I am having to sell my house and move to rented accommodation. We have a secured loan on the property. We are about to start a debt management plan but have been advised by the debt company that when we sell we can go on to an IVA. Is it possible to sell with a secured loan on the property? We wont be able to pay back the amount in full from the equity
Why do you have to sell your house before being put forward for an IVA? Provided you can manage to make the payments on the mortgage, loan and IVA payments then you should be able to keep it.
However, you can sell a house with a secured loan on it. The mortgage company will get their money back first, followed by the secured loan company. If there is a shortfall it will be included in the IVA.
Which company are you using? You don't have to stay with the same company to do an IVA.
Give one or two companies a ring via www.iva.com - you will get free and impartial advice from them.
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Thank you. I've really been worrying over that point in particular.
We need to sell and go to rented to reduce our monthly outgoings, I'm due to go on maternity leave at the end of March/beginning of April and we have worked this out to be the best option.
The company that are dealing with our DMP is Churchwood.
I would seek clarification from a professional with regards to selling a property with a second charge registered. If the sale of your property covers the outstanding mortgage, and the second charge then sale of the property should be straight forward.
If however, you fail to cover the amount remaining from the secured loan, I do think the finance company will block the sale of the property, and revert to legal action to cover their costs.
A secured loan shortfall does not become an unsecured debt in an IVA - unlike in BR.
No doubt one of the experts will be along to clarify.
Best of luck.
kallis3 wrote:
Why do you have to sell your house before being put forward for an IVA? Provided you can manage to make the payments on the mortgage, loan and IVA payments then you should be able to keep it.
However, you can sell a house with a secured loan on it. The mortgage company will get their money back first, followed by the secured loan company. If there is a shortfall it will be included in the IVA.
Which company are you using? You don't have to stay with the same company to do an IVA.
Give one or two companies a ring via www.iva.com - you will get free and impartial advice from them.
Hi Nicdean.
You should advise the secured loan company of the sale and get their permission to release the charge even though they will not be paid in full. Any shortfall becomes unsecured and would be a debt in any subsequent DMP,IVA or bankruptcy. If the loan company refuses which is highly unlikely, you could return the keys to the mortgage company who would then sell it leaving the loan company with an even bigger loss.
You should seek advice from an IP firm because you could enter an IVA before the sale and an estimate used for the shortfall. Alternatively, if you are in a position to maintain the payments to the mortgage and secured loan you may not have to sell the house. Bankruptcy would also be an option and from what you say it is unlikely that you would lose the property unless you could not afford the secured payments. This advice is free and may help you reach a better conclusion to your problems.
I was in this postion and yes, the secured loan company blocked the sale, we had a cash buyer lined up too, but they refused to release their charge on the house
we had no option but to let the house be repossessed and then went bankrupt, thus making the shortfall larger by another £40,000 by the time the house sold
Last edited by jane.l on Thu Oct 22, 2009 10:07 am, edited 1 time in total.
Seems ludicrous Jane for them to have done that. I don't know when this happened but I have seen the loan companies being a lot more commercial lately probably because of cases like yours.
The beneficiary in your case was probably the cash buyer who could easily have bought the property later on at a huge discount when the mortgage company sold it at auction.
I thought he might buy it too but he didn't, I was being nosey and bought a copy of the Land Registry and I know the name of the person who bought the house and how much they paid for it. It is now being rented out and they got a bargain. The cash buyer we had was paying enough to pay off all secured part of the mortgage (it was a Together morgage with NR) and about £16,000 off the secured loan, we owed £36,000 on that so we wanted to put the £20,000 left over into an IVA and we also had other debts of a credit card and the unsecured portion of the mortgage and another unsecured loan with NR. Knowing what I know now, I am glad we chose bankruptcy as I don't think an IVA would have been accepted and I was not waiting 18 months until the house sold so we could find out the exact shortfall amount. On my bankruptcy SOA I listed the shortfall as about £30,000 with the secured loan, mortgage arrears, interest,etc, but the real figure is nearly £70,000 I have worked out, going off the selling price of the house
I just think it was ridiculous that it came to that when we were trying to do our best to pay back what we could and make the best of the situation, I got so ill and fed up with all the stress, we just decided to throw the towel in and go bankrupt
Last edited by jane.l on Thu Oct 22, 2009 10:30 am, edited 1 time in total.
Just to clarify that secured shortfalls do become unsecured claims regardless of the type of insolvency solution you choose to enter into. It sounds like an IVA would be a more suitable solution for the original poster, as a DMP could take must longer to complete.
