The first step in a ecured loan IVA is to assess your home’s equity. The equity can be positive or negative, with negative equity occurring when the outstanding loans exceed the property’s current value. Equity is an asset that is held by the creditors. A clause in your IVA can be set up to release some or all of that equity to creditors. In some cases, it may be possible to get a free valuation from a local estate agent.
One benefit to an ecured loan IVA is that it allows debtors to keep their home. While an IVA may not allow debtors to sell their homes, an ecured loan IVA allows debtors to retain their home and make payments on their unsecured loans. However, some creditors may require a debtor to give up some of their equity in order to pursue an IVA, which could impact eligibility. Therefore, a debt management professional should be consulted before proceeding with a ecured loan IVA.
When choosing an ecured loan IVA, it is important to remember that unsecured creditors are not allowed to repossess a debtor’s property. However, they can take legal action against the debtor in some circumstances. For example, if a debtor sells a house, but cannot pay off the vehicle’s finance, the creditor can take legal action. Alternatively, an ecured loan IVA can prevent unsecured creditors from repossessing a debtor’s home or even filing for bankruptcy.
If you own a property, it is likely that you will have to release some of its equity in order to pay off the loan. If you are unable to repay your secured loan, an ecured loan IVA will help you restructure your debt and reduce your monthly payments. The monthly installments you pay will be split between your creditors. Aside from being more affordable, this payment plan is also an excellent way to get your house back on track.
An ecured loan IVA may not be suitable for every person who needs debt relief. Because the fees are high, an ecured loan IVA may not be a viable option for a person who owes less than PS10,000. You should seek help from a debt management professional if you need help with your finances. The IP may suggest an ecured loan IVA in conjunction with debt management measures such as consolidation or debt management programs to help you reduce your overall debt.
When choosing an ecured loan IVA, make sure you look into the details. Unlike an unsecured loan, an ecured loan IVA will involve all your creditors. The creditors must agree to the agreement, which is often referred to as a ‘proposal’. If the creditors are not on board with the plan, a haggling match will likely ensue and the debtor will end up paying more than they can afford.
A secured loan IVA can be less costly than a remortgage. If Steve had a base rate plus 0.5% mortgage, it would have been more affordable. However, a secured loan IVA should clearly define the type of secured loan and set a limit on how long it should be for the loan to last. Once this is done, the IP can propose a variation to the creditors and save the debtor more money in the long run.