Can we sell our house & payoff some debt before getting into IVA or bankruptcy?

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robert405
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by robert405 » Tue Feb 06, 2018 4:15 am
We are facing a difficult financial decision, my wife, who is the main earner, is going to lose her job and isn’t going to be working anytime soon. We both have considerable debt in terms of loans, credit cards and store cards through stupid decisions of always thinking we'll pay it back. How wrong we were. My wife is thinking of going for bankruptcy, I am thinking of going for an Iva, I have a fairly decent wage and with some support from family we should get through. Our house is mortgaged, we have about 23000 equity. Here’s my question.

Can we remortgage to release the equity, perhaps pay off some of my wife’s debt using her share- she has a car loan and this whilst this payment would put it into positive equity and we would have to lose it in the bankruptcy we might be able to replace it for a much cheaper model (I have read this is allowed in bankruptcy but would lose any surplus for the difference in value). Then could I use my share of the equity to buy her part to essentially keep our house safe at least until the bankruptcy ends where there would be little equity in it anyway? Or would this go against us for either or both the bankruptcy and IVA? Understandably we want to do everything right!

I hope this makes sense, it’s mind boggling and the unknown is scary. I only ask because we would have no where to live if we lose our house.
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Foggy
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by Foggy » Tue Feb 06, 2018 7:52 am
If she goes for BR the sale of the house could still be reversed by the official receiver, as it wouod most likely be viewed as a device to remove the asset from the creditors -- this could lead to further penalties and a longer period of making payments. You could, possibly and depending on the full picture, consider both going for interlocking IVA's (essentially an IVA each, but treated as one for payment purposes). This would mean your income being the main source of funds to the IVA after allowances for essential living expenses.

I would suggest you speak to a few insolvency firms direct for more specific advice and would recomment the smaller to medium firms, rather than the "IVA Factories", so that you get more considered advice.
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Lisa Thomas
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by Lisa Thomas » Tue Feb 06, 2018 9:26 am
You need to take proper advice from an IP.

The property is at risk of being repossessed and sold in Bankruptcy.

You could consider selling it and using the proceeds to offer a ump sum IVA.

Either way unless you have other assets/income to offer in an IVA it seems as if you may well have to lose the house.

Perhaps with a bit of time your wife can find new income and offer a contributions based IVA, keeping the property.

Lots of things to think about.
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robert405
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by robert405 » Wed Feb 07, 2018 9:41 pm
Foggy wrote:
If she goes for BR the sale of the house could still be reversed by the official receiver, as it wouod most likely be viewed as a device to remove the asset from the creditors -- this could lead to further penalties and a longer period of making payments. You could, possibly and depending on the full picture, consider both going for interlocking IVA's (essentially an IVA each, but treated as one for payment purposes). This would mean your income being the main source of funds to the IVA after allowances for essential living expenses.

I would suggest you speak to a few insolvency firms direct for more specific advice and would recomment the smaller to medium firms, rather than the "IVA Factories", so that you get more considered advice.


Thank you very much, I think I’ll steer clear of that idea!
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robert405
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by robert405 » Wed Feb 07, 2018 9:42 pm
Lisa Thomas wrote:
You need to take proper advice from an IP.

The property is at risk of being repossessed and sold in Bankruptcy.

You could consider selling it and using the proceeds to offer a ump sum IVA.

Either way unless you have other assets/income to offer in an IVA it seems as if you may well have to lose the house.

Perhaps with a bit of time your wife can find new income and offer a contributions based IVA, keeping the property.

Lots of things to think about.


Thank you for your reply, how does a contributions based IVA work?
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Lisa Thomas
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by Lisa Thomas » Thu Feb 08, 2018 10:09 am
The IVA proposals will compare the estimated outcome in BKY with an IVA. They are high costs in a BKY often making an IVA just as attractive, or more attractive.

You would need to show that the contributions you can afford to pay from your income would result in the same or better dividend payment to creditors to convince them to vote in favour of the IVA.

The amount will depend on what you can afford (remember you will no longer be paying your creditors so this will free up some funds) and the timescales will depend on which terms an IP uses and what creditors will approve.

Protocol terms are standard 5 year IVAs plus a 1 year extension in relation to the equity in the house. Non Protocol IVAs can be more flexible so could match the 3 years would you pay contributions in BKY.
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Shaun Vickery
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by Shaun Vickery » Thu Feb 08, 2018 11:23 am
I would certainly recommend talking to an Insolvency Expert - possibly one of the experts or sponsors of this forum? A re-mortgage may not be a viable option if you have limited equity and, in particular, if you have already started missing payments on credit.
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kallis3
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by kallis3 » Thu Feb 08, 2018 11:55 am
Agree that you need to speak to speak to an IP company as soon as possible.
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