advised may have to sell HELP

[lisabham]

i have sent all the details back to DFD. Had a booked call today to discuss the details. They have advised we do a DMP as we have a mort of 103k and a secured loan of 29k on the house. the 2 payments are 1300 per mth. DFD are advising we will be asked to sell house as you can rent for 600 per mth.Can you please advise?

[MelanieGiles]

Hi liabham and welcome to the forum

How much are your combined earnings, including any child benefit or tax credits? Some creditors have a policy of rejecting IVAs where the mortgage and secured loan payments represent more than 40% of income. Is this the case in your case, and how much would it cost you to rent a property in your local area? Also how much dispoable income are you able to offer to creditors and how much are your debts?

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[lisabham]

Melanie, combined income is 3240k, debts are 60k. could rent for 600 per month. was told by dfd payments of around 850 per mth.

[MelanieGiles]

So your mortgage payments are just about OK on the percentage basis, but clearly your current advisor is encouraging you to reduce costs in order to be able to fund an IVA - hence the suggestion to sell.

Do you have any equity in your property, and does the £850 assume that you will sell and rent for £600 per month?

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[lisabham]

no there is no equity valued at 119k mort+ loan secured =140k the 850 per month was with keeping the house?

[MelanieGiles]

The personally I would be prepared to present the proposal on the basis that you retain the house and pay contributions of £850 per month. This seems like a good proposal to me, and will produce an excellent return to creditors.

I cannot see the logic of asking you to sell, but obviously the adviser you have chosen to represent you has more details relating to your financial affairs than is possible to reproduce on the forum.

My feelings are that if you move into rented accomodation, you will then be paying £1,550 per month to a DMP, which will enable you to repay your debts over a quicker period, but only if creditors agree not to charge any interest. This is at the expense of your home, so do consider matters carefully before proceeding.

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[lisabham]

we have an endowment policy against house surrender value 25k my husaband and i are 50 and 45 would never be able to buy a house again if we sell. really want to keep house. do you thin dmp best way forward. DFD are sending our details to payplan?

[MelanieGiles]

OK - so this puts a different slant on matters. The endowment policy would have to be declared under IVA proceedings, and in my book it should also be disclosed within the DMP so that your creditors are able to consider the merits of your offer.

Are you paying your mortgage on a repayment or interest only basis? And would you consider surrendering the policy to reduce your debts? This would bring additional savings to your budget, as you would no longer require to pay the endowment premiums, but would need to find life cover. This is an dangerous area, and you ought to seek proper advice from a properly qualified Independent Financial Advisor with regard to your mortgage and investments.

A surrender of the policy would leave you with debts of £36,000, which if you paid £850 per month into a DMP, and the creditors charged no more interest you could clear in 42 months. Once your debts are clear, you then ought to continue to pay this amount off your mortgage to counter the loss of the endowment policy.

Just a thought - and please take proper professional advice on this important area before proceeding. A DMP is probably the best way forward for you, as I do not believe creditors would accept an IVA.

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[MelanieGiles]

OK - so this puts a different slant on matters. The endowment policy would have to be declared under IVA proceedings, and in my book it should also be disclosed within the DMP so that your creditors are able to consider the merits of your offer.

Are you paying your mortgage on a repayment or interest only basis? And would you consider surrendering the policy to reduce your debts? This would bring additional savings to your budget, as you would no longer require to pay the endowment premiums, but would need to find life cover. This is an dangerous area, and you ought to seek proper advice from a properly qualified Independent Financial Advisor with regard to your mortgage and investments.

A surrender of the policy would leave you with debts of £36,000, which if you paid £850 per month into a DMP, and the creditors charged no more interest you could clear in 42 months. Once your debts are clear, you then ought to continue to pay this amount off your mortgage to counter the loss of the endowment policy.

Just a thought - and please take proper professional advice on this important area before proceeding. A DMP is probably the best way forward for you, as I do not believe creditors would accept an IVA.

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[lisabham]

we have both the main mortgage is repayment and the endowment interest only. I have been advised we could switch to total repayment but not sure how much it would cost.You say creditors may not stop interest is that normal? Just do not know what to do was so set to do an iva now all confused again.

[MelanieGiles]

In my limited experience of Debt Management Programmes, I have to say that I have seen a mixed bag response with regard to interest freezing.

The average DMP is said to run no longer than 2 years, with less than 20% successfully running their course. This is due to a number of factors, but probably the major one is that there is no strict supervision of the arrangement, and no bar on obtaining further credit. If you are disciplined in your approach to repayment, however, there is no reason why you could not have a very successful outcome.

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

Appoint me as your IP:
http://www.melaniegiles.com/ivaEnquiry.asp

[lisabham]

thanks melanie will let you know how we get on once spoken to payplan.[xx(]

[mikebdomain]

Hi lisabham

A simple phone call to your current mortgage provider or any mortgage broker and they will be able to tell you about the addtional cost to switch from the interest only portion of your mortgage to repayment.

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