The success of an ecured loan IVA depends on the circumstances of the borrower and the responses of the creditors. Often, the IVA fails because the borrower is unable to make payments or the creditor refuses to accept lower payments. If this happens, legal action may need to be taken against the creditor. However, the success of the IVA is highly dependent on how the debtor reacts and how much time they have to make the payments.
In most cases, an IVA proposal will be accepted if 75% of the voting creditors agree to the terms. This percentage is called ‘by value’ and applies to all creditors who hold a majority of the debt. Creditors who are owed the most may vote against the IVA proposal and haggle over the terms of the arrangement. They might try to get you to borrow more money, include assets, extend the repayment period or take another loan.
Although there are advantages and disadvantages to an IVA, you may want to consider it before filing for bankruptcy. Although you should not file bankruptcy before speaking with a debt expert, an IVA can help you reduce your debt in a manageable way. It is worth noting that you should consult an Insolvency Practitioner before proceeding with an IVA. It is vital that you understand the full extent of its risks and benefits.
Once you have a draft of your IVA agreement, you should consult with an IP. An IP will be able to advise you about the terms and process of the IVA. Most IPs provide a free initial meeting. Some will require an up-front fee to draft the proposal. You may lose this fee if your IP is unhappy with the proposal. If the IPs do not agree with the terms of your IVA, they may try to get their money back through the IVA process.
However, getting an approved secured loan IVA is not easy. Many lenders will refuse to approve the application if the borrower owes more money than he or she can afford. You must carefully choose the lender for your secured loan. Ideally, your mortgage must be worth at least 85% of the market value of the property and the loan amount must be within your repayment capacity. So, you should consider all these factors before deciding to apply for an IVA.
If you qualify for an ecured loan IVA, you must have a PS100 spare income each month. You must also have equity in your home of PS5,000. Your lender may require you to remortgage your home in the final year of your IVA. The value of your home will be taken into account in your IVA. The final year valuation of your home will determine how much equity you have.
A secured loan IVA may include other debts, such as joint debt. You are generally responsible for three or more debts, but you can include as many as you want. Typically, it is recommended that you have at least two or three lenders. In the case of a secured loan, you will need more than PS10,000 to qualify. If the debt is less than PS10,000, it will likely not be accepted. The lenders’ only incentive to accept an IVA is that it may help you get your home back.