http://www.opendoorsmoney.com/content/features Advice, information and resources on debt related issues including debt management plans, IVA's and Bankruptcy. en contact@flgmoney.co.uk Copyright 2008 2008-03-16T16:44:00+00:00 http://www.opendoorsmoney.com/content/site/protected_trust_deed_questions_answers/ http://www.opendoorsmoney.com/content/site/protected_trust_deed_questions_answers/#When:16:44:00Z We’ve provided an exhaustive list of common questions that people ask us about the Protected Trust Deed.  You may well have questions that we haven’t covered, in which case please contact us and we’ll get straight back to you with an answer. Q. What is the difference between a Protected Trust Deed and an IVA (Individual Voluntary Arrangement)? A. A Protected Trust Deed is the Scottish equivalent (in principle) of an IVA (Individual Voluntary Arrangement). Q. How do I know whether a Protected Trust Deed is the right option to my debt problem? A. Open Doors Money is a ‘best advice’ debt solution organisation, this means that we provide the most appropriate, unbiased advice for your debt problem, and our advice is free and without obligation. Some debt solution companies promote the solutions that make them the most money, or don’t consider the full range of solutions to debt. Our policy is to always provide the best advice and offer a complete range of solutions. Q. Is a Protected Trust Deed the same as Sequestration (Bankruptcy)? A. No, although governed by the court and a legal process for persons with unmanageable debt, a Protected Trust Deed is a less formal process than Sequestration (Bankruptcy). Q. Why will my lenders agree to a Protected Trust Deed? A. Although the letters and calls you may have experienced recently may suggest otherwise, your lenders want to help you with your situation and recover as much of their debt as possible. As long as you communicate honestly with them about your situation, they will understand and will in most cases accept less than what you owe if that is all you can afford and as long as they are satisfied that you will keep to any agreement. Sequestration (Bankruptcy) is costly, time consuming, and a large amount of the money raised from a Sequestration (Bankruptcy) will be used to cover professional fees, therefore lenders would in most cases prefer not to resolve the situation in this way. A Protected Trust Deed offers the simplicity of a repayment arrangement between yourself and your lenders with legal backing, without the high cost and low returns of a Sequestration (Bankruptcy). Your lenders will welcome a Protected Trust Deed where appropriate, as an effective resolution to the situation that you find yourself in. Q. How long will the Protected Trust Deed take? A. The Protected Trust Deed will usually last for a maximum of 3 years. Some Protected Trust Deeds may last for less than 3 years depending on individual financial circumstances. Q. Will I lose my house if I enter into a Protected Trust Deed? A. No, but if you have equity, this will be taken into account and will need to be released to pay your lenders. If the property is joint-owned, then an appropriate portion of the equity will be taken into consideration. Q. Will a Protected Trust Deed affect my employment or professional status? A. No, a Trust Deed is an arrangement for responsible people who want to deal with their debt problem, and as such you will not prejudice your employment.  However, be aware that your credit rating will be affected and the fact that you are in a Trust Deed will be known to any future employer if you consent to them conducting a credit search on you. Q. I own a business, will I have to close it? A. If you are self-employed, there may be some restrictions on your ability to trade. Alternative arrangements may, however, be available to allow trading to continue to generate future income. Q. Can anyone find out that I’m in a Protected Trust Deed? A. A Protected Trust Deed will not be publicly known, but information about a proposed Trust Deed will need to be published in order for lenders to hear about the proposal. Q. Which lenders can be included in a Protected Trust Deed? A. You can include debt to banks, finance companies, credit or store cards, HM Customs & Excise (VAT), Inland Revenue, and loans made by your friends and family. Debt that cannot be included are mortgage debt, hire purchase, student loans, fines, debt incurred through fraud, maintenance and child support arrears. Q. What will happen if I fail to keep up payments on the Protected Trust Deed? A. It is very important that once in a Protected Trust Deed that monthly payments are made as proposed. If at any point your financial situation changes and the monthly payments are no longer affordable, then you must consult immediately with your Trustee. If you don’t keep up payments then your Trustee can initiate Sequestration (Bankruptcy) proceedings against you. Q. What will happen at the end of the Trust Deed? A. Your