Is an IVA an option for me?

[darren123]

Hi,

I have got myself into difficulties with the property market. I currently have 4 propeties with a total debt of £706,000. I estimate the properties to be worth a minimum of £840,000 which allows a drop of 70k from the previous values to try and sell. I estimate I can only afford to carry the debt repayments for another 5-6 months at the most. If I have sold nothing by then I'm in trouble however I want to prepare myself for the worst case. Is an IVA an option for me?

[Reviva UK]

Hi Darren123

we have a number of clients in almost exactly the same position as you ( perhaps with less equity)

The important thing here is to have a global plan of action with some variations built in incase you can only sell 1 house every 6 months.

It is a little like preparing a gant chart but with more variables.

Realising the assets is one thing , the next is to understand how much you have subsidised the btl business with personal loans / credit cards and have a plan to deal with this too.

You have a lot going on and a lot riding on this so suggest you speak to an IP very quickly. Timing is everything and it is great that you have already realised the problem.

[MelanieGiles]

Darren

To advise you on this point, it is pretty fundamental to understand exactly how much you owed to unsecured creditors. Could you clarify that position please, and how long do you think it would take you to sell the properties?

[darren123]

Hi,
Thanks for coming back to me. I have no unsecured loans or credit cards, only the mortgages. I purchased and renevated the houses with my own money which when the market was extremely buoyant seemed the sensible investment. I didnt get overly greedy by taking out quick capital to buy more and more which seems to be the approach of many. How long it will take to sell the properties is anyones guess at the moment, even with them being at turnkey standard. To give you an idea I have dropped one house by £45,000 (20%) to try and attract a buyer but the general media does not help confidence nor the lack of available mortgages. To try and have a plan seems difficult as predicting a sale is unrealistic, which is why I want to get to worst case so at least I can have some control over that.

[MelanieGiles]

As your troubles appear to be related to secured rather than unsecured lending, then an organised managed sale of these ought to be your first priority. An IVA will only enable you to deal with unsecured lending - which would include mortgage shortfalls if the property sales could not cover the secured lending.

[Adam Davies]

Hi
Can you switch the mortgages to interest only to help your cash flow for a longer period ?