do we file for bankruptcy

DNR_2

Please can anyone help?

My husband and I have been in a successful iva for about 22 months. To enable us to enter the iva we were advised to go interest only on our mortgage and re apply for interest only every year. I spoke to my mortgage provider y'day and they said that as we have been interest only for 2 years now, it is not possible to continue and the payment would resort to the original balance.

We currently pay 710 p/m for our mortgage and it will rise to 1180 p/m in Jan 13. We pay £480 in total to our iva's, so would our only option be to now go bankrupt? I cannot stand the thought of losing our home, but the equity if it was sold would be about 47k. So it seems inevitable. We don't have cash spare as we went too tight with our exp originally for the iva, and there has been no upturn in business.

Our iva jointly was about 104k, due a huge downturn in business, and foolishly living off credit cards.

If we tried to sell the house to avoid going BR would this be enough money to repay iva as f&f nearly 2 yrs in, or would this not be allowed? after estate agency fees etc.

Not thinking straight after a sleepless night. Any advice on options would be greatly appreciated. I am awaiting email back from my iva agent.
Thanks.....dnr

techno1029

I think you need permission to sell your house whilst in IVA as they put a restriction on it. The idea of IVA is to protect your home but as your expenditure is about to change dramatically you need to seek advice from your IP. The issue with your creditors taking equity at the end of the IVA is always a sticky point because your chance of securing a remortgage after been in an IVA is quite slim, but if there is a chance of them recovering money from you selling your house and you are happy to do that its another question.
Whilst I was in my IVA I would have jumped at the chance of selling my house and walking away debt free but I did not have the equity required. You could be in a better position.

DNR_2

Yes I am sure you are right. I know I had a request to have the IVA company name put with deeds. To be able to sell the house to clear the IVA is somewhat relieving in a sense, to have an end to all of this. Although finding a rented property with a dog and a bad credit rating would probably be virtually impossible.

Does anyone know how long we could stay in our home if we had to go bankrupt? I haven't had a reply from IVA company as yet.

Thank you techno1029 for your help.

FiatFan_2

Can I ask who advised you go interest free on your mortgage for the iva? I ask as few of the threads here I read relating to this all mentioned as soon as their mortgage company found out they were iva they were instantly put back on a repayment mortgage. Which could be why you've now been told you can't have a further year(s) int only.

Dependent on what your IP comes back with, hopefully if you want to stay in your current house then they can look to a variation meeting to include the interest within your iva payments as it sounds like you have a reasonable amount of equity in your home so come the equity release stage they could claw that off you. But then you'll still have a whacking debt of a mortgage at the end of your 5-6yr iva period. Being in an iva will no doubt restrict your chance of getting a reasonable mortgage whether it's for your current house or another. If you did sell yours then the possible 47k could be regarded as a windfall and your IP try claim 50% of it, apparently windfalls with houses/cars can be negotiable prior to sale.

On the other hand, we choose to surrender our house and go rented prior to our iva. Not everyones cuppa tea, but after a good discussion we decided it was the right choice for us. Also means max length of iva is 5yrs and we'll be 100% debt free at the end and not have 16yrs of mortgage left and higher payments due to the equity release.

Dependent on the letting agent, they will ask about BR but not about iva so you don't need to say unless they directly ask. Some landlords will allow for pets, but typically charge double deposit upfront. IMO it's worth having a look over the rental properties and see if any are suitable for your needs size, location etc then you can weigh up the options for your future. With regards to credit checks, you have to pay upfront for those too and reading on here everyone seems to have gotten through them ok.

Depending on your mortgage company may depend on how long before you'd be evicted down the BR route. We've been out our house 5 months, have handed over the keys and signed the paperwork but as it's not processed yet we are still the legal owners. We've not made a mortgage payment in 12 months so that could give an idea on timescale.

