subject: Car And House Or Other Assets [print this page] Car And House Or Other Assets Car And House Or Other Assets
Unlike with bankruptcy, as long as you have enough income to make the monthly payments, you should be able to protect your house and other assets.
While you won't have to sell your home, you may have to give up a big proportion of your equity', the share of it you own. Creditors can ask you to remortgage and release up to 75% of your share. If you have no equity or are in negative equity' (that is, you owe more than the property is worth) at the start of the IVA, your creditors may demand that the home is re-valued in the fourth year. After that, you may have to give up a proportion of the equity you then have.
If you are struggling to make even the minimum repayments on your debts and think an IVA might be an option you must get personal advice before signing up. Yet equally important is who this advice comes from; you need non-profit debt counselling help, in other words a one-on-one session with someone who is paid to help you, not make money out of you. This is different to free': many commercial companies say they're free as you're not charged directly, but you'll still pay somehow. If you have an endowment policy linked to your mortgage you're likely to be asked to cash it in and add the proceeds to the arrangement. Plus if you have any savings you'll probably have to hand these over as well.
If you've a car but can show that you need it for work, you are unlikely to have to sell it. Yet if you're in the middle of paying the car off under a hire purchase deal, you can't include this debt in the IVA, as the finance company could just repossess the car.
Normally you'll be allowed to keep making monthly payments towards the car (assuming you can afford them), yet when the finance deal ends you'll need to pay the extra money into the IVA instead.
And although an IVA has no impact on your state pension, if you've a private pension it might be affected. In some cases creditors may ask you to stop making contributions over the period, and add the amount to your monthly IVA payment instead. Not all pension schemes will allow you to freeze your payments for five years but if yours does allow it you may have to.
