about to start the ball rolling

[MelanieGiles]

Hi there

I really do feel for you, but as Ian and I have already stated there is no ideal solution for you, and you have the consquences of not being able to repay money which I assume that you borrowed in good faith and are unable to repay due to changed circumstances.

Try and pluck up the courage to talk to Northern Rock - I am sure it will be worth your while.

[jpj]

Surely if NR take steps to secure their loan, Introuble could do an IVA for the rest as the then secure loan couldnt be included in the IVA,ruling out the NR problem??

[MelanieGiles]

A definate possibility so long as there is sufficient disposable income to pay both NR and make ongoing contributions to the other creditors. And NR will only be able to secure in the event of a default on the account, so unsecured payments will need to stop to allow that to happen.

[introuble]

But wouldn't that risk repossession? My loan element is in the same direct debit as my mortgage.

[jpj]

Hampshiredolpin hasnt said how much equity is in the property, but the securing of the NR loan might cancel out the equity release in year 4 too ! or the securing may leave them in negative equity from the start!

[MelanieGiles]

You cannot have your property possessed for the non payment of an unsecured loan - only the secured element which you should carry on paying.

[introuble]

Would that matter? I have no equity in mine so i would be negative straight away.

[ianmillington]

Hi introuble

At first sight there might be some merit in NR securing the debt - as jpj says that would then take them out of the voting equation so long as there isn't a great deal of negative equity.

The downside of course is that the mortgage payments will invariably go up. The upside is that the contributions that would need to be introduced into the IVA would be less as the unsecured debt is £30k less. If your mortgage were to be £30k higher, how much would you have left per month for your remaining debts which you say total £68k? Our mortgage advisor reckons it would be about £200-£250 per month so you could be left with an IVA proposal with a contribution of about £250 - £300pm and debts of £68k. £300 per month would, according to my fag-packet calculations, produce just under 20p in the £. Tight. This compares with 23p in the £ if the NR loan is brought in and £500 per month is paid into the pot. The relatively small difference is surprising.

If I were NR I would want to secure the debt. Given the relatively small difference it might be possible to persuade the other creditors to go along with it. However, the devil is in the detail, you will need to go through this at some length with your chosen IP who will help you build the case.

Ian

Ah! Your post wasn't there when I started typing! I wasn't aware you are already in negative equity or at least haven't spotted where you said it. Arguably your bargaining position improves. If NR are looking at a loss in any event it will surely be in their interests for you to do an IVA instead of going bankrupt - although they might not look at it that way. One question should be whether or not they want to secure the lot. My guess is that they will as they will have less reason to write off the debt and if the property goes up in value they will benefit. The other question is whether you will be comforatable paying the increased mortgage payments.

[MelanieGiles]

This is a together product so the poster would simply carry on paying the amount that they are currently paying on the unsecured loan. How much are the unsecured NR payments - and what do you reckon you would have left to fund ongoing repayments to the other creditors - assuming NR were to secure?

[introuble]

But if this was the case and they secured my 30k, I would be really 30k in negative equity. WOuld this have a bearing on their securing it? If that element stayed the same level of the unsecured payment, but secured - currently about 180 per month, And the rest was in an IVA, which is say max 300 per month, then we could manage that. We currently are attemting 1200 per month in payments to all the creditors.

[ianmillington]

Please see my edited post

[introuble]

The house is mortgaged for 105k. Bought it for 110k, and given the market, 110k is what we'd get now realistically. We would only be in negative equity if we secured the 30k against it.

[MelanieGiles]

NR would be unlikely to have a problem securing the together (unsecured) element of their debt, providing that you continued to make the contractual repayments under that loan agreement.

Do I read your post correctly to understand that you are currently paying £180 per month on the unsecured NR element and still feel that you would still have approx £300 to offer to other creditors? If this is the case, as IVA could eventually work, but not until the debt was secured - and in the meantime your other creditors might also have the same ideas.

[introuble]

How long would it take to do that(get the 30k secured?) We are up to date on most payments at the moment, but any missed will be made up next month and may be then behind with another for a month.

[MelanieGiles]

You would have to default on the unsecured element of the loan, thereby giving NR grounds for taking the legal action against you. I believe that this would be three months of non-payment, but could not be sure.

This is in no way certain, and in some ways is a gamble as you are presumably already in the position where you have not paid your other creditors - effectively putting them ahead of the game in terms of charging order - and you should not take Ian's or my posts as giving you advice to proceed with this route, we are merely commenting upon your options and the consequences of same.

I would now suggest a direct chat with NR to see what advice they are able to give you about resolving your overall financial difficulties.