remaining debt will in effect be written off and you will be free from debt. Q. Do I need to notify my partner or family? A. You can choose not to notify your family, and even your partner, but we would advise that you do inform those that are very close to you. Q. Will all debt covered by the Protected Trust Deed? A. Your Protected Trust Deed will cover your unsecured debt and arrears, such as unsecured loans, credit cards and rent arrears. Q. How does secured and unsecured debt differ? A. Secured debt is secured against assets you own, such as a house or a car. If you fail to keep up repayments on secured debt your assets may be at risk. Unsecured loans are not secured on any asset. Q. Do lenders have to accept the terms of the Protected Trust Deed? A. If two thirds or more of your lenders by value agree to the proposals, the Trust Deed will be protected. If they don’t, then the Trust Deed can still go ahead but you will not be protected from further interest or recovery action. Q. Can a single lender refuse the Protected Trust Deed? A. Yes, but this will only stop the Protected Trust Deed proceeding if they account for a third or more in value of your total debt. If they account for less than a third in value then they will be bound by the terms of the Protected Trust Deed regardless. Q. Will I be protected from further recovery action, charges and interest? A. If the Trust Deed becomes a Protected Trust Deed it will prevent any further action, including the addition of charges, and all interest will be frozen. Q. What if my financial situation changes? A. You will be required to inform your Trustee of any changes in your financial circumstances, good or bad. If your income is reduced, the Trustee can propose a variation on the terms of the Trust Deed to reflect your new circumstances. Q. Can a Protected Trust Deed be cancelled? A. No, just as your lenders must abide by the terms of the Protected Trust Deed and accept what has been agreed, you must also keep up repayments as agreed. Q. How long will it take to set-up a Protected Trust Deed? A. The process of preparing the Protected Trust Deed will begin immediately and is usually set-up and fully in effect within 6 weeks. Q. What will happen if the Protected Trust Deed is not approved? A. There are other alternatives to a Protected Trust Deed if it is not approved, we will be happy to advise the next course of action if the T rust Deed fails. Debt Advice Features 2008-03-16T16:44:00+00:00 http://www.opendoorsmoney.com/content/site/iva_questions_answers/ http://www.opendoorsmoney.com/content/site/iva_questions_answers/#When:16:24:00Z We’ve provided an exhaustive list of common questions that people ask us about the Individual Voluntary Arrangement.  You may well have questions that we haven’t covered, in which case please contact us and we’ll get straight back to you with an answer. Q. How do I know whether an Individual Voluntary Arrangement is the right option to my debt problem? A. Open Doors Money is a ‘best advice’ debt solution organisation, this means that we always provide the most appropriate, unbiased advice for your debt problem, and our advice is free and without obligation. Some debt solution companies promote the solutions that make them the most money, or don’t consider the full range of solutions to debt. Our policy is to always provide the best advice and offer a complete range of solutions. Q. Is an Individual Voluntary Arrangement the same as Bankruptcy? A. No, although governed by the court and a legal process for persons with unmanageable debt, an IVA is quite different from Bankruptcy. The main differences are: An Individual Voluntary Arrangement does not require that your details be published in the local newspaper. The Individual Voluntary Arrangement does not require the sale of your assets, such as your house and car as Bankruptcy does. The IVA process does not affect your ability to hold public office and will not affect your professional status. Q. Why will my lenders agree to an Individual Voluntary Arrangement? A. Although the letters and calls you may have experienced recently may suggest otherwise, your lenders want to help you with your situation and recover as much of their debt as possible. As long as you communicate honestly with them about your situation, they will understand and will in most cases accept less than what you owe if that is all you can afford and as long as they are satisfied that you will keep to any agreement. Bankruptcy is costly, time consuming, and a large amount of the money raised from a Bankruptcy will be used to cover professional fees, therefore lenders would in most cases prefer not to resolve the situation in this way. An Individual Voluntary Arrangement offers the simplicity of a repayment arrangement between yourself and your lenders with legal backing, without the high cost and low returns of a Bankruptcy. The Individual Voluntary Arrangement also offers certain tax benefits for your lenders. Your