www.iva.co.uk

My husband and I have a number of debts (amounting to approximately £31,400 excluding our mortgage, our student loans and my husband's course fees of approx £6,000 which we don't need to start paying until 2009 but including approximately £2,500 worth of catalogue goods which are on buy now pay later schemes). Our debts are spread across 11 different lenders and we also have 8 storecards/catalogues/credit cards with nil balances.

Our monthly incomings are approximately £2135.00, our monthly outgoings (excluding debt but including our mortgage/rent) are approximately £1675.00 and our monthly liabilities for our debts (excluding our mortgage) are approx £1050.00

My parents currently pay approximately 50% of the monthly payments in respect of our debts but my stepfather became unemployed towards the end of last year and it's looking more and more likely that they will not be able to make their share of the payments as he is struggling to find a new job. If it comes to the point where they can’t make their share of the payments my husband and I cannot afford to pay more than we do already.

We are pre-empting the possibility that we will need to apply for IVA (if my step dad doesn’t find a job soon) and have a few questions we’d like answering so if the time comes we can make an informed decision.

1. How would it affect our option to apply for credit in the future?

2. Our home is jointly owned with a local Housing Association. We have a £59950.00 mortgage on 50% of the property and rent the other half. Would our property still be protected if we had to enter into an IVA?

3. How would it affect student loans, if at all?

4. We had planned to remortgage by July 2009 as our fixed term period on our current mortgage is due to end then. Would we be able to remortgage if we had entered into an IVA by that time?

5. Are mortgages included in the debts under an IVA?

6. We have a secured loan with Welcome Finance would that be included in the IVA?

7. We understand that some people remortgage and then enter an IVA. We don’t believe this is an option for us. The property was worth £120000 when we purchased it in October 2006 and we were told sometime last year that the property was worth approx £140000.00 but housing prices are currently going down so we believe there is little or no equity available on our share of the property as we have not paid off much of our mortgage and have the secured Welcome Finance Loan. Does this affect us entering into an IVA?

8. Presumably accounts/credit cards will all be closed. How will that effect option of borrowing with those “lenders” again?

9. Would the IVA include items on buy now pay later such as my husband’s deferred course fees and the goods on my catalogues that are on buy now pay later schemes?

My apologies for this long list of queries but I didn’t want to keep sending individual questions.

Thanking you in anticipation of your assistance.

Regards

Hi Cheryl and welcome to the forum

Dealing with your queries in turn

1 The IVA will remain on your credit file for six years from the date of your creditors meeting. Credit will not be allowed whilst you are in the IVA, unless this is with the express permission of your supervisor, and you will gradually find that your rating is restored once the IVA has been finalised.

2 With a housing association property, you will be unlikely to be able to raise further equity at the end of the arrangement, so may have to offer some other form of compromise such as an additional year's payments.

3 Student loans can be, and should be, included into the IVA - but if they represent more than 25% of the aggregate debt be aware that they have a very high acceptance criteria - often expecting at least 90p in the £ to be returned.

4 You will likely be allowed to remortgage at that time, but try and find out what the likely cost of a new mortgage is going to be, as this may affect your ability to fund your ongoing payments from that time onwards. This is particularly key if you are currently on a low or discounted interest rate.

5 No. Secured creditors are not included in IVAs, and you obvioulsy have to be able to afford to continue those payments as well as paying your IVA contributions.

6 See my comments at (5) above.

7 This does not cause any problems.

8 That will be ultimately a decision for those individual lenders into the future.

9 Yes - and you will need to give your IP a list of these items.

Hope this helps for now - and don't be afraid to ask any further questions and we will try to help.

Thank you very much for your help Melanie, it is very much appreciated.

Sorry, but can an IVA be applied for in anticipation of missing payments or do we have to be in arrears with some or all our debts?

Hi
You can apply for an IVA now.Many people are completely upto date with their payments going into an IVA but are using credit to pay credit.
Be sure to speak with several IVA providers before deciding.
Regards

Just another quick question, as mentioned above we several creditcards/catoluges/store cards with nil balances. Would these lenders need to be informed of the IVA?

A nil balance is not a debt, but be aware that you will not be allowed to use these credit facilities, if you do then you will be breaking the terms and conditions of any IVA proposal. On a separate note, I would estimate that upwards of 70% of clients that I speak to have never missed payments on their debts. You are to be commended on realising the gravity of your situation and taking action on it before it gets any worse.

Good luck.

Hi
Life is tough in an IVA and if you have a credit,store card available you almost certainly will use it.Make sure that you cancel,cut up these facilities before you commence your IVA.
Regards