Iva

sianj83

My partner and I have a combined debt of £19,000 and have been told that our only option is an IVA as I have a few defaults (no thanks to a debt management company I joined up to a few years back). My partner has a good credit history but his wages have dropped by nearly 2/3 . My question is would our car finance by put into this IVA and would the finance company be able to repossess it? Also, we have about £60,000 equity in our house, would we be forced to remortgage and loose this equity? The majority of our debts will come to an end in 2013 so I'm wondering if we should just struggle on until then. I've also been offered a loan of £15,000 but the APR is 22% so as you can see I'm a little confused in what to do.
Any advise would be fantastic, thanks
SJ x

Penelope_Penguin

sianj83 wrote: »

My partner and I have a combined debt of £19,000 and have been told that our only option is an IVA as I have a few defaults (no thanks to a debt management company I joined up to a few years back). My partner has a good credit history but his wages have dropped by nearly 2/3 . My question is would our car finance by put into this IVA and would the finance company be able to repossess it? Also, we have about £60,000 equity in our house, would we be forced to remortgage and loose this equity? The majority of our debts will come to an end in 2013 so I'm wondering if we should just struggle on until then. I've also been offered a loan of £15,000 but the APR is 22% so as you can see I'm a little confused in what to do.
Any advise would be fantastic, thanks
SJ x

From those figures, your assets are more than your liabilities, so you're not insolvent, and an IVA won;t be suitable.

Remortgaging to pay your debts is an option, but one to be treated with caution.

Have you spoken to one of the free debt advice agencies about your options?

anuvvasaver

1) A debt management plan may be better suited - talk to Citizens Advice Bureau for free advice about all your options and be totally honest about ALL of your financial commitments (they've heard it all before).
2) The loan might be preferable to remortgage - you need to work out the total repayment costs for both over the full term of each. My guess is that the loan (whilst the apr looks horrendous) will work out cheaper + you keep the equity in your home.
3) Most IVA's require you to remortgage at the end of the 5 years with the equity being put into the IVA agreement to clear as much of the debts as possible. Remember too that whilst they are supposedly helping you, the IVA practitioners are legally responsible for recovering as much as possible from you.
4) Assuming that the car finance was a finance agreement (HP or similar) and not a a loan (important distinction). You should find that the car is safe as the finance will be SECURED against the property (ie the car) much like a mortgage, as long as you keep up the repayments it can't be touched. If it is a loan it is likely to be UNSECURED like your other debts and the IVA company may ask you to sell it as an asset.
5) Whatever path you choose make sure that you really can afford it and don't take out any other finance until you're back on an even keel.
6) In your position I would remortgage as a last resort. If you do, make sure that you release enough of your equity to clear ALL of your debts and then reinvest the remainder in a high interest account or ISA or similar.
Hope this helps.

Homershairdo

Hi,

As Penelope mentions, you'll not be able to get an IVA with that much equity in your property. If you're really struggling, it may be worth exploring a DMP. But you'd need to speak to someone and work out what you income and expenditure really is.