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[TBabs]

I currently am on a debt management plan with DFH. I feel they are kind of pushing me to change to an IVA but my concerns are with my joint mortgage and how it will be affected. They told me it would mean a fixed sum over five years then debt is cleared unlike the DMP plan I am currently on. Our Mortgage is fixed for a further two years after which we may want to move it . I have read on your site that at the end of the five year IVA If I have any equity in my property I may be forced to release this to pay the debt? Is that right?

[Melissa S]

Hi there Tbabs and welcome to the forum

I understand your concern with your mortgage and starting an IVA. Firstly, if you are in a DMP your credit rating will have been affected and you will still struggle to get a new mortgage in 2 years with a good rate of interest unfortunately. It is best to wait to move if possible or rent somewhere instead of trying to get a mortgage. However, if your DMP is going to last many years you may want to look at another option.

Secondly, is there any equity in your house? It is true that end of your IVA you will need to try to release equity but this is only if there is any. Also it will be almost impossible to remortgage again due to your credit rating and it is more likely that if there is equity to release your IVA will simply be extended for another year to compensate your creditors instead and your equity will no longer be at risk. you are not forced to sell your home in an IVA.

If you can tell us a few more details of your situation we will be able to help more. If you are looking at a longer time than 6 years to pay your DMP an IVA may well be the better option.

[James Falla]

Hello TBabs

As Melissa has said if you are currently on a Debt Management Plan then the first thing you need to understand is your credit rating is currently very poor. This will almost certainly prevent you from moving your mortgage in two years whatever happens.

In terms of the IVA option you are absolutely right. If you started an IVA you need to understand that you would have to commit to trying to release equity from your property in the 5th year of the arrangement. If this is not possible due to your inability to get a mortgage then you will normally have to pay your IVA payments for an extra year. However you need to be prepared to release the equity if you can. I am surprised that DFH did not make this clear to you when they spoke to you about the possibility of an IVA.....