lenders will welcome an Individual Voluntary Arrangement where appropriate, as an effective resolution to the situation that you find yourself in. Q. How long will the Individual Voluntary Arrangement take? A. The IVA will last for a maximum of 5 years. Some Individual Voluntary Arrangement plans may last for less than 5 years depending on individual financial circumstances. Q. Will I lose my house if I enter into an Individual Voluntary Arrangement? A. No, but if you have equity, this will be taken into account, usually at the end of the Individual Voluntary Arrangement. You may then need to release this equity by way of a remortgage depending on your circumstances, however your IVA supervisor will be able to assist with this. If the property is joint-owned, then an appropriate portion of the equity will be taken into consideration. Q. Will an Individual Voluntary Arrangement affect my employment or professional status? A. No, an IVA is an arrangement for responsible people who want to deal with their debt problem, and as such you will not prejudice your employment.  However, be aware that your credit rating will be affected and the fact that you are in an IVA will be known to any future employer if you consent to them conducting a credit search on you. Q. I own a business, will I have to close it? A. No, unlike Bankruptcy proceedings, you will not have to give up your business or directorship if you enter into an Individual Voluntary Arrangement. Q. Can anyone find out that I’m in an Individual Voluntary Arrangement? A. An Individual Voluntary Arrangement is confidential and won’t be publicised.  However, the fact that you are in an Individual Voluntary Arrangement will be noted on your credit file and will be listed on the Insolvency Register. Q. Which lenders can be included in an Individual Voluntary Arrangement? A. You can include debt to banks, finance companies, credit or store cards, HM Customs & Excise (VAT), Inland Revenue, and loans made by your friends and family. Debt that cannot be included are mortgage debt, hire purchase, student loans, fines, debt incurred through fraud, maintenance and child support arrears. Q. Can I enter into an Individual Voluntary Arrangement if a Bankruptcy order has been made against me? A. If the IVA is more appropriate then it may be possible to annul a Bankruptcy in favour of an Individual Voluntary Arrangement. Q. Can I enter into an Individual Voluntary Arrangement if I have already received a Statutory Demand? A. If the IVA is a more appropriate solution than the Statutory Demand, as determined by the official receiver, then an Individual Voluntary Arrangement can be taken in favour. Q. What will happen if I fail to keep up payments on the Individual Voluntary Arrangement? A. It is very important that once in an Individual Voluntary Arrangement that monthly payments are made as proposed. If at any point your financial situation changes and the monthly payments are no longer affordable, then you must consult immediately with your Individual Voluntary Arrangement supervisor. If you don’t keep up payments then your supervisor can initiate Bankruptcy proceedings against you. Q. What will happen at the end of the Individual Voluntary Arrangement? A. You will be issued with a ‘Statement of Completion’ usually within 3 months of the final payment. A copy of this will also be sent to the Insolvency Service so that the completion of the Individual Voluntary Arrangement can be recorded. Q. If I have CCJ’s against me can I enter an Individual Voluntary Arrangement? A. Yes, you can. Having CCJ’s registered against you does not prohibit you from entering into an IVA. Q. Does it matter whether I own my property or not? A. Your status (homeowner, tenant or living with parents) does not matter. If you do own your property it will not be at risk whilst in the IVA (but of course it may be at risk if you don’t resolve your debt problem). Q. Do I need to notify my partner or family? A. You can choose not to notify your family, and even your partner, but we would advise that you do inform those that are very close to you. Q. Is all debt covered by the Individual Voluntary Arrangement? A. Your Individual Voluntary Arrangement will cover your unsecured debts and arrears, such as unsecured loans, credit cards and rent arrears. Q. How does secured and unsecured debt differ? A. Secured debt is secured against assets you own, such as a house or a car. If you fail to keep up repayments on a secured debt your assets may be at risk. Unsecured loans are not secured on any asset. Q. Do lenders have to accept the terms of the Individual Voluntary Arrangement? A. The decision whether or not to accept your Individual Voluntary Arrangement proposal is made at a creditors meeting where a vote is made. Alternatively (and more often the case), your lenders can vote by proxy (by post). If 75% in value of your lenders vote to accept the Individual Voluntary Arrangement then it will go ahead. Q. Can