IVA now wants equity on the house

purplepixi

My partner and I are not married. But we do have a mortgage together. He ended up taking out an IVA 4 years or so ago to cover the debt from his ex-wife.

He is the main income earner, I'm self employed but don't bring in more than £500 per month.

We have 19 years left on the mortgage, and fixed for a new deal in January.

I also have a debt management plan in place.

Ok so back story over. He received a letter which wasn't from the IVA company, it was from another company. Telling him as he's coming in to his final year of the IVA he has to release equity in the house.

He contacted the IVA firm who said yes this is in the small print. 

He had no idea about this. And I'm flabbergasted. It's a joint mortgage. 

My question is can they force this legally, I didn't sign the paperwork, and I don't agree to remortgaging the house. And with my debt repayment plan we wouldn't get one anyway. 

It's really causing a lot of stress. We can't afford to see a financial advisor as all of our money goes towards the debt.

He's even talking about transferring the whole property to me and then declaring bankruptcy - I think he's probably just said this out of panic. But he was lead to believe the IVA wouldn't affect the house.

tls123

Can you check with an independent debt helpline not associated with the IVA company surely they can’t force that if you are a co owner on the house and has an existing mortgage it would affect the existing mortgage company security. 

tls123

https://www.gov.uk/debt-advice

Grumpelstiltskin

Taken from the help thread at the top of this board.

Individual Voluntary Arrangement (IVA) & Debt Relief Order (DRO) Info, advice and help thread. — MoneySavingExpert Forum

Did he not realize exactly what he agreed to when he took out the IVA?

elsien

Clearly not.

I would second getting the independent advice from someone who’s not being paid from provide it. 

When he took out the IVI did he declare the house was in both names?

fatbelly

It's a standard clause.

Most people can't release equity so they do an additional 12 months.

Debt camel has advice around this. I'll link to one article but you may want to read around re complaints

https://debtcamel.co.uk/debt-options/iva/#The_“secured_loan_clause”

fatbelly

purplepixi said:

He's even talking about transferring the whole property to me and then declaring bankruptcy - I think he's probably just said this out of panic. But he was lead to believe the IVA wouldn't affect the house.

This is a huge NO.

He misunderstood what he signed up to. An IVA is bankruptcy for someone who has something to protect, usually a house with equity. You will not be forced to sell the asset but if you can release equity from it then this goes to benefit your creditors. As I said, if you can't, then you do an extra 12 payments

purplepixi

Thank you everyone. I'll let him know

ByzantineByron

Just to echo other statements;

When I entered into an IVA it was explained to me that the ideal scenario is that they last 5 years. In the 5th year you are asked to remortgage in order to release equity to make one full and final payment.

However as my mortgage advisor explained to me about ten minutes ago, the vast majority of high street lenders will not allow this as it constitutes extra lending to a person with an IVA. In that instance, the plan carries on as normal for another year.

Definitely get some advice on this from a charity like Stepchange before you do anything though. 

miaboo

If it's a joint mortgage you can say no you don't consent, ring them up and let them know. Then the extra year of payments is needed instead