URGENT advice for IVA

Stressed_NW

Hi everyone im new to the forum so please be gentle. I need some advice on whether getting an IVA is a good idea as i keep reading horror stories. Basically i bought house in 2007 when i was single. I dont personally think i should have been given mortgage but thats another story. Anyway since then my life has changed drastically. Im now in a relationship, have a young child of my own and also responsible for my partners 2 children. My house wasnt big enough and too far to travel to take kids to their schools, so i moved in with my partner this year. Due to wages staying more or less same, but huge increase in cost of living i simply cant afford to live. I cant sell my house as in negative equity and also have an unsecured loan of 20k on it, the dreaded Nram 120% mortgage, plus a bit on credit card and bit on overdraft. Im looking to do voluntary reposession on house, shortfall about 10-20k, so total debt about 37k. Been to see a company about it who advised IVA at £200 per month. They want 2 payments of £200 before do anything. Question is, is it normal practice and whats chance of IVA at £200 PM being accepted. They say they have 96% success rate. Thanks in advance x

UpToMyNeckInIt

Hi Stressed,

Welcome to the forum.

Based on your wording, it sounds like your £20K loan is in fact 'secured' against the property. Please clarify.

How much is the house realistically worth? How much is your mortgage?

How bad is your negative equity? Depending on what news story you believe, property is on-the-up again. Is the property worth protecting?

You need to be aware that an IVA will only take care of your un-secured debts, NOT mortgage or other secured loan debts. To get the latter included in an IVA, you would need to bite the bullet and sell the house, the shortfall could then be included.

However, you are right to be concerned about IVA 'horror stories', especially if you google 'NRAM IVA' - they are notoriously difficult creditors to deal with, often insisting on an extended IVA term to increase dividend, or other 'special terms', which make the IVA experience even more unpleasant than it already is.

Therefore, I have to ask: Is bankruptcy an option for you? More importantly, is there any reason you have not already considered it? A responsible IVA company should discuss this as an option for you, based on the circumstances you have described.

Creditors may not agree to IVA terms if you have a mortgage burning a hole in your pocket, but with you not living in the property (unless you are able to rent it out and cover the payments with rental income).

Which IVA company have you spoken to? (Are they an IVA firm, or a debt management firm)?

DON'T PAY A BEAN UPFRONT. (I made that mistake). Plenty of IVA firms who charge nothing upfront (they all make plenty enough once your IVA is up and running).

If you still feel that an IVA is right for you, Google 'insolvency practitioner reviews'. The first non-sponsored result takes you to a decent review site.

Speak to 2-3 different companies, and see what they say.

Look into the bankruptcy option as well: Have a chat with Stepchange and the CAB.

Stressed_NW

Hi the loan attached to the mortgage is definitely unsecured. The mortgage is 80k, house worth about 65k. Did ask about bankruptcy but was told that wouldnt be able to keep car which i need for work. Im a Police Officer and work over 30 miles away. Not worth protecting property as in negative equity and on interest only mortgage. The company said to do voluntary reposession and they would negotiate a shortfall with Nram prior to house being sold and include in IVA. Thanks

Mrs_pbradley936

Is the house empty? You moved in with the partner and did not let it? I would look into doing that until the market picks up if you can.

UpToMyNeckInIt

...OK, that explains why BR is not a good option.

A c£200pcm payment against a c£37K debt is certainly in the right ball-park. Once your IP's fees are taken into account, that should return a dividend of approx. 22-25% over a standard 5-Year IVA.

Definitely shop around for a company that charges no up-front fees though.

Stressed_NW

I was renting house out, which just kept my head above water, but tenant moved out due to damp and need about 2k to get it rentable again. I just don't have it and don't want to get into further debt, as house is old and things want doing all the time to it. I'm better cutting my losses. I'd be quite happy to pay £200 PCM. So you think there would be a good chance of being accepted at that?

Mrs_pbradley936

Well go carefully - my son has an IVA and it has made life easier for him. We kept bailing him out but he never seemed to learn and so we finally said "no more". He did not pay anything up front so I would steer clear of any of those.

Once you cannot spend on a card it is surprising how you can sort yourself out. He has been weaned off of spending money he does not have whereas before he put whatever he wanted on a card and thought about payments after.

I wish you well with whatever you decide and come back here often for support and advice they are a good crowd.

Stressed_NW

Thanks for replies. Who did your son sort it through and what was his debt and how much did he pay PM, if you don't mind me asking x

FiatFan_2

any secured loans will become unsecured once the house has been voluntarily/forcibly repossessed and included in the iva. we had a shortfall in our mortgage and a hefty secured loan that all got wrapped up in our iva when we voluntarily gave up our house pre-iva. this was the main factor in giving up the house, had we kept them we'd still have circa 250k+ debt post iva

Find_The_Real

I let the house be repossessed first before I went into an IVA so that all of my debts were unsecured and as NRAM are not always the easiest to deal with, despite stopping paying the mortgage it took almost another year to go to court to seek repossession.

Also you need to be aware that NRAM will generally insist on it being a 6 year IVA rather than the normal 5 year.

I would definitely speak to a couple more IVA companies and a quick google search will generally pick up a number of decent sites to get information from especially if you type in "IVA" and perhaps look at the 4th site for information.

Good luck.

Mrs_pbradley936

Stressed_NW wrote: »

Thanks for replies. Who did your son sort it through and what was his debt and how much did he pay PM, if you don't mind me asking x

The firm he used is this one:

http://www.kingsgateinsolvency.co.uk/index.asp

He pays £300 per month but I do not know all the details of what he owes and who he owes it to.

BUT there is/was no house/mortgage involved. He lost his house years ago!