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we have debts of around £50,000 excluding the mortgage and total income is less than outgoings(all household bills and debt)
if we do an iva will this effect our mortgage? dont want to lose the house

Hello Nic - and welcome to iva.co.uk. I hope you find the information helpful.

An IVA cannot affect the position of a secured creditor, so your mortgage company will not even be notified of its existence. You do, however, need to ensure that you have sufficient money to pay the mortgage and IVA payments as well as the rest of your expenses.

Given that you have debts of around £50,000, I anticipate that you will need to make payments into your IVA in the region of £360, although you should take professional advice on this when you have your overall financial position available.

What is the value of your house and the outstanding mortgage? If there is any equity in your property, creditors also like to see a similar sum raised at the end of the arrangement by way of a re-mortgage. Your chosen IP will be able to advise you further on this point.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Hi

The amount of equity payback to the creditors is 75%,
Is that of the valuation of the property when you start the IVA or is it at the end of the IVA?

Scooby

Hello,


When you enter an IVA assurances can be agreed to protect the family home.

Near the end of the IVA it may be necessary to remortgage your property in order to release some of equity to your creditors.

Creditors would expect a proportion of any equity to be realised and paid into the IVA at the end, for the benefit of the creditors. Typically this would be up to 75% of your share of the equity.

If you have negative equity or zero equity at the beginning of an IVA, creditors may ask for a valuation of the property in the fourth year of the IVA with 75% of your share of any equity at that point, which will need to be realised and paid into the Arrangement at the end.

The alternative is to release equity in the beginning to offer a Full and Final settlement IVA.

This is a legally binding arrangement with your creditors which allows you to repay a proportion of your debt in a one off lump sum payment. Normally the lump sum is raised by remortgaging your property or introducing a lump sum from relatives. Creditors are likely to accept your full and final settlement if we can demonstrate that this offers a better return than bankruptcy.

Kind regards,

Julia

For more information about IVAs, please visit my website:
www.supersonicsquirrel.net

The amount of equity which may have to be raised at the end of an arrangement is entirely dependent upon the specific terms of the IVA which may have been modified by creditors.

I usually work on 85% loan to value and then deduct the amount of the existing mortgage at the beginning of the arrangement, although this is often modified upwards by creditors.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

Melanie is quite right, there is no "official" percentage of equity that must be released for an IVA proposal to be accepted. I always work on an 85% LTV basis but as IVAs are in their nature individual this could mean that someone could have an IVA where they had to release more of their equity or less. Generally creditors will want to see people release as much equity as they can.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

Hi

But is this based on the valuation I gave whilst my IVA was being set up or a valuation at the end of the IVA?

Scooby

The initial calculations will be based on the original valuation however depending on the terms and conditions of your IVA the final equity release could be based on the valuation at the end of the IVA.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

Scooby

As Oliver says, you must check the terms of your IVA proposal (and any modifications which were put forward by creditors) to be sure.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

THANKS

Your welcome Scooby

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp