www.iva.co.uk

Good Morning,

My brother is curently looking into an IVA.

What i want to know is how it will effect me, we have a joint mortgage on our jointly owned flat and also have a joint bak account.

I am under the impression that this is a lighter version of a voluntary bankruptcy and i need to know if it will effect me, my credit rating and what about the mortgage on the flat?

Simon

Hi Simon and welcome to the forum

So long as you continue to meet the mortgage payments, and your joint account does not go into overdraft, your brother's IVA will have no effect on you. If the current account is with a creditor to whom your brother is indebted, he will need to open up another bank account, to avoid your monies beng offset against debts with the same company.

Your brother's IVA is unlikely to have any effect on your own credit rating, but if there is equity in your jointly owned property you will need to give permission to your brother attempting to raise some of that for the benefit of creditors during the final year of the IVA. This is usually based upon a maximium borrowing of 85% loan to value, and just affects your brother's share.

If he has already appointed an IP to represent him, it might be an idea to have a separate chat with them to reassure youreself of any queries.

Morning Simon. It is good that your brother has kept you informed and you are right to check out how you are affected. First of all, if there is a joint bank account have his name removed from it unless he has no debts to that bank and the account is used to pay household bills. If it is overdrawn and subsequently included in his IVA you will be liable for the overdraft[ less any payments received from his IVA].

The property will have to be refinanced in year four or five and in the interim there will be a restriction placed upon it. This has potentially serious ramifications for you and the mortgage depending on the current level of equity and what it will be at this time. It may be better for you if your brother petitioned for bankruptcy and you bought his interest now.

Finally, your credit file may be affected as you are related parties but if you do suffer as a result of adverse information against you, obtain your credit file and have it corrected.