To IVA or not?

onereallynicespeed

Hi there.Im a new member to this site so bare with me.We are struggling with a large loan from Barclays Bank.We have never defaulted a single payment in 5 years but I lost my job recently and wages have spiralled down so it's becoming a huge weight.the loan is for £500 a month.We are now nearly £2000 overdrawn in our personal account.I also have a loan from my old business which folded(£170).A pop up on Facebook for "debtfree again" caught my eye so filled in a few details.They subsequently rang me and I fed them all of my information.they said they could help and listed 4 possibilities from bankruptcy to IVA.We still have 5 years to pay on the large loan and we have a daughter leaving school this year as she is 18 so our tax credits will be cut in half.We are just about surviving but as the wages go in to steady our account then we are back to square one.Im in part time employment now and so is the wife.We know that the house is secure but my father in law has a severe illness and my wife is at breaking point.Barclays said we need to default 3 times on the loan before they will help.Seems ludicrous! Our credit rating goes down if we default and down if we IVA! I didn't want to jump into IVA unless in know more of the facts? Thanks in advance.

Foxy-Stoat_3

What is the total outstanding unsecured debt?
What is the total outstanding secured debt?
What is the balance on your mortgage?
What is your house worth?

I would not be talking to a "pop-up" on face-ache, I would speak to a proper debt charity before signing anything.

onereallynicespeed

Hi Foxy.We have no secured debt.the total amount of unsecured debt is roughly 36000.Our mortgage is 162000 and there is no equity in the house.The house is worth the same as outstanding mortgage.We have been on interest only mortgage ever since we started which was 8 years ago.

Foxy-Stoat_3

Sounds like you need to explain ALL of your financial information to a debt charity as I would be more worried about what happens when your mortgage has finished and your left with a £162,000 bill to pay in 17 years time.

You could do a 5 year IVA which will be extended another 1 without the equity release.

Then on year 14 of your 25? year mortgage you would of hoped that your property would be worth 10% more than it is now which should allow you to think about going on a repayment mortgage for the remaining 10? years.

Good lucks

debtfree2016

Hello onereallynicespeed, Foxy-Stoat is correct on pop-ups you need to speak to a debt charity. You will also need to look at the mortgage paperwork if you are on INT only the Lender could decide that you have to go over to Repayment and this could happen after you have set up the IVA.

Foxy-Stoat_3

debtfree2016 wrote: »

You will also need to look at the mortgage paperwork if you are on INT only the Lender could decide that you have to go over to Repayment and this could happen after you have set up the IVA.

It may be better to address the mortgage before you go down the IVA road, if you decide to, as changing a mortgage after your credit history is shot will be much harder. The lender may well not be able to offer you anything as you have no equity but worth an ask while you have reasonable credit history.

Do you have any endowment policies or other assets or any repayment vehicles in place for your property?

onereallynicespeed

Hi guys,thanks for your replies.We spoke to an independent financial advisor about our mortgage a while ago.He said a lot of people are going to be in the same boat and he didn't have an answer with all those years ahead.We had a specialist mortgage in the first place because I was then self employed and property was at the all time high! A month later the house bubble burst! We put 18000 down as a deposit and haven't recouped any reward.the house was 180000 and left us with 162000 mortgage.its just worth 162 at this moment.We can't switch because we have no equity in the house.

debtfree2016

In that case I would suggest you consider going onto a repayment mortgage with your provider if you were to head down the IVA route. Better to include the greater repayment now than to have to find whilst in an IVA. I speak from experience and it was the biggest mistake I made but nobody highlighted to me before the IVA papers were signed.