a single lender refuse to accept the Individual Voluntary Arrangement? A. Yes, but this will only stop the Individual Voluntary Arrangement proceeding if they account for 25% or more in value of your total debt. If they account for less than 25% in value then they will be bound by the terms of the IVA regardless. Q. Will I be protected from further recovery action, charges and interest? A. Yes, the Individual Voluntary Arrangement will prevent any further action, including the addition of charges, and all interest will be frozen. Q. What if my financial situation changes? A. You will be required to inform your supervisor of any changes in your financial circumstances, good or bad. If your income is reduced, the supervisor can propose a variation on the terms of the Individual Voluntary Arrangement to reflect your new circumstances. Q. Can an Individual Voluntary Arrangement be cancelled? A. No, just as your lenders must abide by the terms of the Individual Voluntary Arrangement and accept what has been agreed, you must also keep up repayments as agreed. Q. How long will it take to set-up an Individual Voluntary Arrangement? A. The process of preparing the Individual Voluntary Arrangement will begin immediately and is usually set-up and fully in effect within 6 weeks. Q. Will interest still need to be paid or any recovery action taken whilst waiting for the Individual Voluntary Arrangement to be set-up? A. Interest will still be incurred, however this will be included within the Individual Voluntary Arrangement once it is approved and wouldn’t affect the payments you would need to make into it. Q. What will happen if the Individual Voluntary Arrangement is not approved? A. There are other alternatives to an Individual Voluntary Arrangement if it is not approved, we will be happy to advise the next course of action if the Individual Voluntary Arrangement fails. Debt Advice Features 2008-03-16T16:24:00+00:00 http://www.opendoorsmoney.com/content/site/short_term_debt_problems/ http://www.opendoorsmoney.com/content/site/short_term_debt_problems/#When:20:16:00Z The most important thing to do is to communicate with your creditors. This may be directly or through credit counsellors. How long do you expect to be struggling for? Is it until your house sells for example – so possibly at least six months? If it is under six months, it may be a good idea just to contact your creditors directly. Before you get in touch with them, make sure you work out a detailed income and expenditure for your entire household that shows how your circumstances are going to mean you will struggle paying. When you communicate with them do it in writing and always keep a copy of the letter. You can request that they only contact you back in writing and you should detail the reasons why you are going to struggle paying and when you anticipate your circumstances to change for the better and how. You will get one of two responses from this – either positive or negative. If you get a positive reaction from the majority or all of your creditors then obviously you should manage fine until your circumstances change, just stick to the agreement you have made with your creditors, and if any other problems arise or your circumstances change for the better sooner just simply communicate with them. If one or two do object try to negotiate further with them as if you can’t get these to agree then it could put your whole financial situation in jeopardy as you can’t be preferential to particular creditors – it is not fair on the ones who have agreed. If continuous negotiating doesn’t get you anywhere then it may be time to get outside help from either organisations such as the Citizens Advice Bureau or from credit counsellors, who should be able to provide advice free of charge. If you feel it is going to take you longer than six months to a year to get your financial situation on track it may be wise to seek further advice from credit counsellors. They will examine your personal circumstances and outline your options. Sometimes they may even give you options you haven’t previously thought of or even heard of. For example you may be able to do what is known as a full and final Individual Voluntary Arrangement. This may be applicable if you are expecting to come into a sum of money for example from a house sale or windfall or inheritance. You could owe £50000.00 and be coming into £30000.00. This could be offered to settle the debts, and the remaining £20000.00 would be written off. Credit counsellors could help you arrange this, and so it is worth contacting them. Credit counsellors can also hold more “sway” with the creditors. Where you may have not succeeded in negotiating with the creditors, they may be more successful as the creditors tend to know that they can’t get away with as much, and know that credit counsellors are more familiar with laws and regulations surrounding debts. In other words they are less likely to take advantage. Either way