One of the most common questions in an IVA is what will happen when I enter the solution, in particular, will I get to keep my house? The IVA enables you to retain your house. It can be a frightening period wondering if you can keep your house but you can always speak to our charity debt advisors to get help with your debt solution.
At Debt Support Trust we specialise in debt solutions and will give you all of your options, along with the pros and cons, so you can make a decision how you wish to proceed.
Alternatively, analyse your debt with our debt test below.
Remortgage or 1 Extra Year
Your property will be included in the IVA. Near the end of the IVA your property will be valued. The outstanding of your mortgage and any securities will be subtracted from the value of your property. If you have any realisable equity – money which can be released – then you will be asked to get a remortgage. In most instances it’s impossible to get a remortgage.
The fees and charges of remortgaging are taken into account too. If you can’t remortgage then the IVA would run for an extra year, known as the equity year. This means you continue to make your IVA payments for another 12 months. You keep your house at the end of the IVA and any outstanding debt is written off.
Example of an IVA with a House
If you are wondering what would happen in an IVA if you have a house then we’ve listed an example below.
Unsecured debt (credit cards etc): £40,000
Monthly payments: £250
Equity in the house: £30,000 (house is valued at £200,000)
If you can’t remortgage to release the £30,000 in the house then your IVA would last 12 months extra at £250. In 5 years you would repay £15,000. The extra year would mean an extra £3,000 would be repaid for the £30,000 equity.
In total, £18,000 would be repaid into the pot. The fees for the IVA company would come out the £18,000 and the rest of the debt would be written off. You would keep your house in this scenario. If you can get a remortgage (or a third party is willing to make the payment) then the IVA would end after 5 years.
My Partner is Entering An IVA
If your partner is entering an IVA then your asset (house) would be included in the proposal. You would not have to include your share of the equity if you are not entering the IVA. You would have to sign an RX1 form to confirm you’re happy to proceed and include the house.
In bankruptcy you would either have to pay your partner’s equity to retain the property or sell the property to release the money back to the creditors.