Hope that make sense and helps a little

DNR_2

Thanks fiatfan for your advice. It was my IVA company that suggested we go interest only with the mortgage and I arranged that first of all before the IVA went through.

I'm feeling very mixed about this now as I've possibly been given the wrong information by the IVA company. They maybe knew that we wouldn't get the interest only after 2 years. NRAM told me that the IVA company should have advised them we would need interest free for the 5 year term in order that the IVA would work. Paranoia is setting in as after 22 months they have probably not paid anything to our creditors yet?

My IVA company emailed back asking for my morgage account number and details of conversation yesterday so they can call NRAM. But even if they persuade NRAM to give us another year interest free year, when next year comes we could be in the same boat again.

22 months ago we couldn't face going bankrupt as our daughter was ill and going for the IVA offered stability by staying in our home. So in some ways it was the best thing.

I will see what they come back with, but am wondering what would happen if we didn't pay the mortgage and saved the money to move into rented if their advice is have no alternative but to go bankrupt. Something will have to give come January. I will definitely ask about that thank you.

Your plan sounds great and I wish you all the best.

FiatFan_2

it may have been good advice at the time to get your income and expenditure to be acceptable, there does seem to be big difference in what we all get agreed.

NRAM's only aim is to recoup as much money as possible so long term interest only is not in there interest. Hopefully if your IP gets in touch with them they can negotiate this for you, as techno says above remortgaging during an iva could be difficult and no doubt costly. With the added trouble of having to change provider as nram is closed to new lending. lol takes me back to when all the NR trouble happened back in 07 when we received a letter politely asking us to remortgage elsewhere as we weren't premium enough.

Our solution isn't for everyone, I think if the advisor had suggested it in the first few discussions my wife possibly would have been more frightened about entering the iva, although we knew we had to do something positive to fix out debt. After receiving a letter from Santander raising our mortgage payments £300pcm circa £1200 that was the main reason we decided to look into the rented option although we had little to no equity left in the house as it lost 35k in last 2yrs.

Hope your IP has good news for you next week

DNR_2

Yes as I am working my way through the posts - all very different. NRAM are not budging and my IVA company - no response as yet.

Wow that a huge loss but now you can count down the months till you're debt free. Cheers. and I will feel better when I know which direction we are going in again.

FiatFan_2

I ment to throw in a big caution over surrendering your house back to nram. If surrendered, they will sell it off cheap at auction with no minimum value.
In our case it's written in the iva the expected sale price will be 40k less than it's current market value which compared to 2yrs ago is nearly 50% off!
Fingers crossed your IP can sort a deal for your this week

DNR_2

I have emailed my iva company a couple of times with questions of what to do, and they want us to meet with them, this would mean travelling about 70 miles. Working full time this is will also prove difficult to do this.

Have you or anyone else had to deal with them face to face, or did you do everything over the phone?

If I sought a family member to help us to a f and f offer, would there then be a restriction on us then selling the house (if it was in the original time scale of the iva) to repay the family member? I know it sounds like I want it all but really don't want to go bankrupt.

Thanks for all advice on here, it's nice to have someone to turn to.

FiatFan_2

We done all of ours over the phone, iirc our IP is in Cardiff which is 300miles from us so would be 4hrs driving each way.

Can't offer advice on the F&F, as far as I understand even if you have one accepted your still on the iva register until the end of the 6th year which would prevent taking any further credit/mortgage anyway.

We got a letter through the other day saying there going to list the house 5k below current house prices, which would be a big benefit to us if it sold at that.

DNR_2

That's brilliant, I won't feel pressured to go now, although only about 70 miles, but even that's enough in fuel, and AL from work.

Thank you anyway, I think f and f is a bit of a long shot as our family don't know about our iva, so I would have to feel slightly.. positive it would be accepted to have to ask in the first place.

I'm not sure I would want credit again, I'm getting good at shopping in aldi and savers , although my car is 10 years old this year, so i'l never say never!

Good luck with your house and Happy 2013 !