Turning secured debt into unsecured?

Scarlett.1974

Evening all,

I do hope I'm not repeating something that's been discussed a dozen times before, I did do a search, but nothing came up

Basically, my question is this: has anyone ever successfully managed to turn a secured debt into an unsecured one? Or am I deluding myself in thinking this could be a possibility?

Brief history:
Lots of unsecured debt, am in a DMP with Payplan.
Massive secured loan with First Plus - approx. balance outstanding is £40k.
We really want to go down the route of IVA but this is impossible at the moment - can't afford it due to the secured loan.
A financial advisor and payplan have suggested we ask First Plus to make our debt with them unsecured so it could be included in the IVA. They think they (as in first plus) may go for this idea because at least they would still be getting *something* from us.

The situation at the moment is not great. We're keeping ourselves above water (I'm sure most of you saw my SOA a few weeks ago), but only just. There is a strong possibility we may end up down the reposession / losing the house road and because we're in negative equity First Plus would be unlikely to see any of their money, so this is the reason they may well go for it.

Sorry for blathering on and I know no-one can answer the question of "Will they? Won't they?" (I'm composing a letter to them in the morning with the help of my payplan lady), but I was just wondering if anyone has had any experience of this sort of situation?

Many thanks,
Scarlett xx

immoral_angeluk

I can't really see why they would agree to that... why accept an IVA in which they may not get the full amount when you could repossess the house to get all of your money back?

Got to be worth a shot though..

Scarlett.1974

immoral_angeluk wrote: »

I can't really see why they would agree to that... why accept an IVA in which they may not get the full amount when you could repossess the house to get all of your money back?

Got to be worth a shot though..

Hi, thanks for replying

That's the thing though, IF we get repossed first plus won't get their money (according the financial adviser I spoke to today) because there isn't enough equity in the house to pay them as well as Nothern Rock (mortgage). He said the mortgage company would get first dibs (so so speak!) and that First Plus would get whatever's left, which wouldn't be very much at all, just maybe 3 or 4k.

Like you said, it's worth a shot, they can (and probably will) only say no.

kit43

Hi

I've just entered an IVA.

A couple of months ago we moved into rented accom (before the IVA was registered) and have our house on the market.

I have an secured loan on the house for 21K, the mortgage settlement figure is 130K and it's on the market for £145. I am no longer paying the mortgage or the secured loan as I cannot afford to do so.

The secured loan was taken into consideration as a contingent debt with my IVA which means that once the house has been sold or repossessed and there is not enough money to pay off the secure loan in full the balance will be added to my IVA as an unsecured debt

I'm not sure if this helps you or not. We decided to move into a rented property as I was in a lot of debt and the mortgage was going up so often that combined with my secured loan I just couldn't manage to pay it.

There was never going to be enough equity in the house to sell and make any sort of profit and I will probably never take out another mortgage which I am happy about. I know it's a pension for some people but once you've remortgaged a couple of times like we did you can kiss goodbye to any equity.

My rent plus my IVA payment is less than I was paying for mortgage and secure loan and I will be debt free in 5 years which feels pretty good!!