I think an IVA is best route

Pumpkinmad

Very long story short due to my soon to be ex husbands poor credit at the time the shared ownership house and all family non priority debts were in my name. The financial paperwork for divorce leaves house and all debt to me.

Single Mum, one child. £42000 of debt over 4 credit cards/loans. All defaulted in the last 9 months. I’m paying £5 agreed token payments on these currently. I could realistically afford £150 a month.

From what I’ve read IVA would end up being 6 years as homeowner. I just want a plan for all this to be sorted and the weight lifted. I just can’t risk losing my home as it’s mine and child’s stability

RAS

How much equity do you have?

ManyWays

Could we see a list of the debts please? Lender name, approx balance

When does your mortgage fix end and what rate are you paying at the moment?

How old is your child?

Do you have a car on finance, HP or PCP?

IVAs are very inflexible if you are not paying much a month, it is very easy for one to fail because your bills or expenses have gone up

Pumpkinmad

I have around £58000 equity.

All debts are nearly equal around £10k, one with Link (was Halifax loan), 2 with wescot (were Barclaycards) and 1 with Moorcroft (was MBNA)

fixed rate ends 2029, I earned a lot more when I brought the shared ownership house so I’d never be able to remortgage elsewhere anyway

child is 9

no car on finance

ManyWays

What is your current mortgage rate? A mortgage rate that increases during an IVA has to be provided for in the IVA terms, or the IVA will probably fail.

A 9 year old. You need to consider whether your costs will go up at secondary school - uniform, school trips, school lunches etc. Also more pocket money, mobile, other tech.

£150 a month provides very little room to be reduced if your expenses go up.

Pumpkinmad

current rate is 4.69%

I know it all needs some though and yes child will start costing more (lucky to have very generous grandparents with a lot of that).

I’ve left a little wiggle room. But overall does an IVA looks a good option in my situation to have in done and dusted in 6 years because just saving a bit and making token payments I don’t ever see an ending and I’m a person much calmer with a plan. Thank you

sourcrates

The issue you will likely face, is the re-mortgage clause in an IVA, usually in year 5/6.

You will be required to re-mortgage for the benefit of your creditors, and with approx. 58k equity, you may end up repaying the full 42k debt, plus fee`s/cost`s/interest associated with the IVA, which will amount to around 6k, plus any other associated costs.

This will be on top of the 5 years of monthly payments you will have to make, so it could cost you almost 50k in the end, that`s assuming you can re-mortgage, if not, you face another 12 months of payments.

An IVA is a very complex arrangement, which never gets fully explained by those who sell them, there are many clauses, and caveats attached to them, basically for it to be of benefit to you, you need to have very large debts, with only the bare minimum amount available to repay monthly, re-mortgaging would be a mistake, and should be avoided if possible.

That way you get a good percentage of the debt written off, but if you re-mortgage, you will most likely pay it all back with the standard fee`s on top.

Honestly if the informal arrangement you currently have is working ok, I`d stick with that, have you done CCA requests and affordability complaints?

ManyWays

https://forums.moneysavingexpert.com/discussion/comment/82064845#Comment_82064845

There is no longer a remortgage clause in the very large majority of IVAs where there is a house involved. And a remortgage clause would fail for a shared ownership house anyway.
If you have over 10k in equity at the time the IVA starts, the IVA is 6 years long, with the extra year being instead of remortgaging.
Under 10k in equity when the IVA start and the IVA is 5 years with no need to extend or remortgage in the 5th year.

I think IVAs for low monthly payment amounts are dangerous. If you are paying £400 a month there is at least some room to reduce that. £150 a month with a 9 year old child seems to me to be very very thin. IVAs are very stressful and intrusive when your costs go up. They are not an easy, cruise through the 5/6 years making a fixed payments option.

sourcrates

https://forums.moneysavingexpert.com/discussion/comment/82064916#Comment_82064916

Its been a while since my IVA, I didn`t know that clause had been removed, I do agree with you that IVA`s are not the most "user friendly" of things.

RAS

I believe that the new rules apply to "protocol" IVAs that were introduced earlier this year. So anyone signing up needs to confirm that what they are being offered fulfils the criteria beforehand.

Whether any of the sales people who answer the phones when people ring in response to a social media or TV ad actually knows is a mute point. Which why I'd suggest Stepchange to anyone considering an IVA.

Still very hard doing on a very tight budget over 6 years and a risk that any salary increase or windfall is wiped out or even leads to a settlement exceeding the book value.

Pumpkinmad

thank you all. Think I need to do some thinking. I guess I really liked the idea of having an end date, debts gone and move on. I know I need to ge my head around the thinking process of I’m not more in charge than them but I’d have to get massive settlement offers or I’m still going to be paying debts for about 15 years