Help please----Can't see a way out

[ianmillington]

A number of options for you here. All advice here is sound.

I think it will help to summarise:

1. I can't see going interest only simply to create sufficient surplus to enable you to meet IVA payments to be sensible.
2. A DMP probably won't work as I can't see you getting all your creditors to freeze interest for 9 years.
3. Bankruptcy could be an option - Is there between £7k and £17k gross equity in the property? I think it will be important to know which it is. At the lower figure you will probably be left alone, at the higher figure the house may well go. What do you do for a living? Also, as I assume you are over 50, do you have any personal pension schemes where a lump sum has already become capable of realisation?
4. IVA - You might get away with paying the contributions you can currently afford. However, if interest rates go up (not necessarily by a great amount) it will have a major impact on your ability to fund the IVA. If your IVA were to fail as a result you would be back at square one and probably worse off as a result. Clearly if you sold the property as part of your IVA then the IVA would be more viable. If you were to have to get rid of it however you might ask yourself what is then the point of an IVA, which will entirely depand upon what you do for a living.

Definitely a dilemma. There is no easy answer, particularly if your overriding priority is to keep the house.

Ian

[MelanieGiles]

I thought the poster said they had negative equity? But can see that there are borrowings of £113k against a £120/130 valuation. I suggest getting redemption statements for those secured loans, as you might find that you actually owe a lot more with redemption penalties and other settlement charges.

[ianmillington]

Agreed that this makes sense.

[stickman]

Hi All,
Re posts--- Early payment & redemption charges including std discharge fee = 1250.
re equity if it was the higher figure 17k why do you feel that I would lose the house - mort in joint names.
Also Mel do you deal with BR?
Thanks

[ianmillington]

If there is equity in the property of £17k, it is likely that your spouse/partner would have to buy out your share. If that is not possible, then the Trustee has the power to sell it. If, however, there is negative equity then your share could be bought out for a nominal sum. If that's the case the big question becomes whether bankruptcy will affect your earning potential.

Ian

[MelanieGiles]

Yes I do deal with bankruptcy work stickman, but only after the Official Reciever has been appointed. We give bankruptcy advice, as any other insolvency firm would, and can help you with questions and queries, but I can also recommend Paul Johns of Reviva who does operate a tailored bankruptcy assistance service who might be worth a call.

[stickman]

Thanks Mel will contact Paul asap, also how do you go about getting a FREE written house valuation or do you have to pay if you require it in writing.
Many Thanks to you and everyone who has taken the time to reply and give me great advice.
Keep up the good work.

[stickman]

Hi All,
Re Ian and IVA-- could get away with paying contributions that I can currently afford but if interest rates rise albeit not by much would have impact on ability to pay IVA. Appreciate everything said but surely that same criteria applies to everyone on an IVA how do they manage?

Thanks

[ianmillington]

Yes it does. However, when the mortgage payments are high a relatively small change in rates has a major impact on the amount paid into the mortgage and, as a side effect, the ability to make payments into an IVA. It won't necessarily bring the IVA down but, in your case, your mortgage and secured loan payments are 5 times the IVA contribution you would make. A relatively small hike in interest could wipe out your ability to contribute altogether. Were the mortgage smaller, and the contribution bigger, I would hope that the effect would not be so profound and that it would be within tolerances eg covered by overtime or (under current conditions) would not require more than a 15% reduction on contributions.

As a result, I think you are rather more vulnerable than most to interest rate rises because of the level of secured debt and the fact that a (significant?) proportion relates to the secured loan which will itself be subject to a higher rate from the start. Whilst that doesn't rule out an IVA entirely, it makes it rather more difficult.

Ian

[stickman]

Hi Ian,
Thanks for great advice again, really appreciated.
Originally stated DMP at 230 but could increase to 300-350 also secured loan is at same interest rate as mortgage(lifetime tracker)base rate currently at 6.1%.
Also was thinking if debt was split between us both then my debt = 35k partners 14k she could go on DMP and myself on IVA. Just a thought don't know if it would work.
Thanks

[ianmillington]

Must dash off now - will come back tomorrow if OK

Ian

[MelanieGiles]

I don't think that an IVA would be feasible for you if your partner was outside as she would need a proportion of the £300 to fund the DMP and this would probably leave you with an affordability problem.

Ian makes extremely good points about your secured borrowings, and creditors are bound to have issues if your lending is so high to the ratio of your disposable income. I would be nervous about recommending you for an IVA to be frank.

[stickman]

how do you go about getting a FREE written house valuation or do you have to pay if you require it in writing.

[Reviva UK]

Hi Stickman

Most efficient way is to ask 2 estate agents to give you a written valuation if you put the house on the market and wanted o sell it in 3 months.

They will give you 2 figures. What you should put it on the market for and what you are likely to achieve at the sale.

hope it helps

[stickman]

thanks Paul, but are they free or will they charge me?