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IVA and Equity

 

An Individual Voluntary Arrangement (IVA) can affect the equity in your property and it is therefore something that you need to carefully think about before entering into. For some people it may not be the best solution to their problems but for others it may provide much needed help. It is imperative that you make sure that you have adequate information on this subject to make a well informed decision.

Equity explained

A property that is said to have negative equity means that the resale value will be lower than the amount that has been borrowed against it. If you are looking to begin an IVA and your property is in negative equity then future equity will not be included in the IVA agreement.
 
It is however more common for a property to be in positive equity. If this applies to you then it is likely that by remortgaging your property you will be able to use some of this money to repay some, if not all, of your debts. If your property has equity in it that can be released then this will most likely be included in the arrangement.

Your home and its equity

If you own your property then your creditors will be keen to know exactly how much equity you have tied up within it. If you were to eventually be made bankrupt then they could make you sell your property to release all the equity and pay back what you owe them.

The affect of your IVA on equity

If you enter into an IVA agreement you will not be made to sell your property. However, your creditors can request that you release up to 75% of the equity during or towards the end of the agreement, if this is not possible then a lower percentage will often be acceptable.

The majority of people will make the choice remortgage their property in order to release equity for the IVA. If this is not possible for you then IVA creditors will most likely expect your IVA to be extended to 6 years.



Are you eligible for an IVA ?

Try our simple debt solution calculator to find out.