www.iva.co.uk

Hi Melanie
We have been hit very hard with the mortgage lenders changes since April. We have 32 properties which we cannot sell to even cover the mortgages at auction and owe £170,000 to credit cards and overdraft facilities due to not being able to equity release at the end of our last development projects. My husband has found other employment and is on a good salary so we can make regular payments of around £500 at the moment, and hopefully more as his salary increases. We are considering an iva as it will take up to 30 years to pay back these creditors, if we cannot sell any property. Our concern is an we do an IVA when we own these properties, without being forced to sell them at a loss? (we are happy to sell any to repay debts if this is possible in the future) They currently cover themselves well,and depending on maintenaince costs may provide variable income also.
I have written to all the creditors, listing all debts owed to creditors and offering to pay a fair proportion of our excess income to each, each month and am awaiting their replies.

You have a relatively complex case, with 32 properties all in negative equity. The shortfalls to the mortgagees will need to be taken into consideration in any offer you choose to make to creditors, but it is not impossible to deal with as an IVA.

I would suggest that you arrange a face to face meeting with an IP firm local to you so that you can discuss all of these issues at length. £500 per month against the level of debt you are carryng will produce a very low dividend, but as you don't say whether the £500 would include your rental profit I cannot say whether you have a viable case or not.

Seek advice at an early juncture to get some form of strategy in place to face the debt head on.

32 properties?? That's excessive debt based leveraging or gearing and in boom times you would be laughing.And I am sure you would have gone to own 64 if the house price crash didn't occur.

Like most businesses you have assets and liabilities but no cash flow to roll over your debts,or to refinance - this had been the source of difficulty for every business that's gone under....,you really need a Entrepreneur to invest and bail you out/take properties off you hand in a fire sale of assets.You have assets that creditors can take and sell to recover as much money as possible. I think your creditors would be inclined to call in administration and liquidation. Complex case indeed as M says!

What is required is a bit of financial engineering with your creditors, A standstill agreement on re-payment and possible roll up of interest until the property market becomes alive again. I remember sorting similar problems out in the 1973 and 1989 property crash so it is not unchartered waters.You must seek independent advice from a firm of Insolvency Practitioners experienced in these issues. Good luck and let us know how you get on.

Nice points David,I am sadden to see these types of Insolvency cases as it goes beyond over doing the CC and the shopaholic syndrome.In 70s personal assets; unless one was a millionaire never reached those astonomical asset bubble levels. Now we have had property speculation balloned on 'red bull'. Property prices reached an apex of 160% increase in the last 13 years,those ratios never occurred throughout the the 70s in real money terms.