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ClappedOut
New Member

4 Posts

Posted - 18 Mar 2011 :  16:59:34  Show Profile  Reply with Quote
Hi there.



I have debts with Natwest (credit card and loan), Capital One, MBNA and Marks and Spencer. Altogether adds up to about ?35000 and there is no way I am going to be able to keep going with the payments.



Do I have to be behind on the payments already for an IVA to work out?



IVA Adviser
IVA Expert



726 Posts

Posted - 21 Mar 2011 :  09:42:51  Show Profile  Reply with Quote
Welcome to the IVA forum ClappedOut.



The straightforward answer to your question is that you do not have to be behind on debt repayments to start the IVA process (or indeed any other debt solution such as a debt management plan).



The key factor is whether or not you are in a position to make your full contractual debt repayments each month AND be able to afford all of the essentials you need to live reasonably. If this isn't possible, or it can only be achieved through continuing to use further credit, then an IVA will be one of the options to consider.



Are you a homeowner?

I am a professionally qualified debt adviser. To contact me about starting a IVA please:?      
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ClappedOut
New Member

4 Posts

Posted - 22 Mar 2011 :  18:28:58  Show Profile  Reply with Quote
I am a homeowner. How does that make a difference?



I dont want to do anything that puts my home at risk obviously and thought that an IVA would help to protect it.
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IVA Adviser
IVA Expert



726 Posts

Posted - 23 Mar 2011 :  12:55:33  Show Profile  Reply with Quote
Hi ClappedOut



If there is equity in your property, an IVA will usually require you to try and re-mortgage towards the end of the IVA and pay that money into the IVA for the benefit of creditors.



How much equity do you think is in your property?



You can work out approximate equity by looking on the internet for properties recently sold in your arrear v any outstanding mortgage and secured loans.

I am a professionally qualified debt adviser. To contact me about starting a IVA please:?      
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ClappedOut
New Member

4 Posts

Posted - 06 Apr 2011 :  13:36:05  Show Profile  Reply with Quote
It's really hard to say what the house might actually sell for as there seem to be some round here that have been on the market for ages.



My guess is that the house would sell for about ?160000 and the mortgage still has about ?143000 on it I think.



Can you actually get a mortgage if you have an IVA?
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Mike Sloper
IVA Expert



107 Posts

Posted - 13 Apr 2011 :  19:18:32  Show Profile  Reply with Quote
Hi Clappedout



The IVA will probably say that you will try to remortgage 6 months before the end and if you can't then the IVA will carry on for another year so creditors get 12 more payments instead. At the moment it's pretty hard to get a remortgage when you're in an IVA, but it used to be much easier and it's hard to say what the situation will be in four year's time. Being in an IVA is of course just one of the factors a mortgage lender will look at when making a decision.

I am a Insolvency Practitioner handling IVA cases.
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Minerva
Regular Contributor

22 Posts

Posted - 16 Apr 2011 :  01:14:17  Show Profile  Reply with Quote
No IP really wants to see their clients having to take on another large financial commitment at the end of the IVA, so personally I hope that the lending world continues to deny mortgages to those in IVAs in five years time. An extra year's IVA payments has to be a better option than further long-term lending - even costed at only 50% of the then diposable income.

I have worked in the insolvency profession for a number of years, but prefer to share my offerings to the forum anonymously
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ClappedOut
New Member

4 Posts

Posted - 20 Apr 2011 :  11:58:34  Show Profile  Reply with Quote
So if things change with mortgage and I could get a mortgage I might have to pay all of the equity in my house into the IVA?



Not sure I understand exactly what "costed at only 50% of the then disposable income" means. Could you explain please and sorry for being a bit thick.
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IVA Adviser
IVA Expert



726 Posts

Posted - 20 Apr 2011 :  17:43:56  Show Profile  Reply with Quote
Hi ClappedOut.



I think Minerva is referencing some of the safeguards that commonly exist to prevent a requirement to take on a new mortgage (if it were available) that is unduly expensive (or large) as part of an IVA.



Mike or Beverley (or indeed Minerva) may be able to detail exactly how this works in terms of:



1 - The maximum percentage of your equity that might be involved.



2 - The maximum proportion of your disposable income (the amount that you pay into your IVA) that might be re-directed to a higher mortgage payment as a result of this IVA remortgage.

I am a professionally qualified debt adviser. To contact me about starting a IVA please:?      
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Minerva
Regular Contributor

22 Posts

Posted - 21 Apr 2011 :  01:41:57  Show Profile  Reply with Quote
Happy to explain this further - but difficult as I do not know the exact terms of this poster's proposal.



If the IVA has been presented in line with current IVA protocol, there will be a requirement to have the property revalued during the final year and then an attempt made to remortgage to a maximum 85% loan to value. So if the property is worth ?100,000 the maximum borrowings can only be ?85,000. Another criteria is that the increased mortgage payments are not allowed to be more than 50% of the then disposable income - so if you are paying ?300 into the IVA, your increased mortgage must not cost more than ?150 per month.

I have worked in the insolvency profession for a number of years, but prefer to share my offerings to the forum anonymously
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Mike Sloper
IVA Expert



107 Posts

Posted - 21 Apr 2011 :  15:10:04  Show Profile  Reply with Quote
Hi Clappedout,



Just to add to the other comments, the term "disposible income" means your income less your expenditure, as detailed in your IVA proposal, and it will be the same amount as your IVA payment. So you could read it as "costed at only 50% of the IVA payment". As Minerva points out, that means if the remortgage payments cost more than half of your IVA payment, you don't need to remortgage.

I am a Insolvency Practitioner handling IVA cases.
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