Long story short guys... I have been in an IVA since April 2009. Stupidly I did it just in my name I think because we thought my wife would still be able to get credit ( not that we ever wanted any more ). My mortgage is £1300 a month and I have around £25000 negative equity. We are desperate to move somewhere cheaper and have been on the market for a year. I am sick of paying so much money mainly just in interest and would rather rent somewhere for half the cost. I had a variation agreed to my IVA to go over another year and cover the negative equity when we sell the property which is fine for me. Problem is the mortgage is in joint names so my wife will still be liable for the negative equity anyway. Do I remain patient and try to sell for as much as I can, pay my IVA over an extra year then my wife take one out for the negative equity and be debt and mortgage free in 5-6 years? Or do I do what I am tempted to do and that is let our house get voluntary repossessed, sold at a knock down price, and then both go down the bankruptcy route? The point is we don't care about losing our house because it is costing us so much money but the market isn't moving so I can cut my losses now and give the keys back. I just want to be debt and mortgage free in the quickest time possible. It pains us so much paying out £1300 a month knowing it is not even eating in to your mortgage. We are grateful for any advice. Do we sit tight potentially for another year trying to sell or do we just call the building society, fail the IVA and go bankrupt?
To be honest if I felt the way you do, I'd go for whatever option gets you both out of debt quickest. Finishing the iva may be best for you as it will be clear from your credit file quicker. If you go BR the clock starts again for the six years. Do think very carefully as property is a long term investment and at some point you will have equity in the property again; at the same time, it will take you a long time to get back on the property ladder with insolvency on both your files. xx
Thanks for that Broke. We could keep paying our mortgage until we have equity again but it is £1300 a month and still has 27 years to run and I can't see it being anything less than 15 years the way the market is until we are in equity! I was contemplating going bankrupt then renting places and saving up a large deposit to get back on the property ladder in a few years time for a much cheaper house with a much shorter mortgage. I am 37 now so I figure go bankrupt, get back on the housing market at 45, take a 20 year mortgage and be payment free at 65! What do you think?
I don't know what to recommend. You sound like your mind is pretty much made up. Before taking any big steps though, it might be an idea for your wife to speak to a couple of debt professionals including your own IP who can also advise on your joint situation. You could continue with the iva while your wife goes BR; you don't have to use the same solution. In BR you will more than likely pay 36 months of contributions...would this be quicker than completing the iva?
Hi Can you advise how much you are paying each month into the IVA, You cannot sell your home the secured lender will not let go of their security until the full balance is repaid and with 25k negative equity sounds like it may be a long time before you can market it.Finally if you did not have the IVA Payment each month is the mortgage affordable
If that is the case that I can't sell my house until I have equity Daniel, how come my IP has sorted out the variation to my IVA to go over an extra year and take in to account around £20000 potential negative equity?
You can sell your home with the IP's permission but obviously there will be a shortfall.
However if there is that much negative equity then BR might be a solution for you as the shortfall would be included. You could just find somewhere to rent now, hand the keys back and then go bankrupt but, as you say, your wife will be liable for any shortfall, her own debts and any joint ones. Is there any reason she can't go BR as well so you could both move on?
Initially though, have a chat with your IP and explore all options.
The friend in my adversity I shall always cherish most. I can better trust those who helped to relieve the gloom of my dark hours than those who are so ready to enjoy with me the sunshine of my prosperity. – Ulysses S. Grant
An iva.co.uk mentor,is someone sharing from their experiences of dealing with debt
I think the fact that your IP has allowed you market your property and made provision for the shortfall is good, however, what Daniel has said is relevant, do you know for definite that your IP has discussed this with your mortgage provider and they are happy for the sale to go ahead and the shortfall to be included in the IVA?
If so, then if I was in your shoes I would carry on the IVA, give the house back and let your wife go BR, it seems a shame to let your IVA fail now when you are 3 years into it.
Hi Cowboys Are you saying that a potential future unknown shortfall of the sale of your home is included in your IVA proposal?? I can understand the variation of the extra year, again you have not mentioned the monthly IVA repayment, can you afford the mortgage without the IVA payment?
Your IVA has been in operation for three years so it would be a shame to fail it now especially since you could get a three year income payments order anyway.
It may be best to return the property to the lender who is bound by the IVA and your wife can then decide her best course of action whether bankruptcy, IVA or a settlement witrh the mortgage company for the shortfall.
