If you own a home with equity, you’ll usually need to remortgage or release equity in the fourth year of your IVA.
May not be suitable in all circumstances. Fees apply, read more. Your credit rating may be affected, read more.
An IVA is a formal insolvency procedure. It must be approved by your creditors, stays on your credit file for six years, fees are taken from your payments, and debts are only written off if you complete it. It isn’t right for everyone.
An IVA can be an option if you owe over £7,000 in unsecured debts and can afford monthly payments of around £100. For homeowners, an IVA offers an advantage over bankruptcy and Debt Management: your home is protected from legal action by your creditors.
Once your IVA is in place, creditors can’t ask the court for a charging order, and they can’t petition for your bankruptcy. Your home could still be at risk if you don’t keep up your payments — and you’ll almost certainly be asked to remortgage or release equity to help repay your debts. Here are the questions we’re asked most.
Usually in the fourth year of your IVA. Most IVAs run for five years, so you’ll be near the end. The timing gives you breathing space, so you aren’t hit too hard by the extra cost.
Yes. The insolvency practitioner who sets up your IVA will discuss it before the arrangement begins. If it’s likely to be required, it forms part of the proposal sent to your creditors and is written into the legally binding terms.
Your creditors will expect you to raise as much as reasonably possible. How much depends on your circumstances, and lenders often cap equity release at around 75–80% of your property’s value.
See which debt solutions you could qualify for. Checking your options won’t affect your credit score.
Not necessarily. The rates available depend on market conditions and may be affected by your credit rating or payment history, so you could end up paying more. There may also be upfront fees, even with the same provider.
It isn’t always possible. Your IVA terms set out in advance what happens then. In most cases the IVA is simply extended by 12 months: your normal payments continue for an extra year.
Yes — provided you make all your payments on time and keep to the IVA’s other terms. Even if a 12-month extension raises less than a remortgage would have, that won’t count against you: once the IVA ends, the qualifying unsecured debts included in it can still be written off. For more, see an IVA and your credit rating.
If your situation allows and your IP agrees, yes. A better-paid job or moving in with a partner can lift your disposable income. If your circumstances change, tell your IP, and read adding new debts to an IVA if anything new has come to light.
See which debt solutions you could qualify for.
