Bankruptcy and Your Home
As one of your most valuable assets, your property may be at risk if you can’t pay your bills. The good news is that an IVA can help you keep possession of your home – regardless of whether you rent or pay a mortgage.
Bankruptcy and Your Home
If you are made bankrupt (England and Wales), you will usually be required to sell your home to help pay your debts unless you are able to make arrangements for someone to provide funds equal to the value of your interest in your home. The costs of bankruptcy are substantial and these would also be paid from the sale proceeds of your home.
1. Individual Voluntary Arrangements (IVA) and Your Home
Setting up an IVA will, in almost all circumstances, prevent your home from being taken away from you. The major banks and credit card companies have agreed a ‘Protocol’ for consumers who are struggling to repay their debts and who propose IVAs. Under the terms of the Protocol the banks and credit card companies agree not to require you to sell your home. They will expect you to try and realise some money to pay your debts by obtaining an affordable secured loan or remortgage and if it is not practical for you to do this they will agree to you paying 12 months additional income contributions into your IVA instead.
You will need to adhere to all the terms of your IVA to keep your home fully protected. Bennett Jones can help every step of the way in the IVA process.
2. Remortgaging for debt consolidation
In some instances, it may also be possible to remortgage your home or obtain a secured loan for debt consolidation. Remortgaging is only recommended for a select group of individuals, so it’s important to speak to a professional regulated by the Financial Conduct Authority before proceeding further.
What if I rent my home?
With an IVA you will often be permitted to continue renting your property as normal without notifying your landlord about the arrangement.
If you are behind on rent charges, these can sometimes form part of your IVA repayment plan with the arrears of rent to be paid in priority to the payments to your IVA.
Bennett Jones are here to ease your concerns
It can be daunting to consider the prospect of losing your home, but no matter how complex the situation becomes, our team is on hand to help.
For more information on protecting your property, speak to one of our advisers completely free of charge on 0800 7710 073.