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| IVADougie |
Posted - 22 November 2010 : 14:19:48
For the past 18 months I have been trying to get my head around what to do both short term and long, I went down the IVA route yet I still have a terrible nagging doubt about my choice.
My wife and I entered into an IVA in Sept '09 and had initially intended to move out of our house into rented accommodation thus leaving behind a huge interest only mortgage and 2nd mortgage which, when combined put us around £50k in negative equity.
Despite this plan, 6 months into the IVA we changed our mind and decided to stay in the property as we were so worried about falling off the housing ladder. The result meant a variation to our IVA which was thankfully approved.
However I am really concerned, as whilst we are just managing to pay our IVA we have another 4 1/2 years to go, property prices are still flat so we are still in the negative equity by around £50k, interest rates are due to rise and we are set to lose our child benefit in 2013. This makes me doubt we could continue the IVA.
What I really want to do is somehow get the 2nd mortgage into the IVA (but not give up the house) so at the end of the term I am at least back in a positive situation but I can't see how this is possible so am considering bankruptcy.
This is where I need advice, if we went Bankrupt now and stayed in the house then nothing would really change. However, if my wife gave up her job to look after the children full time we could just scrape by on my salary but could not afford to pay the 2nd mortgage at all and there would be nothing left for any creditors each month. I want to know what would be likely to happen? If I just stop paying the 2nd mortgage then sooner or later they are going to take action, if at that point we declared ourselves bankrupt could they still force the sale of the home even though it is in negative equity (by more than their stake) and they would get nothing from the proceeds of such a sale?
I'm really hoping an expert can explain the likely outcome to me. |
| 2 L A T E S T R E P L I E S (Newest First) |
| IVADougie |
Posted - 22 November 2010 : 17:09:05
Thanks Melanie and also for the direct email reply.
I suppose I was hoping that the secured loan may be able to be dealt with as unsecured if, as in this case, the sale of the house at full market value would not yield anything to the 2nd charge holder as it would barely cover the main outstanding mortgage balance |
| Melanie.n |
Posted - 22 November 2010 : 16:34:20
I belive I have dealt with this post direct by email, just to recap:
If you stop payments into your secured loan you run the risk of the property being repossessed.
The loan is secured on the property and the secured creditor has the right to realise their security if you default on the repayments.
You cannot bring the secured loan into the IVA nor include in a bankruptcy unless the property is sold/handed back/ repossessed - unless either of these have occurred/ about to occur, the secured loan is still secured on the property and as such cannot be included in either option.
You have two choices
If you wish to remain in the property then you need to remain in your IVA (or go bankupt) and continue to make payments into your secured loan
OR sell / hand back the property upon which the secured loan becomes 'unsecured' and can at that point be included in any future bankruptcy
IVA's & BAnkruptcy only deal with your 'unsecured' debt
Hope this clarifies matters for you
Melanie Nicholas
29 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
email me at melanienicholas@jonesgiles.co.uk
telephone 01792 899996
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