IVA or remortgage?

livewire82

Bit of a complicated situation I have, and one I could really benefit from getting some advice on...

I've been living with unsecured personal debt for as long as I can remember. Currently 1 personal loan that was initially taken for debt consolidation, 2 credit cards, 1 loan for a new boiler, 1 loan for a new kitchen and a payment plan for personal tax bill that I was unable to clear in one go. All of this totalling approximately £30k. All just about manageable if I live frugally plus I've always had a stubborn determination to clear this myself, particularly as I recently started a new job on £45k.
There have been a number of challenges along the way, including no less than 5 redundancies and the varying periods I had out of work really set me back financially.
Until July last year I was also the co-owner of a business (which was a limited company). However, I resigned, with the business underperforming and having built up debt in my Directors Loan Account which sat at around £16k. Not so much of an issue whilst the company remains active but within the last month, the other director who stayed on and whom I no longer have any communication with after a breakdown in our work relationship, has decided to liquidate business. This means my £16k debt is now in the hands of the liquidator and I've recently just received contact from them.
With any money I have left over after living expenses going on all of my other debts, I simply have nothing left to pay towards this DLA debt. I'm due for a £5k pay increase at work in about 4 months and I qualify for annual bonuses, which all helps but there's certainly no way I'd be able to clear that amount any time soon. I've yet to negotiate with the liquidator but I'm not feeling very optimistic about my chances of them just agreeing to my terms.
I recently explored other options and spoke with a company that deals with IVAs. In short, from what I've been told its a bit like bankruptcy whereby I'd be blacklisted from any borrowing for 5 years but not as severe on your credit file. We'd agree to a monthly amount to pay off the total debt and and whatever is left after 5 years is wiped off. Sounds like a valid option for me but for one issue... I am a homeowner and I have equity in my property. I've heard that this may stand in the way of being able to go down the IVA route. So if that is the case, would I be able to release equity for my mortgage to pay off the debt? This is effectively additional borrowing and with over £60k, surely this is not going to be possible?
I just need a bit of guidance on this. My main concern is getting the liquidators off my case. The last thing I want is CCJs and being taken to court, especially with a new job that I cannot afford to jeopardise. But I also need an affordable way of clearing the full amount of debt. What are my options?

fatbelly

An IVA is for people with large debts, some surplus income and an asset to protect. So it's a possibility.

But you haven't had impartial advice yet. If you ask an IVA provider what you should do, the answer will always be an IVA.

Why not run this past Business Debtline?

RAS

Definitely Business Debt Line.

And make sure you fully understand the IVA fees (£6-9k), equity release and mortgage, likely living budget and IVA payment, and that both your salary increase and bonuses will go into the IVA.

You could end up paying a discounted amount to clear the debt, or the whole debt plus the IVA fees.

sourcrates

IVA`s are meant for homeowners with large debts who cannot go bankrupt, but there can be so many pitfalls involved its difficult to say whether its a good choice or not.

Your pay rise for example, will increase any monthly payment you would be making, thus reducing the amount written off at the end.

In year 5 you would be required to re-mortgage, or face another 12 months of payments, any bonus/windfall/salary increase must all be paid to the benefit of your creditors, if your situation improves over the 5 years, you may end up repaying it all plus the fee`s with no write off at all, if your situation worsens, you run the risk of the arrangement failing.

Predicting what will happen over the next 5/6 years is not easy, anything can happen, which is why it`s so important to make the right decision and that starts with good independent debt advice from someone not trying to sell you something.

flipflopflo

Please listen to the wise words of the posters above and get in touch with Business Debtline. 

As they have said make sure you understand 100% what an IVA entails and whether you want to take the risks or whether you want to default on everything and start a DMP. 

BDeluxe

I've never understood the bit that 'requires you to re-mortgage' I was in a similar situation and Nationwide said I couldn't afford to re-mortgage despite having 200k equity when trying to borrow 28k because they take your current debt liabilities into account and ignore the fact they'd be paid off.

I really wish there was some common sense in these situations but as it is I'm stuck trying to pay 2x CC's and a loan which are costing way more and taking way longer than a simple re-mortgage would have done.

If I went down the IVA route I'd make damn sure I couldn't re-mortgage just because paying a further 12 months is definitely going to be cheaper than all the fees they lump in to get you off the IVA.