What happens if I've gone into Negative equity come the yr4 clause?

bubblesqueak

My husband and I went into an IVA 3.5 years ago. 12m ago, my IVA was completed with the help of a remortgage. We're on a fixed rate for 2 years. Next Dec. it will be up and we will need to look at another mortgage, my husband will then be in his yr4. My worry is that what with the current state of house prices, there won't be enough equity left in the house, if any(!), to meet his IVA requirement of monthly payments + equity release. Will we be forced into bankruptcy? We have a 9m old baby and a 6yr old and haven't missed a single payment. I was wondering if maybe they would simply ask for another 12m's payments into year 6 but that would barely reach 50% of the equity that they were originally asking for. I know it's 12m away but it's becoming a real worry. On the other hand I'm thinking that if there's no equity then what's the point of forcing us to sell if they're not going to get anything anyway. Does anybody have any pearls of wisdom that might put my mind at ease? Our IVA is with a reputable firm, not one of these fly by night cowboy IVA houses.

trudij

I think people in that situation are asked to pay another year, but IM not sure. Can you not ring your IVA firm and ask them??

Useless_with_wonga

That's as i understand it no equity = a further year of payments.

skintandscared_2

So what happens if a person enters an IVA with no property or assets that can be used to raise further finance? Do the creditors accept a higher percentage from the outset and just write off what's left after 5 years? Or do they set the plan at 6 years from day one?

Useless_with_wonga

The latter. 6 years.

bubblesqueak

But nobody thinks I'm going to be forced out of my house then???? Another year will be fine, we can cope with that, I just couldn't cope with losing my home. Thanks for your replies.
I spoke to my IVA firm a while back and they 'sort of' implied another year. They were great but didn't want to give me a firm answer as it's a while off yet. I jsut couldn't help worrying and wanted to see what somebody independant of them thought. Thanks. :-)

Useless_with_wonga

No the purpose of the IVA was to protect your house so you should not lose it. When they signed up to the IVA your creditors knew that you might not be able to remortgage and therefore they will just ask for another 12 months in lieu of the equity.
If this were not the case there would be little point in an IVA and your creditors know that. The idea is to realise them more of a return than they would have got if you went Bankrupt. It works both ways you get your assets protected they get more of their money back sort of a trade off if you like.
The only time to worry is if you have not been keeping your IVA payments up and your IP fails your IVA that's the bummer because everything you have paid in goes more or less into the IP's pocket in fees and you end up at square one again with the same amount of debt that you started with. However doesn't sound like you are in that position so try not to worry it should work out just fine.
2 Yrs to go and you will be home free it'll soon pass.