I have been following the forum for some time, I would like to be able to have an IVA but my disposable income is low and, as I work in the voluntary sector, is also insecure because of the nature of the funding of my post.
However, my mortgage comes with a reserve, up to the amount that has been paid to date and which has to be paid off with the mortgage (which for me is another 20 years). At the moment, there is just under £15000 available through this, my debt is £600000, would I be able to use my reserve to offer as a lump sum to my creditors? What sort of figure should I be looking at?
This is tricky because you should not draw down the funds unless creditors agreed and your mortgage company would be unlikely to let you draw the funds once they are aware of the IVA. Bit of a 'catch 22' but if you wanted to take the risk and draw the funds down it might be worth a try. If the IVA is rejected you could always pay it back or try and get early settlements.
It might be worth a try but if there is still equity in your property after the drawdown it would be difficult to justify.
So I might be better using the money to offer informally as early settlements rather than the formal IVA route? How open to this are creditors usually?
You also mentioned about additional equity, do you mean over and above the amount of my mortgage reserve? There is about a small amount of equity (what is left of the deposit I put down before the drop in house prices ate most of it up!) but obviously that is inaccessible with the mortgage market being what it is at present. Will this make a difference to the chances of any offer being accepted?
I was hopeful that, as my monthly payments to all creditors are very low at present, any lump sum offer would be viewed as a better return than they are getting.
While it is always a risk that creditors will turn down a one off IVA, the fact that there is little equity remaining afterwards and you are currently making small payments to a DMP may make it attractive to creditors.
It would certainly be worth a try but you would need to be sure that you could afford the increased mortgage payments and you would have to draw the money down and have it in the bank. This would be tempting to creditors as they would receive a reasonable payment early rather than token payments for a long time.
If you can afford the new mortgage payment and you can draw the funds down it is certainly worth a go and I would be reasonably confident of getting it accepted.
So long as the loan is secured on your property and you can afford the increased mortgage payments - bearing in mind the uncertainty of your job - then I can't see anything wrong with the suggestion.
Why not contact an IP for direct advice on this and the benefits of the other options available to you as well?
