will we have to sell our house and cars

[Superwang]

my wife and I have a mortgage and also pay HP for 2 cars which we do need for our jobs in order to get wages for our £63000 accumulated debts.

My question.....will we have to sell our house and cars to have an IVA in place. the cars are necessary as public transport is rare where we live. thank you

[mikebdomain]

THAT'S superwang! Hi and welcome to the forum, no you will not have to sell your house,

The way it works is this: you propose that in the 4th or final year of the IVA you will obtain a market valuation of the property and redemption statements on the mortgage and any further secured charges against the property. Creditors and Insolvency Practitioners realise that it's next to impossible to get a 90-100% remortgage for a debtor in a IVA, so they will settle on a remortgage of up to 85% of the property's value.

If the charges against the property at revaluation time are therefore less than 85% of its value, you will take the remortgage offer to release the equity into the IVA, which will consequently reduce your payments to your IVA. Creditors do not normally wish to see your increased mortgage payments at higher than 60% of the amount you are paying into the IVA.

If you cannot get a remortgage offer at that time, but equity in the property has risen, then creditors may instead agree that the IVA continues for at most one extra year in lieu of release of equity from the property. They are only likely to agree to this though if the amount of equity release being forgone is similar to what one year's extra IVA payments will amount to.

If the amount of equity you have in the property is more than the amount of your unsecured debts at the outset, you cannot enter an IVA; the creditors would simply expect you to remortgage your house to pay off the unsecured debts in full.

If the property is jointly owned with significant equity but only you are subject to the IVA, creditors will expect to see only your share of the equity – your partner's share remains untouched.


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[Adam Davies]

Hi
It may be possible to keep paying for the cars and once the HP is concluded for the payments that you were paying to be added to the remaining monthly IVA payments that you have.It will all depend on the creditors and the HP companies.May sound a silly question but are you sure that they are actually HP agreements and not personal loans ?
Your house is safe in an IVA,as long as you keep up the secured payments on it,but as Mike states you will have to release some equity in the fourth year.
Can you post more details of your debts and disposible income and your house value and equity.
Regards

Andy Davie
IVA.co.uk Spokesperson

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IVA Helpline: 0800 197 4838
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[iva_squirrel]

Hi superwang,

You don't have to sell your house but equity may have to be released in the final year of the IVA.
You will not necessarily lose your car. If you reasonably need your car to work then this will be allowed as a legitimate monthly expense. Also if your car was worth a lot the Creditors may want you to sell it and downgrade.

Regards,
Michelle P.

[lily]

If the amount of equity is more than your debts, you will not be eligable for an IVA.



lily

[MelanieGiles]

Can I just caveat that the advice you have been given is not necessarily set in tablets of stone with regard to the property.

If the creditors feel that your housing costs are beyond your means - they usually work on a 40% repayment to salary ratio, then they may require you to sell and move into cheaper rented accomodation.

I don't mean to scare you, but didn't want you to think that houses are definately not sold as part of IVA proceedings. There are some very strange votng criteria being operated out there at the moment being operated by creditor representatives, and some very harsh requirements.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
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[Superwang]

many thanks for your helpful replies.........just to help you advise further...
1) we have a joint mortgage of £103000 and the house is currently valued at £103000 so no equity so far. (I Retire in 10 years but mortgage payments of £805 monthly carry on thereafter for a further 9 years)

2) the cars are financed with loans from finance companies and both documents have the words..'hire-purchase agreement regulated by the consumer credit act 1974' for both cars. (£13000 total amount)which end in 3 years time

3) the remainder debts are 'non-secured' bank personal loans and credit cards amounting to £63000

4) would selling up and moving to renting a house help or hinder the IVA process with no equity now, but, equity may be there in 4 years if we don't sell house

5) my gross earnings are £40000 basic + wife's p/time earnings of £6000

6) both jobs are considered secure until retirement, but my health is failing due to debt worries leading to sickness

finally, our creditors are are now leaning towards legal action as they are unhappy with the current debt management arrangement which cannot go on forever.......any help/guidance on if IVA suitable is grateful please

as a footnote the large well known IVA company I have contacted for advice is constantly bothering me by text, phone and email to act soon....it is as if they want commission rather than the client's welfare !!!

[Adam Davies]

Hi
Well your housing costs are not more than 40% of your joint net income so no worries there.
Speak to a couple of other companies before committing
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

Hi again Superwang

I doubt that you could rent a similar property for £805 per month, and as this will represent a ratio of less than 40% of income, I would stick with the property ownership option.

An IVA would appear to be suitable for you, but also consider bankruptcy proceedings given that there is no equity in your property to vest in a Trustee. You may find it difficult to hang on to your HP cars in a bankruptcy, so that is a further consideration for you.

What advice has the large IP company already provided to you with regard to options? Do beware anyone who just tries to sell you an IVA.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp