Selling my home at the end of my IVA

djschoey

Hi There, I have an IVA which was due to finish in September 2014 I lost my income and managed to get the IVA repayments frozen for 6 months, I had fallen 8 months behind. So I have 8 months arrears to finish the original agreement. I was paying £320 per month ok before I lost my job.
I am now really struggling and have fallen behind on the mortgage and other bills. I have equity in my home and am now seriously looking at making a quick sale (for under market value) to clear all my debts and try and start again as the stress is really on top of me at the minute. When I spoke to my IVA supervisor I was told the final fee to repay the IVA early would be just over 25k.
I have some debt with family as well as the bills I am behind and this would wipe out all the equity and just fall short on paying back all family members that have helped. I was hoping to be able to start again and would need to find somewhere to rent while getting back on my feet. I have heard of making a final offer to settle.


My question is am I able to do this if I sell my house? if I do this, I want to be able to clear all my debts and give me enough to find some initial rent which will mean I can then afford to have a lesser paid job. I would be able to offer around 10/11k to be able to do this. is this likely to be excepted?

National_Debtline

Hi djschoey,

The trouble with IVA’s is that they are a legally binding agreement, which means they are quite inflexible, and all of your rights are outlined in the terms and conditions of what you signed. If you are behind with your IVA then, unfortunately, there is a risk it will fail. If it does fail then your Insolvency Practitioner/ IVA provider can petition for your bankruptcy. If you are declared bankrupt I am afraid there is high possibility that your home and equity would be seized from you. It means that you would have no control over how the equity is distributed. It also means that all of your debts would be written off, including personal debts, and you would not be able to repay your family.

Even if you are able to negotiate repayments to keep the IVA up to date you will still need to check the terms and conditions of the agreement. It is quite common that IVA providers will include clauses within the contract about assets and windfalls. You need to know what your rights (and their rights) are to claim against the equity in your home if you sell it whilst you are subject to an IVA.

I think you would benefit from taking free and independent advice as this situation could be quite complicated, especially as your mortgage has started to fall behind as well.

Laura
@natdebtline

silvercar

How much equity is there in the property.

From what you say, the options seem to be:

1. Sell up, use the equity to (a) sort out a rental property (b) pay off family debts (c) pay towards IVA.

You then could use the equity to continue paying towards the IVA. If down the line the equity runs out and as a result your IVA fails, then bankruptcy is an option by which time you should be in a rental of your choice and repaid some of your debts.

2. Sell up and see if you can agree a payment in settlement to the IVA. This may leave little to repay family debts.

3. Sell up, clear the IVA and explain to family that debts will take longer to repay.

4. Continue in your home. Accept that the IVA may fail and the company may make you bankrupt. This will mean you are prevented from repaying any debts. The official receiver will look at the equity in your home and after 2 yrs may look for you to sell up to release the equity (or to buy back the beneficial interest if you have someone that could do that for you). If there is only little equity at that point, you should be able to keep your home.

It all really hinges on how much equity there is in your home and your personal views on repaying family.

*I have no knowledge on whether the IVA can stop you selling up.