Mortgage Arrears

th1593

Hi,
I currently have £3500 in arrears on my mortgage after having money troubles a few years back. For the past couple of years I have been getting back on track, clearing debt and I have successfully entered into an IVA.
I have been paying my full required mortgage amount each month plus £23 extra towards the arrears without fail.

Yesterday they called and asked for an up to date income and expenditure report which I gave.
They told me (quite rudely and abruptly) that my IVA is too much - I am paying £485 to clear a debt of £80k but they are saying I can get this down to £5!

Then she said if we don't reduce our outgoings and pay more off our arrears they will take action to take the house - I am in negative equity by around £60k so this makes no sense but I don't know where I stand legally.

If I am paying my full amount plus some towards the arrears, isn't this better then a lot of people?
Any help is much appreciated

Thank you

Dave_the_Ginger_Cat

When you went through the IVA process, what information did you give about the mortgage payments and levels of arrears? I am presuming these will have been taken into account in coming up with the figures.

There is a separate forum on IVA & Bankruptcy and you may find people who have had similar experiences there? Much of the advice here is from brokers or folk (like me) in the banking industry who will have some experience, but there is much more experience out there

th1593

Thanks for the advice Dave.
Yes, when I went through the IVA process I made them aware of the arrears.

Goldiegirl

Legally speaking, they are entitled to start possession proceedings if you are in arrears with the mortgage.

But there would not seem to any benefit in them doing this at present, as the arrears are gradually being reduced, and the negative equity situation means they would probably make a loss on the sale of the property.

Maybe they just want you to review your expenditure and see if there are any areas where you could cut dwon (e.g cigarettes, alcohol and leisure expenditure) and therefore reduce the arrears at a faster rate.

If they did start poseession proceedings, they'd have to go to court to get a possession order. If that happened, you could make representations to the judge, to say how much per month you can pay (e,g monthly payment plus £23.00) The judge may then grant a a suspended possession order, specifiying that as long as you made the agreed payment, the lender would not be able to enforce the possession order.

So, if you kept up the court order payments the lender would not be able to repossess.

Thrugelmir

The issue would appear to be that £23 a month isn't sufficient to clear the clear the arrears quickly enough , and one presumes late payment charges.

Costs lenders a lot of money to micro manage deliquent accounts. So sometimes in business it's more effective to terminate the relationship.

From a lenders point of view. If £23 is all you can manage. Then any rise in interest rates will cause you financial distress and yet more problems.

th1593

Thanks Goldiegirl and Thrugelmir.
They froze interest charges as long as we made the agreed payments which we have for over a year.

I'm going to call them again tomorrow and see if we can raise our additional payments and hopefully that will appease them for a few months.

I'll keep you posted!

Horseunderwater

You have gone about this the wrong way around. The mortgage debt and the arrears were and are the priority debt and anyone that tells you different has given you some bad debt advice. And now you are stuck with an IVA for unsecrured debts for the next 4+ years?
Priority bills are: Mortgage or rent, Council Tax, TV licence, followed by utility bills food and home insurance and if you need one car insurance. Anything left over from that is what you put to unsecured debts. I am not suprised that your lender is annoyed. Your only hope is to speak to the IVA company and see what amount they are prepared to let you pay now you are in this mess, because £23 a month to clear £3.5k arrears is not going to work.