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Will my house be at risk of repossession if I do an IVA?

PostPosted:Wed Aug 26, 2009 3:53 pm
by Beat My Debt
No. One of the main benefits of an IVA over Bankruptcy for a Homeowner is the fact that under an IVA the sale of your home CAN NOT be forced, whereas, under the terms of a Bankruptcy Homeowners may be forced to sell their property.

However, you should also be aware that in the final year of your IVA a home owner would be expected to remortgage their property and pay any releasable equity into the IVA to increase the return to the creditors.

In certain circumstances, you may be able to consider releasing a lump sum from your mortgage at the beginning of your IVA and undertake what is known as a Full and Final IVA. The lump sum released is used to settle your debt at the beginning of the IVA. The IVA is then seen as being satisfied finished straight away with nothing further to pay. This situation would only be available if your disposable income was very low after the lump sum has been raised.

The time you release this money from your property will be determined by the insolvency practitioner. It could be at the early stages of your IVA or at the later stages of the IVA. Penalty charges, ability to pay, the Loan to Value you have currently and other factors will have to be taken into consideration.

If you sold you property during an IVA you will be required to put all your profits from your property into the IVA. There are certain circumstances where some of the profits can be kept, but this would have to be properly justified.

If you have negative equity in your property, you can still be eligible for an IVA. However in this case there is less likelihood of you releasing equity into an IVA during the term. In this scenario, your IVA is more likely to last for 60 months and will be entirely dependant on you having sufficient disposable income to make a reasonable IVA proposal to your Creditors.