If you are having difficulties making the monthly payments on a secured loan, you may want to consider an Individual Voluntary Arrangement. This is a legal arrangement where the amount you owe is reduced to zero and the outstanding debt is written off. You can choose from a monthly instalment plan or a lump sum payment. Some IVA plans combine both options. You should meet with your creditors to discuss your options before you proceed.
You may be able to include any unsecured debt in an IVA. Unsecured debts are those that are not secured by property or assets. Common unsecured debts include personal loans from banks, payday loans, store cards, catalogue accounts and bank overdrafts. An IVA is not suitable for all unsecured debts. However, the debt you have secured against your home may be eligible. This type of debt may be a good choice if your assets are worth less than the amount you owe.
When choosing an IVA, you should take into account the cost of the plan. Some IPs will charge you a one-off fee for the initial meeting. Others will charge you a fee if they put forward an IVA proposal. This type of fee is often lost if your creditors reject the plan. But the costs may be worth it if your debt relief plan helps you continue your business. So, if you are facing financial difficulties and cannot pay off your debt, consider an IVA.
Although an IVA allows you to include as many debts as you want, it’s not recommended for everyone. Most people who choose to opt for an IVA are indebted to three or more lenders. Make sure you can afford to pay off additional debts before you consider filing for an IVA. So, research the various options available to you and find the best one for you. You can start by finding an advisor who meets your needs.
Another option is an IVA with a secured loan. These loans are cheaper than remortgaging, and the cost of a secured loan is a lot lower. You can also ask the IP to propose a variation to your creditors, but this is more difficult and time-consuming than filing for an IVA. The IP should be able to explain the interest rates and term before the IVA starts. They need to understand the full cost of the secured loan.
Once you file for an IVA, the details of your IVA will stay on your credit file for six years. Until your IVA is over, you may have a difficult time accessing credit or loans. If you decide to pay off your IVA early, make sure you tell your IP and discuss the benefits with them. If you’re able to make a reasonable offer, you can also request a variation meeting. This meeting is normally proposed when a change is needed to the original terms.
If you are unable to make the monthly payments on your secured loan, you may want to consider equity release. Equity release loans generally involve the borrower keeping 15% of the home value. In this way, you can avoid foreclosure. In order to qualify, you must have a suitable income. However, the amount you can borrow depends on the lender’s lending limits and your repayment capacity. A secured loan will generally not exceed half of the value of your property.