm payment. At the time my IP said they could not help with regards the previous property due to it being a secured debt, the property had no equity and keys had been surrendered.

Now a year later I am 10 months into my IVA which is going well and I have just received a letter from the 1st mortgage lender of my previous property saying it sold at Auction for 95k and the settlement figure with sale costs was 65k and my remaining mortgage balance with them was -£30k

You can guess what’s coming,
I am guessing they will now pay the 30k to the second charge lender whom I guess I now owe 60k + £600x12 = 67.2k which will leave me owing 37.2k and the second charge lender will then start coming after me for this amount.

My question is

1) When I am contacted by the second charge lender this debt will have changed from a secured debt to an unsecured debt can I propose for it to be put into my IVA.

2) As it will represent a 42% vote in my new overall debt figure of 87.2k if they vote no would this result in my 10 month old IVA failing and me being back to square one.

3) If they voted yes then my £400 per month payment representing currently £0.29 pence per pound will drop to £0.17 pence per pound, would this be acceptable.

I wish to avoid BR at all costs as I am planning to switch to self employment in 3 months which would not be allowed if I were BR.

Hi Cawkers

As one of the forum experts I will try and answer your queries in the order they have been raised.

1 The only way that this debt could be included in your existing IVA is with the agreement of the secured chargeholder and the creditors who are already bound by the IVA. As this is a significant debt, you will need to work out the impact on all creditors in conjunction with your IP.

2 The secured charge holder has either a yes or no vote. You will then need to get a 75% majority from the other creditors for its inclusion - so the 42% issue is irrelevant.

3 This answers my point raised at 1 - and can only be answered by your creditors. I suspect that they may not be inclined to accept, but see what your IP can do for you, as the existence of this new debt could well scupper the whole IVA for them as well if the chargeholder petitions for your bankruptcy. Perhaps they might therefore take a commerical decision.

Hope this helps!

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

Thanks for the advice Melanie

Not the best news but I will have to deal with it shortly. A bit strange to me now loking back why my IP recommended an IVA when maybe a BR at the time would have been better.