Friday 12th of February 2010
Paying your unsecured debts through an individual voluntary arrangement (IVA) could help prevent your home being repossessed in order to raise money for your lenders.
Recent figures from the Council of Mortgage Lenders (CML) reveal that during the fourth quarter of 2009, mortgage lenders repossessed 10,200 properties.
While this may because individuals had not kept up with their mortgages, if you have fallen seriously behind with your unsecured debt repayments then your lenders could also apply for you to be made bankrupt - which may result in you losing your home.
In order to make sure you meet your mortgage repayments, you may have put your credit card and personal loan repayments to the bottom of your priorities as you see these as less essential bills.
But if these climb to more than £15,000 and you no longer feel in control then an IVA could help you ease yourself out of the red.
IVAs will merge all your personal loan and credit card balances into a single, monthly and reduced-rate repayment.
This should make it easier for you to clear what you owe and as long as you always meet these repayments there should be no risk of you losing your home.
You may feel like you have failed with your finances by undertaking an IVA, but think of what the consequences could be if you are declared bankrupt.
Getting some answers on IVAs could stop you from losing your home, as well as potentially your job, depending what sector you work in.
"Seeking advice as soon as financial problems occur will help to minimise the risk of the situation getting out of control," asserts CML director general Michael Coogan.
The CML survey shows that 188,300 mortgages ended the year with arrears. Making unsecured debt more affordable through an IVA could enable more spare cash to be put towards home loan balances.
By Kim Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs are available to debt-struck residents in Northern Ireland
