Negative Equity

mother_hen_2

Just had a though so quick question.. we are going down the IVA route as we have a property to protect...well thats the issue, having just had 2 different surveys undertaken to provide evidence for the IVA - we find we are in negative equity by about £30,000, which came as a shock to us!
It's due to the current financial climate impacting on property prices dropping! Will this impact on an IVA going through?

Useless_with_wonga

I doubt it. All that will happen is that your creditors will ask for 6 years worth of payments rather than 5 years to cover what they would have expected from a remortgage in year 4.
With £30,000 negative equity would Bankruptcy not be an option? You will get to keep your house as nothing to be had by forcing you to sell.

mother_hen_2

I thought if we went b.r. we would loose the house may be get to stay in it a little longer but eventually I thought we would need to go.

Useless_with_wonga

Hi, as i understand it if there is no equity in your home as in your case -30K there is nothing to be realised from a forced sale. So your creditors will get nothing from a forced sale of your house.
In such circumstances it is possible for you to keep your home and continue paying the mortgage provided that you purchase the Benificial interest from the Offical Reciever.
Whichever way you choose to go the fact remains you will have to live somewhere and pay for that priveledge be it by way of Mortgage or Rent. I would seriously look into this option if i were in your position and Bankruptcy was not made impossible by other factors such as Employment restrictions etc.
I do not have all the answers but there are plenty on here that know all the in's and out's and will help you with any questions that you may have.

mother_hen_2

I think I may start a new heading on that very subject you raised useless with wonga...(employement)

mother_hen_2

LOL just read that back I wasn't calling you useless dear wonga......ha ha but what a name eh... at least I do keep chickens I don't think I will ask about your name!

peachyprice

Hi there Motherhen,

UWW is quite correct, if there's no equity in your home it's highly unlikely you'll lose it through BR if you can afford to pay the mortgage.

You should be offered the chance to buy the beneficial interest (rights to future equity) from the OR for £1 + £211 each, after which the OR relinquishes all rights to your house. Even if you don't buy the BI the OR has a maximum of 3 years to sell the house, but won't do unless there is enough equity to cover all sale costs and still make a decent profit for your creditors.

mother_hen_2

My OH is worried that the spending we have accrued doing up this house is whats 'tipped' us over the edge financially, including buying new carpets/ electrical goods, foolishly now but we were managing to pay at the time all the cards albeit by ducking and diving.. he thinks the OR will look negatively on our spending..

mother_hen_2

Actually, just realised we have a secured loan on the property via NR. they would probably force us to sell to reclaim that if we went BR... so BR isn't an option for us best stick with the IVA then!

Deep_In_Debt

Not sure on this and others may correct me, but I thought a secured loan becomes an unsecured loan if you go BR so it will be included in your BR.

Please feel free to correct me.

peachyprice

Deep, it only becomes unsecured if the property is repossessed, secured lending is not included in BR, or an IVA.