{"id":995,"date":"2013-12-16T12:54:38","date_gmt":"2013-12-16T12:54:38","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=995"},"modified":"2019-01-29T15:22:35","modified_gmt":"2019-01-29T15:22:35","slug":"iva-and-mortgage","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/iva-and-mortgage\/","title":{"rendered":"IVA and Mortgage"},"content":{"rendered":"\n

An IVA<\/strong> is a formal agreement between you and your unsecured creditors to repay<\/strong> a portion of your debt<\/strong> over a limited period of time \u2013 usually five years, but it can be for a shorter period.<\/p>\n\n\n\n\n\n\n\n

Secured creditors expect to receive the full contractual repayments on their secured loans to you over the life of the IVA<\/a> and thereafter. If you have a mortgage, you will be expected to make the monthly mortgage payments to your mortgage provider in full.<\/p>\n\n\n\n

Meanwhile the unsecured creditors receive only a dividend on their \nunsecured loans to you. The size of the dividend can vary. It really \ndepends on what you can afford to pay and what your unsecured creditors \nare prepared to accept from you. Remember that over 75% of your \nunsecured creditors (measured in \u00a3) must agree to accept your IVA proposals<\/strong>\n before your IVA can be approved. In practice the dividend will usually \nfall within the range of 20p in the \u00a3 to 40p in the \u00a3, although of \ncourse it can be much lower and indeed much higher. On occasion \nunsecured creditors can receive 100p in the \u00a3 and even statutory \ninterest on top of that.<\/p>\n\n\n\n

So when you offer your proposals for an IVA, your unsecured creditors are not bound to accept your offer. If they think you can make greater contributions than you offer initially, then they can propose modifications to your IVA which can have the effect of increasing the amount of your monthly contributions or indeed they can seek to extend the term of the IVA for perhaps six months or more.<\/p>\n\n\n\n

If you have a mortgaged property, unsecured creditors will not ignore\n this fact. They will consider the current market value of the property \nand the amount you currently owe to your mortgage provider. You will be \nexpected to provide a current, true and fair market valuation of the \nproperty. You will also be expected to obtain from your mortgage \nprovider a current mortgage redemption statement, showing the total cost\n of clearing your mortgage, including any early redemption penalty which\n might apply. With these two pieces of information, your creditors can \nquickly assess if there is any realisable equity in the property. If \nthere is realisable equity therein, your unsecured creditors may, by \nmodification to your proposals, require you to re-mortgage your property\n during the life of the IVA and introduce some or even all of any \nreleased equity into your IVA for their benefit.<\/p>\n\n\n\n

\"IVA<\/figure><\/div>\n\n\n\n

A well constructed IVA proposal will already include a provision for \nre-mortgaging the property and offering equity to creditors. However, it\n may well be that re-mortgaging is not an option for you simply because \nno mortgage provider will take you on due to your poor credit history. \nAlternatively, you may find that to re-mortgage the property, you may \nhave to pay premium mortgage rates for the same reason.<\/p>\n\n\n\n

Even if there is no equity in the property, unsecured creditors will \nconsider the size of the monthly mortgage repayments. If they are \nexcessive, creditors may propose a modification that you sell the \nproperty and move to rental accommodation, thus enabling you to increase\n your monthly contributions to your IVA. As a yardstick, mortgage \npayments that exceed 40% of net family income would usually be deemed to\n be excessive. Obviously if the cost of rental accommodation is \nsubstantially lower than your monthly mortgage payments, then it is not \nsurprising that unsecured creditors would propose such a modification.<\/p>\n\n\n\n

In recent years, property values have dipped sharply, and many people\n find that their property is in negative equity. This simply means that \nthe cost of redemption of their mortgage is greater (sometimes \nsubstantially greater) than the current market value of the property. If\n forced to sell, the shortfall due to the mortgage provider now becomes a\n further unsecured liability and so would rank for dividend with the \nother unsecured creditors, thus depressing the dividend in an IVA.<\/p>\n\n\n\n

Don\u2019t forget that your partner or spouse may have an equitable \ninterest in your property. In many cases that interest is 50% of the \nequity. Your family may also have rights of residence in the property \nwhich could make a forced sale difficult for creditors, at the very \nleast. In conclusion then, an IVA can indeed affect your mortgage but \nthe good news is that in most cases, debtors will not \u2018lose\u2019 their house\n in an IVA.<\/p>\n\n\n\n

If you are considering entering into an IVA and are concerned that it\n might affect your mortgage, you should initially consult with an \nInsolvency Practitioner, otherwise known as an IP, for advice. A \nreputable IP will look at all of your financial circumstances.  You \nshould incur no costs in obtaining this advice. Your IP will go on to \nadvise you on all of the options open to you including entering into an \nIndividual Voluntary Arrangement (IVA). That is not the only option. You\n might consider entering into a Debt Management Plan (DMP) or even \npetitioning for your own Bankruptcy (BCY). There may be other options \navailable as well. You can choose the best option for yourself in the \nlight of the advice provided by the IP.<\/p>\n","protected":false},"excerpt":{"rendered":"

An IVA is a formal agreement between you and your unsecured creditors to repay a portion of your debt over a limited period of time \u2013 usually five years, but it can be for a shorter period.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-995","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/995","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=995"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/995\/revisions"}],"predecessor-version":[{"id":1009,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/995\/revisions\/1009"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=995"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=995"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=995"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}