To secured loans have to adhere to IVA statutory process if a shortfall arises?

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greg248

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Post by greg248 » Thu Apr 04, 2019 1:04 pm
Do secured lenders who do not participate in the IVA process, although offered the opportunity to do so, have to adhere to the IVA statutory process and treat any shortfall arising on the sale of a property as unsecured debt therefore forming part of the IVA and furthermore advise credit agencies that the debt is settled?

Lisa Thomas

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Post by Lisa Thomas » Thu Apr 04, 2019 2:36 pm
Secured creditors don't take part in IVAs as they rely on their security. IVAs are for unsecured debts only.

If the property has been sold then they are no longer secured creditors.

There is a technical question as to the timing of the shortfall as to whether the debt will fall into the IVA.

It normally does but I have seen case in the past where the debtor continue to pay the mortgage and the subsequent loss was considered a post Bankruptcy debt and not a contingent one that could be included in the BKY. I suspect the issue could be similar in the IVA.

When was the property sold? When did the IVA start? Were new T&Cs issued post IVA in relation to the secured debt? Was the debt listed as a contingent creditor in the IVA? Was the shortfall known at the time of the IVA?
I'm a licensed IP with 16+ yrs at Neville & Co covering the South West area. I have a YouTube channel with advisory videos on here: https://www.youtube.com/channel/UCMPTTu ... Z5k9ZcC2MA http://www.nevilleco.co.uk 01752 786800 Lisa@nevilleco.co.uk

Foggy

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Post by Foggy » Thu Apr 04, 2019 3:12 pm
The debt can be and often is rolled into an IVA once it becomes unsecured. However this is dependent on a number of things Lisa has touched upon, especially if it was considered a contingency debt at the start (so the creditors were already aware that the level of overall debt could increase). If not considered at the outset the creditors would need to be asked if they accept the addition and the IVA itself could be derailed.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
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