www.iva.co.uk

Hi, I'm newly self employed, director of a ltd company, I have personal debt of £25k, I am a home owner but do not live in the property, I've been trying to divorce my husband for the past 2 years, he refuses to leave the house which is why i did and am in so much debt. We have agreed to sell the property and divide the equity, I should receive in the region of £30k to £40k, however the property still needs building regs to be signed off, needs a couple of jobs done to achieve this but ex is delaying! I want to clear my debt, I am currently being supported by a friend as all my income currently goes to pay debt every month but this cannot continue. Do I apply for IVA?

Hi and welcome to the forum.

I'm not sure what will happen in your circumstances, but I would recommend that you speak to a professional.

Visit www.iva.com for a list of companies and reviews and give one or two a ring for some free and impartial advice as to all the options open to you.

I think ruining your credit rating with an IVA should be a last resort. Also given that the equity is great than the debt you are not technically insolvent. That said equity is of no consequence if you cannot release it. Who is going to fund the remaining building works?

Paul

Hi Bea

An IVA in these circumstances is complex as technically you have an assets that, if sold, would realise more than you currently owe. It might be an idea to consider entering into a debt management plan to reduce your outgoings while the property situation is being resolved, and then simply repaying the creditors in full. Getting professional advice from an IP firm would be a lot of benefit to you so you make the right decision.

Remember that a debt management plan will also ruin your ability to get credit.

Paul

But surely the house isn't an asset at this point. Until the building regs are signed off it isn't worth anything. I don't see why an via couldn't proceed with a clause including proceeds from the sale of the property.

It's the potential value that could be realised later down the line. Assuming the property can be sold at some stage during the term I think an IVA proposal would have to consider it as an asset, and on paper Bea would not be insolvent.

I think Bea definitely needs to speak to one of the experts to see what her options are.

I don't see why an IVA for Bea should be complex at all - in fact it should be incredibly easy. Simply offer to pay the creditors in full from the eventual proceeds from the property - assuming that you are certain they eventually will be received. Bea is insolvent in that he/she cannot pay their debts as they fall due - the downside is that the costs of the IVA would have to also be met, but there would be no ongoing interest payable once the IVA is in place. Far safer than a DMP in my opinion.

Yes, I see - Bea would only be solvent if the proceeds could be realised now as opposed to in future.