An equity release loan can be useful in an IVA, as long as the lender leaves at least 15% of the house’s value. This avoids the mortgage being foreclosed on. The loan can be taken for a period of up to 20 years and the amount can be as much as half the IVA payment. The maximum loan amount can be determined by individual lender limits and repayment capacity. Statutory interest is generally excluded from the loan.
If the lender can’t get the agreed amount through the IVA, they can apply to court to secure the debt. Repossessed assets may not cover all debts, so it’s important to include unsecured debts in the IVA too. It’s also important to remember that ongoing secured loan payments are an expenditure item, so budgeting for affordability is necessary. In addition, the repayments will go on for up to six years, so a secured loan IVA is likely to be more beneficial for a borrower.
There are a number of IPs who can set up and supervise an IVA, although some charge upfront fees. Typical fees are PS4,000 or more and are deducted from monthly payments to creditors. Beware of IPs that try to get a fee upfront before setting up the IVA. It’s best to find an IP who doesn’t charge up-front fees and can guarantee you the right outcome. The fee for a secure loan IVA can be worth the cost if it’s the best option for you.
If you have a credit history with a large debt, it can be difficult to get a loan through a traditional lender. If you have a bad credit score, you’ll need to search for a specialised lender with access to the whole market. Getting a loan with an IVA isn’t an easy task, so make sure to take advice and discuss the options with a trusted IP before making a decision. Otherwise, you could risk losing your home or facing bankruptcy.
The most important consideration when choosing an IVA is the available equity in your home. The amount of equity you have is determined by discounting the value of your property to 85% and taking away any mortgage and borrowing. Your available equity must be less than PS5,000 at the time of the IVA. The loan will last 60 months. There are a few exceptions to the equity review process. For instance, if your income is low or you are over 60 years old, you don’t have to go through this review.
In many cases, IVAs can help you get rid of both unsecured and secured debt. In most cases, an individual voluntary arrangement will work for you if you have substantial unsecured debt. It’s a good idea to talk to an Insolvency Practitioner who specialises in debt settlement and bankruptcy. Your IVA should be approved if at least seventy percent of your creditors approve of your plan. There are several ways to obtain IVA approval.