IVA and Mortgages

If you have taken a loan, which you find difficult to repay and want to control your personal debts, avoid bankruptcy and retain your home then an Individual Voluntary Arrangement or an IVA may be the best solution for your debt problem. In UK, it has been seen that indebtedness has increased dramatically which has led to an increase in demand for IVAs.
 
An Individual Voluntary Arrangement is a method by which bankruptcy can be avoided. An IVA is a formal payment agreement made between you and your creditors for a stipulated time, usually five years. An IVA is only accepted when 75% (by value) of your creditors accept the proposal. Once the IVA is complete is over, any remaining debt is written off.

One of the main advantages of IVA is that the mortgages are regarded as ‘priority debt’ and hence the payments are made in advance to the rest of your creditors.  IVA payments are calculated on your disposable income, this being the money left over after secured debt repayments and essential living expenses have been taken into account. As long as the mortgage payment continues, an IVA will not affect your mortgage.    
 
There are certain things you should keep in mind if you have a mortgage and thinking of going for an IVA:

• If you cannot complete your obligation under IVA you may be at a risk of bankruptcy and your home might be at risk.
• There is a clause in the IVA proposal according to which a part of your additional income, which you get during IVA, should be paid into IVA for the advantage of your lenders.
• If you have equity in your property, the lenders anticipate a portion from this equity which is generally 75%. This usually happens when you are in a state to re-mortgage the property to release this equity.

If you have large debts and are struggling to meet all of your repayments then an IVA is a healthy alternative to bankruptcy. There is enough material and literature available on the web to give you a detailed knowledge about IVA and mortgages.