Moving house when in an IVA IVA Issue
Summary: This article examines the implications for someone of moving house whilst in an IVA (Individual Voluntary Arrangement).
When entering an IVA, debtors have to disclose information regarding any significant assets. For homeowners this involves details about the value of the property (or properties) and mortgage statements. The difference between value and mortgage owing i.e. the equity, is relevant in establishing whether an IVA is going to be acceptable to creditors, and once accepted, any releasable equity may be made available to the IVA.
Selling a property
As well as protecting the debtor, an Insolvency Practitioner (IP) has a duty to protect creditors' interests. Therefore if someone in an IVA wanted to sell and upsize in terms of property, some serious questions will need to be asked. In general, selling a property can only be done with the supervisor's permission. If allowed, profit will need to be made available to the IVA, and the IP will want assurances that the move is reasonable and the creditor's interests have not been compromised. Of course there are occasions where such a move has to be contemplated e.g. relocation of job, expanding family, but advice and instruction will need to be sought before action is taken.
In some ways this is a simpler issue, but still needs the green light from the IP. This is because the change of rent payable will be a factor in assessing the IVA repayment level, and a move can impact council tax, utility bills, travel expenses etc. In fact a move will result in a new expenses budget being drawn up. As with selling there may be some very good reasons for moving, but again, any change that has financial implications does need to be brought to the attention of the IP/IVA supervisor.
Any projected move that is likely to benefit the creditors i.e. free up more money for the IVA, is unlikely to be met with any resistance. However removal costs, deposits, furnishing costs etc will be relevant. If it can be demonstrated that a move is reasonable and won't affect the repayment level of the IVA, again should be fine. But when a move affects the debtor's ability to pay the agreed IVA payment level, then it may have implications for the continuation of the IVA.