IVA questions

rag31

Hi there

I have been freaking out about our debts and did the CCCS online debt counselling thing and it told us the best solution for us would be an IVA, of which I don't have huge knowledge.

I wonder if anyone here could answer some questions for us?

1. The majority of our debt is in dh name. We have around £30,000 of unsecured debt. around £1500 is in my name, and a joint overdraft of £3000. Oh, and a joint morgage of £155,000. Not sure if we should both do the IVA or just dh?

2. We don't live in this house now as we had to move so moved into rented as we couldn't sell the house, and rent it out. We lose around £1000 a year on the house as the rent we get doesn't pay the mortgage. We'd happily get rid of the house as it's negative equity and loses money. We'd hoped house prices would raise enough so we could sell house in 3 or 4 y time and pay off all debt, but we can't afford to live anymore so dont' feel we have a choice. Will bank repossess house? What will happen to the tenant?

3. Our credit record is squeaky clean. We pay off all minimum repayments. However we owe over 2k in council tax, 2 months rent and £800 to gas/electricity. We are in a right state. We've been paying off debt instead of basic necessities, obviously all wrong. I'm just thinking that if we apply for an IVA then they'll say 'but you've never missed a payment so what's the problem'. I'm thinking of cancelling all DDs to creditors so we can pay our rent/council tax. Would this be the best option?

Any advice welcome.

Thanks,
Becky

Nargleblast

Hello rag, sounds like you are in a right old two and eight, but you are not alone - lots of us have been in similiar dire situations. I am no expert but here's my two pennorth.

1. IVA - it is perfectly possible for your OH to have an IVA in his sole name, and it might make sense to do that as he has the majority of the debt. Get professional advice though before making any firm decisions on that point.

2. Once you stop making your full mortgage payments every month then you are in default. The bank might let it run for a few months but ultimately they will get heavy, and repossession is likely. I doubt if the tenant will have any protection if this happens, but I am no expert in housing law, maybe some others on here can help.
3. Your credit record may be clean now but not for much longer as you are struggling to meet your bills. In any debt management solution, you prioritise your bills - housing, heating, lighting, water, food - all these get paid first, plus some other household essentials as agreed by whichever company you go through. Then your loans and credit cards have to queue up for what's left, so you will be in default with them straight away.

Your options are DMP, IVA or bankruptcy, and all three have their pros and cons - but one of them will be the right one for you. I suggest you speak with someone at CCCS (or Payplan, or CAB or any other recommended organisation that does not charge you for advice) and discuss the merits of these different solutions. There are people on this forum and on others with experience of all 3 different methods, and I am sure you will not be short of advice from them.