What happens to unsecure loan on mortgage, when IVA is finished.

Concerned75

Hi.
I'm in an IVA because my mortgage company manipulated me at a vulnerable time to put my unsecured loan into my debts, as what I owed the bank, wasn't enough to be in an IVA.
The IVA finishes next year.
What happens to the unsecured part of my mortgage? Does it get written off or continues to be paid until the end of the term? If it continues to be paid, what was the point of the IVA?
Replies appreciated.

mwarby

A pre IVA debt is included unless specifically excluded, loans that are excluded would be in IVA proposal or chairmans report. In my case my student loan was excluded.

Are you sure you didn't pay off your unsecured loan by extending a secured loan(your mortgage) ? In this case the IVA won't write off that loan.

I'd say the point of the IVA was to write off any unsecured that you couldn't afford, avoiding bankruptcy, which may have caused you to lose your home

sourcrates

You need to check your IVA paperwork, all the included debts and creditors will be listed, along with the amounts outstanding (pre IVA).

If you still have any questions, give your IP a ring.

DorisTrousers

There were a spate of cases a few years back with Northern Rock together loans. Did you have one of those?

If you did, then the unsecured element of the loan, which is assumedly in the IVA, will be written off when the IVA finishes. There was a big commotion about how Northern Rock were being unfair to debtors by insisting on 6 year IVA's, which then translated to 7 years if equity could not be released, but that was unjustified, inasmuch as paying for 7 years against a debt that may have had up to 25 years to run if it followed its normal course is a pretty good deal.

Concerned75

My mortgage indeed started with Northern Rock, then got moved onto debt management NRAM and now it is clear of arrears, it's been passed onto Landmark Mortgages. Aside from my mortgage, which was £86k, bank debt was 12k and unsecured mortgage loan was 16k, which is how they created a £28k IVA.
So, does that mean when the IVA finishes, I should still make normal payments of my £86k mortgage and the £28k should be written off?

Concerned75

There was a big commotion about how Northern Rock were being unfair to debtors by insisting on 6 year IVA's, which then translated to 7 years if equity could not be released, but that was unjustified, inasmuch as paying for 7 years against a debt that may have had up to 25 years to run if it followed its normal course is a pretty good deal.

Exactly, exactly exactly. That's the bit I couldnt understand why parts of your mortgage debt is crammed into a short space of time to pay it back, when you have a 25+ year term.
No-one knows what the future holds and most people pay off their mortgage quicker than anticipated, which probably infuriates lenders, as they don't get their full term interest drip.

memberme

I was with Norther Rock, then nram then landmark and also with unsecured part.

after first year on my iva, the unsecured part of the mortgage never showed on any part of nrams statements again but i did know it was included anyway. Check your initial list of creditors you told your ip about. it should be there. my iva had to be 6 years due to this aspect if my debt

So yes it dissapeared. If yours was missed you could possibly add that later as a variation if your ip and otger creditors agreed

adyj73

My Coventry 'moregage' loan was in my IVA and disappeared after my IVA finished. When I bought house 95% was the secure mortgage and on top of that Coventry lent me 5% as an unsecured loan.

I do of course continue to pay my mortgage and in fact am paying it off sooner than 25 years. 19 years is now how long it will run for as I got a lower interest rate but kept my payments the same as I always had paid

Concerned75

I spoke to my IP today, who tells me that at the end of the IVA, I have to go through the process of having the house valued and if it's over £5k equity, then another round of 12months IVA is actioned.
So, after all this, you then have to find the money for a valuation and a potential redemption figure for a remortgage.
I personally think IVAs are very stressful and by law, shouldnt be offered to people who owe less than £50k and work/health is intermittent.
A separate type of payment plan should be devised to reflect the times the debtor's wages go down, poor health and unable to work, or change/nature of job.
If you're paid the same every month, have sickpay/ benefits at work and likely to stay in that job for at least 5years, because of the type of security, i.e public sector job, then IVAs serve it's purpose from start to finish.

DorisTrousers

You should not have to pay for any valuation, and it is indeed likely that you may have to do another year, but that is almost always much preferable to releasing equity anyway.

memberme

Doing the extra year depends on your contract.

We would have had to try and release equity only should our LTV be better than 85%. As it wasn't, the house was no longer in the loop. We were told that only unscrupulous IP's were setting up contracts asking for an extra year against/instead of nothing if there was no equity. However, I do hear of many that have to do that.

I was told you should only have to do an extra year if you have better than 85% LTV and cant release it (which most can't ).

But depends what you signed up to in your contract.

I was with the now defunct ClearDebt and IP was Mr Mond who fought hard for many of the improvements made to contracts over the years.