How will an IVA affect my home equity?

Creditors generally expect to be able to receive a proportion of the equity

We receive a lot of calls and emails from the public asking; "How will an IVA affect my home equity?".

Please note that if you are a homeowner with equity in your home then the creditors generally expect to be able to receive a proportion of the equity.

We receive 1000’s of calls from worried homeowners that have heard of an IVA but want to protect their house being repossessed or sold.

Prospective IVA clients must understand that an IVA is not a 'Magic Wand' but a procedure that is designed to offer creditors a deal that provides with the same amount of money or more money that they would have received in bankruptcy. This means your creditors will expect to receive some of the the equity in your house, flat or home as part of your IVA.

Find out how much equity there is in your home before you start an IVA

Get an estate agent’s valuation of your property. This should be based on a quick sale
Get a mortgage redemption statement – This will show the amount needed to pay off the money you owe on the house from the mortgage company
Get a Secured loan redemption statement (if applicable)– This will show the amount needed to pay off the money you owe on the house from the secured loan company

In an IVA the creditors can demand creditors up to 75% of the equity in the property - the ‘loan to value’ or LTV ratio - especially given you are looking at an IVA to settle your debts.

Stages in dealing with the equity in the home, house or property in an IVA

If it is reasonable up to 75% of the equity in the home, house or property will need to be released
Most people do a remortgage to release equity in the home, house or property for the IVA.
Most people remortgage or release equity in the final year of the IVA. However ever case is different
The fist stage to releasing equity is obtain the following documents; valuation on the property from 2-3 local estate agents, get some clipping from the local papers showing the prices of similar properties for sale and obtain a mortgage redemption certificate from your lenders. The IVA Insolvency Practitioner will want to see all this information so he can work out your equity.
The IVA Creditors usually request as much equity as possible but end up receiving as much as your remortgage allows you.
Due to the recent “Credit Crunch “where banks are not lending such high mortgages this will mean your equity will be far lower.
If a remortgage is not possible then the IVA creditors will ask you to extend the IVA to 6 years.

If you would like to know how an IVA will affect your home equity complete the following formor telephone freephone 0800 074 6918.

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IVA's

The IVA Guide
The UK Insolvency Helpline has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit The UK Insolvency Helpline's Guide to Individual Voluntary Arrangements (IVAs).
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The UK Insolvency Helpline

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How will an IVA affect my home equity?

Creditors generally expect to be able to receive a proportion of the equity

Find out how much equity there is in your home before you start an IVA

Stages in dealing with the equity in the home, house or property in an IVA

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