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Hi,

Myself and my husband jointy have about £38k worth of debts. We also jointly own our home, we purchased it for £100k with a mortgage of 96k, which is the amount roughly that is outstanding now (haven't had it for long). We estimate the market value now to be £130-140k.

The queries I have is that I have been reading that in the 4th year of an IVA then creditors would be looking for equity to be released to pay off the debts, so does this mean that if we do not want to sell and move then we would have to re-mortgage? If this was the case would they take the whole of the equity we have/total amount outstanding - whichever is greater?

If this was the case, would it be better to remortgage now and get them all paid off, before even having to go down the route of an IVA?

Also would we still be able to remortgage with bad credit ratings? Our mortgage is with the Halifax and we have just ebtered a 5 year fixed rate and would want to stay with them.

I hope this all makes sence. We like the sound of an IVA but am very concerned about the equity aspect, if anyone could help that would be great.

Thank you
Nicola.

Hi nicochick and welcome to the forum

The general ruling now with property is that the creditors will require you to revalue your property during the final year of the IVA and obtain an offer of remortgage based upon 85% loan to value. You will then use this money to pay off your existing mortgage, leaving you hopefully with a lump sum to pay to the supervisor. You will not be required to sell your property, and in view of the fact that your mortgage payments will be higher, you can usually then cease the IVA monthly payments.

Are you in a position to remortgage now and pay off all of your creditors? If so, you are hardly insolvent and therefore an IVA is not relevent in any case.

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