IVA and equity in house

Iggle

Hi there,
My debt is £59k and I have £61k equity in house. I am told I can't do an IVA as creditors would just expect me to see my house.

My friend has £54k of debt, no equity and is doing an IVA.

Is that right.

And, if I did do an IVA how does the equity release in the 4th/5th year work?

thanks in adavnce,
Iggle

Tixy

If you have equity in your house at the start of your IVA you may be expected to remortgage to release some of that equity. But if you cannot get a lender to agree to extend your mortgage/grant a second mortgage then you could start your IVA without using any equity. They would then look at the position after 4-5 years and see if you could remortgage at that point.
When you set up your DMP with CCCS did they discuss the possiblity of an IVA with you?
And discuss the pro/cons of a DMP v an IVA?

Might be worth a read of this http://images2.moneysavingexpert.com/attachment/ivaGuide.pdf and then talk it through with CCCS again for starters. If you still feel unsure or things are not explained fully they you could seek advice from alternative sources.

Nargleblast

Who says you can't do an IVA? Even if you did sell the house you would still have to find somewhere else to live, and that costs money! And you may have 61K equity but you would only in practice be able to release 85% of that figure by remortgaging, so that would only be a bit over 50K available. I suggest you speak to one or two IVA companies and see if an IVA is feasible for you. If so, then in the last year you would be expected to see if you could free up some equity in your home to finish off the IVA - you would do this by approaching your lender to discuss the possibility of extending your mortgage. If the answer was no, then you would need to get another quote from another lender. If that one says no then you will need to get written proof of the refusals and your IVA company would most likely get you to extend your IVA for another 12 months instead.

debtinfo

This is more of a question rather than an answer to the people who know. Obviously most IVA's have the 12 month rule if you cant get at the equity, also the IVA is negotiated so the creditors have a say what the rules are. Since the OP has enough equity to cover the debts (although hard to get at) and this is likely to increase over the 5 years, wouldnt the creditors only except full payment (or nearly fullpayment) at the end of the 5 years or fail rather than say accept 30% with an extra year of payments and miss out on that full payment which would seem possible