If you’ve got a secured loan but are unable to repay it, you can apply for an ecured loan IVA. This is a form of debt relief that requires creditors to vote in favour of the arrangement. However, it is important to remember that the creditors’ votes do not bind the debtor. They can still take legal action against the debtor and can petition for bankruptcy.
While an IVA may seem like a great option for you, it’s vital to speak to your IP first to get the best possible advice. Your IP can also give you tips on how to approach lenders. For instance, they may be able to recommend a credit building card, which you can use to build up your credit score.
However, if your debt is so large that it could be difficult for you to pay it off, an IVA isn’t the right option. It’s better to use another solution, such as a debt management program, or a loan consolidation. These are all beneficial if you have several debts, but they can be risky if you’re not careful.
Although an IVA may be the most appropriate option if you’re already unable to make regular monthly repayments, it’s important to remember that it only covers debts that are considered priority. If you don’t make any monthly payments, your debts could be repossessed and you’ll be left with a poor credit rating. In addition, you might face additional fees and costs if you don’t pay your debts on time.
If your share of equity is PS5,000 or more, you may want to consider equity release as a way to settle your IVA early. This method of debt relief requires you to remortgage or secure a loan with at least 15% of your property’s value. However, you must note that the new mortgage has to be finished by the end of your existing mortgage or before you reach state retirement age. This will reduce the duration of the IVA to five years instead of the standard 30 months.
Unlike unsecured debts, secured loans in an IVA are considered priority debts and therefore must be included in the budget. The IVA supervisor will determine how much a reputable lender will lend you, and whether you can afford to repay the balance. If you’re unable to pay the whole amount of the secured debt, the creditor will likely refuse to accept the settlement.
Another option is to file for bankruptcy. Although this option can be a risky one, it can help you overcome the financial crunch that has affected your ability to pay your secured loan. It is a government-endorsed solution that allows you to pay your debts in manageable monthly installments.
If you need a loan that is more than PS500, you must contact your IP to discuss the options. Your IP will need to approve the loan before it is finalised. This restriction is in place to prevent further debt and ensure your IVA runs as smoothly as possible. If you fail to follow the rules, you may end up with your IVA being terminated and facing legal action.