www.iva.co.uk

Hi
I have my telephone appointment with practitioner in the morning, trying not to get too stressed about it all!
My main question is about the house really. The IVA is for debts in my sole name, about £32k, and there isn't enough equity in the house to clear this. The house, mortgage etc are in joint names. If after the telephone conversation in the morning, bankruptcy appears to be an option, is it feasible that they can force us to sell a house in joint names to pay towards a bankruptcy that is just in my name?
Thanks
Fran

Hi there and welcome to the forum

If you decide that bankruptcy is the better option, your house will only be affected if you have equity. Your Trustee will effectively become the owner of your share of the equity and will want to sell this to pay the money over to creditors.

As you have a meeting tomorrow with your chosen IP, make sure that all options are properly explained to you, and that you fully understand what is likely to happen to the house within the IVA - ie the final year revaluation and equity release provision.

Thanks Melanie
We have an interest only mortgage, do you think that would make a difference?
Fran

No - the type of mortgage you have makes no difference to the calculation of equity at this point in time.

Note it will only be your share of the equitable interest in the house (not your partners or wifes). If an IVA is suggested then in the final year of your proposal 85% of your equitable interest (if any) will have to be paid into the arrangement - usually by a re-mortgage. Make sure the IP goes through all options with you from Bankruptcy/IVA/DMP etc.

David

The way I read the IVA protocol regarding property, is that you are obliged to raise further borrowing based upon 85% loan to value during the final year and introduce the difference between that which is raised and that which is owed to your current lender - of course only the debtor's share is required.

So with an example of a jointly owned property (only one debtor being insolvent) worth £200,000, with current lending of £140,000 - 85% loan to value raises £170,000 - leaving £15,000 available for the debtor to introduce into his/her IVA.

This is somewhat different to raising 85% of a debtor's equitable interest, which would actually require £25,500. It is interesting that we have different interpretations - and I wonder if further clarification is necessary as other IPs may also be working with different interpretations. This is of special importance given the indexation formula we are now supposed to project when submitting proposals.

Melanie it is ambiguous and I am reading it differently to your interpretation.I need to get this clarified - will check and get back shortly.

The second attempt at this in July 2008 seems to have made the whole thing very confusing - in terms of indexation of the property value which is a very dangerous practtice. Would be grateful for any clarity on this given your links with the Standing Committee. If we are confused then others are bound to be!