IVA and Help To Buy

dietcokehead

Hi, I’d be grateful for some opinions/advice please.

I’m in month 24 of a 72month + further 12m or equity release IVA.

My IVA is £65 a month original debt was approx £25k

I am on a very low income but there is equity in my house (enough to settle the IVA) but my house has a help to buy attached to it.

My fixed rate ends soon and mortgage will go up by £200/300 a month which will potentially wipe out what I pay to the IVA. 

I don’t think I’ll be able to borrow more money due to low income and bad credit.

I’m completely stuck on how to proceed and the stress is making me ill.

If I sell the house I’d need more than the balance of the IVA as a deposit due to house prices having risen so much. 

Does anyone know if that’s possible? Would creditors accept a lower settlement figure of 40-50% and if so should I arrange that with them before I put my house up for sale?

I feel stuck because if I stay here my IVA might fail due to mortgage payments increasing but if I sell I won’t be able to buy a house without using a lot of my equity as a deposit.

I don’t feel I can ask the IVA for advice on this as they misadvised me on setting it up which is why now in a 7yr term not a 5yr. 

If I stay and the IVA fails I could lose my house couldn’t I? Just me and my daughter here. The IVA payment is such a small amount it feels stupid to let it fail but then the stress of going to term and still losing all the equity anyway seems a bit redundant, maybe it would be better to sell the house and settle it now.

I feel like I won’t survive to the end of the 7yr term because of the stress of all the constant money worries I’m struggling with. I’m really really struggling mentally with it all. 

Any advice would be appreciated.

sourcrates

Very few failed IVA`s actually end in bankruptcy, what normally happens is the IVA gets wound up and the original debts start getting chased again, once it has filtered down the food chain what has happened.

If you think its going to be unaffordable, then letting it fail, and once the dust has settled, start a debt management plan, would be the most likely route to take.

However, a DMP of less than £65 quid a month will take forever to repay, can you not cut back on your budget elsewhere to find the IVA payment ?

As its quite a small amount of money, surely you can scrape it up from somewhere, it seems a pity to fail the IVA on that basis.

dietcokehead

I did but not to the extent rates have risen and I didn’t foresee employment and complications caused by the pandemic and cost of living crisis we are now in. It was sustainable for the term when I entered into it. Circumstances have changed drastically. 

fatbelly

Don't rush to sell up as you will be liable to pay the full balance of the debts in the IVA plus the IP fees.

See what mortgage deal you can get from your existing lender (and/or use a specialist broker) when the time comes.

If you genuinely cannot afford the £65 per month for the IVA at that point then stop paying. It will probably take 6-12 months for the IVA to be terminated.

You talk about 'all the constant money worries I’m struggling with'. Why don't you post a statement of affairs on the debt-free wannabe board and we'll see if we can suggest anything.