Will an IVA affect my home?
Individual Voluntary Arrangements are sometimes a last resort for those who find themselves in dire financial straits; the deal involves making an agreement with creditors to pay back as much as you can in manageable payments, with any debt remaining after the usual five year run being written off. There are a lot of considerations when you’re thinking about taking on an IVA, not the least of which is whether the arrangement will affect your home.
If you are renting the property, then there is no need to worry, you don’t own anything and your home won’t be eligible for inclusion in the IVA. If you are a homeowner you can still protect yourself, part of the deal is a legal agreement that protects your property should your creditors decide to take further action against you – if you don’t keep to the details of the arrangement. A charging order against your home is not legal once you have take out the IVA, the house cannot be used to secure the deal, and creditors are also forbidden to push you into declaring bankruptcy which could lead to the forced sale of your property.
An Individual Voluntary Arrangement usually requires you to remortgage your house to release the equity held within it, which will then be used to increase the monthly amounts due to your creditors. The important thing about releasing the equity in your home is that the people you owe will have to decide whether they would be financially better off if you were to declare bankruptcy – they have no claim over equity under an IVA, but could stand to gain from the money if you declared yourself bankrupt.
Generally speaking, with an IVA solution, you will need to raise as much equity as possible, although a remortgage may limit the amount you are able to obtain. Most likely, you won’t be able to remortgage over 80-85% of its value – which means you will struggle to release all of the money available. If you can get an offer, you can probably expect to increase the mortgage payments by over 50% – in most cases – of you disposable income per month, this will obviously put restrictions on the amount you can raise.
Do you have debt? Do you need debt advice to help with your problems? If so visit iva.net.