IVA Bad Credit Mortgages

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IVA Bad Credit Mortgages

Mortgage arrears - could an IVA help me repay them?

If you are dealing with unmanageable debts, choosing an IVA (Individual Voluntary Arrangement) may be appropriate for you.

However, it is important to note that an IVA will not be right for every person in debt. Not all types of debt are covered on an IVA - and you may find that an alternative debt solution, such as bankruptcy, is a more appropriate solution to consolidate your debts.

What types of debt will an IVA actually cover?
An IVA will basically only cover your unsecured debts - in other words, debts that aren't secured against valuable assets such as your home. So, your IVA could include debts such as credit cards, store cards, overdrafts, unsecured loans, etc.

It is important to understand that your secured debts, such as your mortgage payments or your secured loan payments, will not be covered on an IVA.

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Is there any way an IVA could help with mortgage arrears?
An IVA can't help you directly with payments to your mortgage, but it could still help.

After all, payments to your IVA will be calculated based on the amount you can actually afford after your essential expenses have been covered. Your essential expenses include secured debts - so, as long as you and your mortgage lender are able to agree on a way of repaying your arrears, the IVA payments may be calculated around this.

However, on an IVA, you will need to have a certain amount of disposable income available each month to put towards repaying your debts (in general, this usually turns out to be at least £200). Even so, if clearing your mortgage arrears means you wouldn't have the necessary disposable income for the first few months of your IVA, your IP (Insolvency Practitioner) may still be able to talk to your lenders and come to an arrangement.

A note about IVAs
Note that entering an IVA will have a serious impact on your credit rating. Plus, if you're a homeowner, you may have to release some of the equity in your home so you can pay your creditors more.