I am trying to understand if he had gone bankrupt in April 2009 he would have been discharged in April 2010, he would not have had an income payments order if the mortgage had just been affordable, because I would imagine there would be little if any spare income I do understand there is not enough income coming into the home to meet the mortgage payments and the IVA payments I just wanted to see if the poster thought the IVA payment was more important than his mortgage payment, because if the property is surrendered then his wife is then faced with a similar type of Insolvency procedure
I think one other thing to consider though Daniel is if the OP had gone bankrupt in 2009, it would have been highly unlikely the OR would have allowed him to keep his house with a mortgage of £1300 a month, even if it was in negative equity as the OR could have argued, as the OP himself points out, that he could rent somewhere for half the cost of his mortgage payments, therefore freeing up enough disposable income for an IPO
The way the OP post read to myself- is he is fed up paying an interest only mortgage of £1300 per month - with no sign of the capital repayment being paid - sorry but that is what an interest only mortgage is !! however as Lem states if he rent a house at half the cost and everything else enters the Bankruptcy - then this will free quite of lot of disposible income - mortgage amount /IVA payment
I could answer that question more positive if I knew his gross salary post code and the type of property he has, with some people getting twice that in housing benefits per month the OR would have little argument bearing in mind also the action of the OR would be pushing his partner into bankruptcy and causing an loss to his mortgage company
Daniel, I decided to do an IVA rather than bankruptcy in 2009 because we wanted to stay in our house and the mortgage was affordable then. My income dropped considerably at the end of 2010 and I had to draw up new income and expenditure forms etc and the mortgage became even harder to pay. It is a repayment mortgage but only £300 a month goes to pay off the capital and £1000 of it is interest. I owe around £215000 and it is on the market for offers over £190000 and it is still not selling. If we don't get out of the house now the Mortgage is still going to be £1300 a month for the next ten years when my IVA has finished and we just want to get out of debt as quickly as possible and are not worried about losing our house. I am going to speak to my IP next week and see whether they agree the way forward for us is to hand back our keys and I continue my IVA until 2015. My wife will then be saddled for the negative equity debt and she can either go bankrupt or take out an IVA. At least then when both IVA / Bankruptcies finish, I will have no financial responsibilities at all and we can start again.
There are a few of us with Tenon. I must say I have had no real problems with them, so far. Initially I had a small communication problem ( in that they wouldn't communicate!). However, after a few emails I have now established a link to a very helpful IP there, and the gent dealing with my review was great.
I haven't got a property, so don't have equity to worry about, but, as far as I can make out, the way they deal with equity isn't straightforward.
And, it seems they might also be jumping on the PPI bandwagon ... but we shall have to see how that pans out.
Any opinions I express are merely that .. opinions based on experience. I am no expert but have difficulty in keeping my mouth shut. You have been warned :-)
IVA Completed with funds paid to date 23rd July 2013 .... Completion Certificate 10th January 2014
But why could you not stay in your home and elect bankruptcy,your residence was not an asset to your estate did anyone tell you that you could not do that?
There was an option in April 2009 to go bankrupt and remain in your home I am not saying it was the correct option but it was an option and I am sure Tenon went through this with you,
Had you gone bankrupt your debts would have been discharged in April 2010. At that time you could have purchased your beneficial interest in the property for one pound as your wife was not affected. You would have had an income payments order for income over and above a £90 surplus of between 50% to 70% however as you said when income dropped off later this payment would have dropped off with it.
Edited by - Daniel Griffiths on 23 March 2012 17:18:56
Daniel I know you're very pro-BR but you need to give the OP some credit for knowing his own mind. Dealing in what could have been done in the past with the benefit of hindsight isn't helpful. Cowboys needs to work out the best way forward for the situation he is in...and that isn't necessarily BR!
Hi cowboy, we had a similar situation when trying to sell our house, it was on the market for a year and we kept droping the price untill we finally got a offer, by this point we were in negative equity due to a secured loan we had on the property. When we came to exchange contracts the loan company blocked the sale due to the shortfall. even our solicitor hadn't warned us this could happen dispite us being open and honest about the negative equity. We spent months trying to persuade the loan company to allow us to sell but they refused. The only way we could sell the property was to hand the keys back to the mortgage company which we did and they sold it for £10,000 less than we did. I wouldn't want anyone to go through what we did, it was so stressful. If you haven't already i would recomend speaking with your mortgage company to ensure they will agree the sale. However, everyone i spoke to were astonished by the actions of the loan company so perhaps this is unusual and we were just unlucky.
Another thing i wanted to mention, i was suprised when we handed the keys back, it took a further 6 months for the property to sell. The mortgage company continued to market it through local estate agents and refused to put it through an auction.
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