This is a question that has arisen a few times and the answer appears to be, maybe not.
There are certainly options to consider before making the decision and those are:
Remortaging – As a homeowner, I can see that it makes the most sense to top up a mortgage to get at the equity neaded to clear debts. This way I could extend my mortgage to 25 years or more and spread the cost to reduce my monthly outgoings.
Debt consolidation loans – either secured or unsecured loans can be used to consolidate debt depending on the amount of debt. An unsecured loan will cover debt up to £25,000 whereas a secured loan is more dependent on the amount of equity in your home. Due to the security attached to secured loans people with less than perfect credit histories can often be accepted.
Either by remortgaging or consolidating debt it would be possible to prevent disaster, reduce outgoings and even allow for a little bit of saving again. For people stretched beyond their means this could represent a very favourable option.
With an IVA, your debt is negotiated down to a more affordable limit. The people you owe money to have to meet with your representatives and discuss your case. If they agree your debt is reduced and you are committed to making the repayments you can afford based on your current situation.
If you default on an IVA you could still lose your house.
OK, so losing your house is the last thing the government wants to see happen so it is possible to renegotiate an IVA at a later date if you still can’t manage it. But is it ever worth taking the risk? It’s your house we’re talking about here!
I’ve also tried to find out what kind of a stain an IVA leaves on a persons credit record but that information seems to be slightly buried for now, or at least not blatant and remains to be discovered and appended to this post.