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IVA – a lifeline in a rising tide of
repossessions?
07/05/08
Last year,
27,100 properties in the UK were repossessed. This year, the Council
of Mortgage Lenders (CML) expects around 45,000 – a figure which
highlights the difficulty some homeowners are experiencing as they
struggle to make larger mortgage payments without neglecting their
unsecured debts. In many cases, the most effective way to ensure
adequate funds for the former is to bring the latter under control.
This is one of the key benefits of an IVA (Individual Voluntary
Arrangement).
“Like tenants, homeowners throughout the UK are facing steady
increases in the cost of living,” says a spokesperson for Debt
Advisers Direct. “But many are also being hit with rising mortgage
costs, especially those coming to the end of their mortgage terms
and looking for an affordable new fixed-rate deal. For many of them,
the only way to make their increased mortgage payments is to reduce
the cost of their unsecured debts. After all, there’s only so much
they can do to cut back on their discretionary spending. When that
isn’t enough – and when they’re facing significant levels of debt –
an IVA can be their best way forward.”
“2007’s repossession figure was a real wake-up call: the last time
we saw more repossessions was back in 1999, the final year in a
decade in which nearly half a million properties were repossessed.
Although the 90s started under very different conditions, with the
Bank of England’s base rate at nearly 14%, it’s still worrying to
see repossessions once more rising to this kind of level.”
A form of insolvency, an IVA is a legally binding agreement between
an individual and their creditors. The individual agrees to make
fixed monthly payments for (normally) five years, based on what they
can afford after essential living expenses. The creditors agree to
freeze interest, not to take any legal action, and to write off the
outstanding debt at the end of the IVA.
So an IVA delivers both short- and long-term benefits. It reduces
the individual’s monthly repayments to unsecured debts, freeing up
money for mortgage payments and other essentials. Like bankruptcy,
an IVA writes off their outstanding unsecured debt and lets them
make a fresh start – but unlike bankruptcy, it also helps them
protect their home.
Debt Advisers Direct helps people with financial difficulties,
providing free advice and tailor-made debt solutions. The company is
part of the Think Money Group, one of the UK’s leading financial
solutions providers. Think Money is headquartered in Salford Quays,
Manchester, and employs around 600 employees to deliver a
comprehensive range of debt, loan and banking solutions. It defines
its mission as ‘To educate, rehabilitate and advise on all aspects
of financial management’.
http://www.debtadvisersdirect.co.uk/
Nick Gibson, editor
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