IVAs – one way of avoiding repossession
Released
on: August 20, 2008, 5:46 am
Press
Release Author: Debt
Advisers Direct
Industry:
Financial
Press
Release Summary: Although IVAs (Individual Voluntary Arrangements)
don’t address mortgages and other secured debts, they do
reduce payments to unsecured creditors, potentially freeing up
funds for mortgage payments, helping homeowners avoid repossession.
Press
Release Body: Commenting on the rising number of home repossessions,
debt consolidation experts DebtAdvisersDirect.co.uk point out
that IVAs (Individual Voluntary Arrangements) and other debt solutions
could help people stay in their homes.
Of
the 45,000 repossessions expected by Council of Mortgage Lenders
(CML) in 2008, there were 18,900 in the first half of the year.
In the second half, therefore, the CML expects a further 26,000
or so.
“As
with any statistical forecast, this figure isn’t written
in stone,” said a DebtAdvisersDirect.co.uk
spokesperson. “Times are particularly tough for homeowners,
but many people threatened with repossession may be able to resolve
their situation by talking to their lender, and by taking steps
to sort out their finances and free up enough money for their
mortgage payments.
“Different
homeowners will, of course, need to adopt different tactics to
avoid repossession. Some may just need to reduce their spending,
while others may need to consider taking in a lodger, for example,
or working longer hours.
“But
for many, the problem is unmanageable debt. Many people can’t
afford their mortgage payments because their non-priority debts
are taking up so much of their budget. We would advise anyone
in that situation to seek debt help immediately. A professional
debt adviser can help them go through their finances and figure
out what steps they would need to take to free up the necessary
funds.”
Often,
those funds are already there: “Very few people know exactly
where all their income goes. They may know where they spend large
sums of money, but the smaller sums can easily slip through the
cracks – and they all add up. This is why so many people
find they have enough ‘on paper’, but not in reality.
A debt adviser can help them create a monthly budget sheet and
track their spending more effectively.”
Some
homeowners, however, are facing more serious debt problems. “At
a certain point, the monthly debt repayments simply exceed the
individual’s ability to keep up – there just isn’t
enough money coming in to service the debts and cope with the
ongoing bills. Once this happens, they find it’s almost
impossible to pull themselves out of debt without professional
help. The important thing is to get in touch with a debt specialist
as soon as possible, and find out what they can do to help.
“Depending
on the individual’s circumstances, the best debt solution
could be an IVA.
As a form of insolvency that helps people clear significant debts
without resorting to bankruptcy, an IVA can be an effective way
of reducing their monthly expenditure, freeing up the money they
need to make their mortgage payments and start paying off any
arrears that have built up.”
An
IVA is a legally binding agreement between an individual and their
unsecured creditors, which normally lasts for five years. “The
individual commits to making fixed monthly payments throughout
the IVA, based on what they can afford after taking their essential
living expenses (including mortgage payments) into account. If
enough of the creditors agree to the terms, they’ll agree
to freeze interest, not to take any legal action, and to write
off any outstanding debt at the end of the IVA. Like bankruptcy,
an IVA helps borrowers make a fresh start, but unlike bankruptcy,
it helps them protect their home – they may have to release
some equity, but it’s extremely unlikely they would have
to sell.”
Yet
it’s important to recognise that IVAs are not an appropriate
solution to every homeowner’s problems. “Whatever
financial issues an individual may be facing,” the spokesperson
concluded, “it’s vital they seek debt advice from
a specialist offering a range of debt solutions – someone
who can help them take stock of their situation, understand their
options and identify the best way forward.”
About
Debt Advisers Direct
www.debtadvisersdirect.co.uk
helps people with financial difficulties, providing debt
help & advice and tailor-made debt solutions.
Web
Site: http://www.debtadvisersdirect.co.uk
Contact
Details: Melanie Taylor
melanie.taylor@debtadvisersdirect.co.uk
0845 056 6480
Pennington
House
Carolina Way
South Langworthy Road
Salford
Greater Manchester
M50 2ZY
2008
