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A good starting point for IVA questions
By dipsy007
Hi all

I am coming up to completing my second year in an IVA and a new debt has come to light. It is a joint debt with someone else (mortgage shortfall following repossession) which was not on the cards when I took out my IVA. I was named in the mortgage but never lived in the property and made no payments towards the mortgage. The other person is filing for an IVA to cover other debts and the whole amount of the shortfall of the mortgage. I understand that I am jointly and severally liable for any debt incurred by the repossession.

Can anyone tell me what will happen to my IVA? If the mortgage company accept that the other party is entering into the IVA and claiming the whole amount of the debt (which has been agreed by the company they are going into the IVA through) will the mortgage company be entitled to also chase me for the debt?

I am a bit confused by this all and not sure whether I now have to put my half of the debt onto my IVA and how this will affect things. Any advise would be gratefully received.
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By Geraldine
Hi Dipsy007 and welcome :)

The first thing to say here is if you are a joint mortgage holder as named on the mortgage and the other named person starts an IVA then you will still be liable for all of the shortfall debt the mortgage company will chase you for 100% of the outstanding balance.

Given this the first thing you should do is speak to your IVA company about the situation. Explain that you are now liable for this new debt and find out if it can be added to your IVA.

The problem is that mortgage shortfalls are normally quite large so it is going to seriously affect the amount that your original creditors are paid in your IVA. There will have to be a variation meeting for them to agree for the new debt to be included. They might agree but they will probably want you to extend your IVA payments by 12-24 months to compensate them.

If your IVA company feels it is impossible to add this new debt or the extension of your payments makes the IVA unrealistic for you then my suggestion is to consider allowing your IVA to fail and go bankrupt. You may be asked to make payments towards the debt for 3 years but this is no more than you are currently facing in your IVA and could end up being far less.

This situation and your options is explained in this article written by James Falla. It would be well worth having a read: What happens if my house is repossessed during my IVA?
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By James Falla
Hello dipsy007

Sorry to hear about your situation especially as you have never lived in this property and do not seem to have had any benefit from it. However Geraldine is quite right that if you are a joint mortgage holder and the other mortgage holder goes into an IVA then you will remain liable for 100% of the outstanding shortfall debt not just your half.

This is potentially a very serious situation and you need to speak to your IVA company about it asap. If the new debt is large it might be very difficult to add it to your IVA. If not then as Geraldine has suggested one option is to allow your IVA to fail and go bankrupt (given you are not the owner of your own property as well).

Please let us know how you get on and come back to us if you need more help.
By Melissa S
Hi dipsy007
you have already been given some good advice by geraldine and James. I just wondered if you had spoken to your IVA company and what the news was?

Please let us know how you are getting on and if you need anymore advice.