you have stuck to your credit agreement by communicating with your creditors, and even if your income and expenditure shows you have nothing left each month currently until your circumstances change as long as you offer a token payment of one pound, you are still within your credit agreement and this means the creditor cannot take further action against you. You must make what is know as a reasonable offer of repayment. This has to be justified by an income and expenditure, and if this shows a disposable income (what is left over) of one pound or less, that is a negative amount, then just paying a pound to each is deemed as reasonable. If this income and expenditure was to be submitted to a court and they agreed with it, it is all they would also ask you to pay each month, so if you consider this it is not worth the creditor’s while to take you to court as they will incur the costs of it. Remember this if they threaten you with court action. What I would;d say though is if they start to threaten or begin any sort of court proceedings, seek further advise immediately. Offering your creditor one pound per month is likely to get you more rejections in the negotiations early on, but it is worth keep negotiating sometimes as they will just try and push you further at first. If any creditor tells you they can’t accept a payment that low because of company policy for example. It is not correct, they may not like it, but as I said you are within the regulations of your credit agreement. What they may do is pass it on to a debt collectors. This isn’t something to worry about as usually they will stop the interest and charges, and are more likely to accept the offer of a pound. Again just keep trying. Debt Advice Features 2007-07-04T20:16:00+00:00 http://www.opendoorsmoney.com/content/site/administration_orders/ http://www.opendoorsmoney.com/content/site/administration_orders/#When:20:15:00Z First of all what is an Administration Order? It is a court order which covers all your unsecured debts, this means you make one payment and the court will distribute it for you to all your creditors. There is a charge for this – the court will retain 10% of your payment for the administration costs. They take this directly from your payment. The reason why this may help you in managing your debt situation is because under the terms of an Administration Order your creditors are not allowed to take any action against you, including turning up at your property demanding money, sending you letters demanding payment, and any other debt collection procedure. This may relieve a lot of intense pressure that creditors tend to put on you, and also give you a manageable payment to make regularly. Often when creditors are demanding money from you they refuse to negotiate properly and won’t take into account what your outgoings are, be it to other debts or even household expenses. Obviously they should do this, but I’m sure as many have you have seen they are not always willing to be reasonable! You have to apply directly to the court for the Administration Order, and you will need to complete form N92, which can be obtained from your local court office. To apply for an Administration Order however you do have to meet certain criteria. These include having at least one County Court Judgement or High Court Judgement registered against you, having at least two different creditors and the total amount of your debts must not exceed £5000.00. When completing the form N92 you must include all your debts, whether they are just in your name or not. If you do have any joint debts you must list the total amount of the debt. You cannot do a joint Administration Order and so if the other individual wishes to also do an Administration Order , they must apply separately. If you both make an application to the court for your Administration Orders at the same time the court may agree to divide the debt between you equally, otherwise if you do a single application you are technically liable for the full amount of the debt, although presumably the third party could make some payments towards it. This could still benefit you as it does stop this creditor from hassling you at least and give you a manageable payment still. Usually the court takes the payment from your wages via an Attachment of Earnings for employed individuals. However if you didn’t want your employer to know about it you can specify on the N92 form that you do not wish to pay it this way. You must maintain payments into the Administration Order for it to be affective. You will be asked to complete an income and expenditure so hopefully your payment should be at a manageable rate each month, however if it wasn’t or became unmanageable for a particular reason or because your circumstances changed you can apply for to court with your reasons and have it adjusted to a reasonable amount. However if you just missed payments the court can revoke the order, and the creditors would be entitled to pursue