Advice would be much appreciated

[bluemoon]

Hi all,
My Wife & I owe £29,000 to various creditors & i was wondering if someone could give us some advice ?
We've looked at IVA's & bankruptcy and feel an IVA might be the better option as we need to keep control of our mortgaged home as we have 3 children, rents are also higher than our mortgage payment.
We've tried to remortgage but we only have £15,000 equity & the most we've been offered is a secured loan of £11,000 , which obviously wouldn't even pay half our debts off.
After 4 years in an IVA (if we're accepted) i understand we would have to remortgage to help with the payment of our debts, would we need to raise the £29,000 (minus the payments we've already paid into the IVA) or would it be for a lesser amount ? Also, what happens if we are unable to obtain a remortgage due to our poor credit rating ?
The reason i ask this, is because if we have to still raise most of the debt in 4 years time then doesn't it mean all we've really done is get 4 years grace from our creditors & just added another creditor (IVA company) to our debts ?
Thanks in advance,
Stephen

[MelanieGiles]

Hi bluemoon and welcome to the forum

The first step to identify here is how much do you think you could afford to pay to creditors on an ongoing monthly basis? Depending upon this amount, coupled with the need to raise equity at the end of the arrangement, will determine whether an IVA is a sensible option for you to consider.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[bluemoon]

Thanks for your reply, we could only afford about £300 a month ( can't see them being overly happy with that amount).
We were fine until i lost my job 18 months ago, i've since found it difficult to find employment at a similar salary level.
The problem with having to remortgage after 4 years is that effectively we would be paying back this debt for the next 20 years & not just the 5 years of an IVA.
I suppose it's our only option though, we arranged lower payments with the help of the CAB last year but the banks have sold our debts to these highly aggressive recovery companies & they want the money NOW !!!
I don't mind being skint for the next 5 years as it was our choice to take out the credit in the first place but to be skint for the next 20 years is another matter entirely.
I know it may be out of our hands but my only concern is that we get to keep our house, we rented a few years ago & found it hard to find long term lets & moving every 6 to 12 months was horrendous for our children.
I suppose i allowed myself to be taken in by tv adverts that promised the world regarding IVA's but i'm glad i found this site as it gives a more balanced view and that there are CON'S as well as Pro's

[Adam Davies]

Hi Bluemoon
If £300 is your disposible income each month then if an IVA was accepted by your creditors you will be paying in 18k less IP fees of about 6k.So you creditors will get about 12k which equates to a dividend of just over 40p in the £1.This is a reasonable return.
In year four you will be required to remortgage and this is usually a max of 85% of your house value.However plans are in the pipeline to make sure that the new mortgage is affordable and it could be that the remortgage must cost you no more than 60% of your disposible income[£180 per month].
You need to speak with several companies before deciding what you should do.
I have been through an IVA and it is not easy,infact it,s extremely hard so you are right to be sceptical of the tv adverts.
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

[bluemoon]

Thanks for the replies. Just one more question.
What happens if in year 4 we couldn't obtain a remortgage due to our credit rating , would we have to sell the house to raise the funds ?
If we've paid 12k to our creditors (out of an initial debt of 29k)would we then have to find the 17k remaining ? If we would it seem's that all we've really done is add the IVA companies fee's to our debts.

[MelanieGiles]

If you could demonstrate that you were unable to effect a remortgage, then I do not believe that creditors would require you to sell your house - but not being able to get a remortgage in the current marketplace is relatively unlikely.

I am afraid that if you wish to avail of the IVA as a solution, insolvency practioners will be required to be paid for the services they provide to you. Therefore there will be fees involved, with are usually funded by the creditors by way of accepting a reduced overall repayment.

You should consider all options available to you, including bankruptcy proceedings and an ongoing Debt Management Programme before arriving at a final decision, but as you are aware there is no really easy option when it comes to dealing with debts you cannot afford to repay under contractual terms.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[hara]

You have to do a detailed Income and expenditure first.Then shop around for a good IP. Sit down and have chat.

IVA may be the right thing even if you return 100p in the pound.

I notice that you are finding it difficult to find a job of similar salary level.Though such is the case, I presume you are employed in ome capacity.

For IVA to be propsed one should be able to pay a minimum of 25p in the pound.The amount one can pay in pounds is not the factor.

Hara

[bluemoon]

Thanks all for your help, it's a daunting prospect but hopefully we'll come through it in the end.
Glad i found this site as some of those tv/website adverts can really give a false impression to people who are vulnerable because of debt.
The whole 'write off up to 75% of your debts' line they give isn't really true if you own your own home & have to raise the equity in year 4.
Thanks again for your help

[bluemoon]

Sent all our documents off a few days ago(took us an age to find it all), had a letter this morning with less than half of the documents in it....post office had some how opened the envelope & have lost nearly everything, all our wage slips, mortgage details & bank details are missing.[:(]
Apart from the fact it's going to take ages to replace the documents it's also a bit worrying that someone somewhere might have a lot of our personal details.
Phoned the company for another form & will try & get copies of everything lost. Could have done without this to be honest