Ask Your IP Before Changing a Mortgage While in an IVA
Today I have been speaking to someone who has been in an IVA for 2 years. When they started their IVA they were single and owned a flat with some equity. As with many similar IVAs, there was a clause included that stated any available equity from the property would have to be released for the benefit of the creditors in the 4th year of the IVA.
Unfortuanately this person says that they were not aware of this clause. During the last two years, they met a new partner who also had a property. They decided to sell both their properties and combine the proceeds to buy one larger house. They did this without the knowledge or consent of the person’s IP. This has caused huge problems. It turns out that the person had £20,000 of equity in the property which was released and put into the new home. The new mortgage is such that it can not be changed for 5 years. The creditors are now taking the view that the release of this equity has broken the IVA agreement and if £20,000 is not made available the agreement will fail.
This helps illistrate that if you are in an IVA, you must ensure you understand its terms and conditions. Do not change or take on a mortgage without the prior knowledge and concent of your IP. It could have dire consequenses