to for the full amount of the debts outstanding. Once you have completed the Administration Order, that is when all the debts are paid off you can obtain a Certificate of Satisfaction to say you have completed it, and there is a charge of ten pounds for this certificate. The Administration Order will be recorded on your credit file, and could adversely affect your credit score, however if you are struggling with the debts anyway then it is already likely to be affected. You can only get an Administration Order if you live in England or Wales currently. You can also apply to the court to pay your debts over a reasonable amount of time. The court may usually do this over a three year period. This is known as a Composition Order. You would normally apply to the court whilst actually in the Administration Order for this. If you are on a low income, for example on benefits, a lone parent, elderly, or disabled or sick the Judge will consider it. Sometime they may suggest it at a review of your Administration Order after the first year. They will set down the time you will pay the debt off for and then the rest of the debt will be written off. Debt Solutions Guide 2007-07-04T20:15:00+00:00 http://www.opendoorsmoney.com/content/site/how_will_being_in_debt_affect_me_getting_a_mortgage1/ http://www.opendoorsmoney.com/content/site/how_will_being_in_debt_affect_me_getting_a_mortgage1/#When:20:14:00Z If you have unsecured debts they can affect you in several different ways when you look at acquiring a mortgage. If you have had difficulties with paying your debts, for example one or two missed payments then this will have been recorded on your credit report. When you apply for a mortgage your credit file will be looked at by the mortgage lender to check what sort of a history you have with repayments and how much credit you actually hold. If you have missed a few payments, the mortgage lender will consider you a slightly higher risk and this in turn usually affects the deal you get in the way of the interest you pay on the mortgage. For example those who are considered a higher risk will pay a higher interest rate on their mortgage. If you are in this situation you should definitely shop around as some lenders specialise in this sort of mortgage and may be able to offer you a more competitive interest rate. Again if you think you have a poor credit score because of CCJ’s etc., then it is likely that you are going to pay more for your mortgage. It is worth remembering however that different lenders will score you differently. You do not have one definitive score. The lender will have certain criteria that they are looking for, and when examining your credit file they will give you their own score, this can mean it is very wise to shop around as with the different scoring systems you may come out better with some companies compared to others. If you have a lot of debt this may also affect you adversely as the lender may feel you are a higher risk with so much commitment, and obviously you have acquired this debt for a reason. Is it because you are close to being insolvent? Could you afford mortgage payments along side your unsecured debt payments. This is not to say they won’t give you a mortgage but as with anything they will make you pay for the privilege if they consider you a high risk. Your credit report does show activity dating back six years. However you can repair it over this time, so basically things that may have affected you a few years ago, with careful use of credit now may be not looked into. You can also write a notice of correction, giving you an opportunity to explain why something is on your credit file. The best thing to do is first of all discuss your need with a mortgage lender – could you consolidate you debts into the mortgage? Would entering a debt management plan help? What sort of interest rates will you be looking at paying? Is it worth paying off the debts before you acquire a mortgage? Compare all your options and work out which will suit you financially. Debt Advice Features 2007-07-04T20:14:00+00:00 http://www.opendoorsmoney.com/content/site/why_would_i_have_to_give_details_about_my_children_when_i_look_at_entering/ http://www.opendoorsmoney.com/content/site/why_would_i_have_to_give_details_about_my_children_when_i_look_at_entering/#When:20:13:00Z Usually you have to give the details about the members of your household, dependant or non-dependant. This is applicable in bankruptcy, an Individual Voluntary Arrangement, and debt management, the major debt solutions. This is because the creditors usually require a copy of your household income and expenditure, and the only way to back up what you spend or bring in is to verify the details of the members of your household. Regarding your children or dependants it is likely you will only be asked for their names and dates of births, literally for proof they exist. In terms of your income and expenditure, this would back up and tax credits you get, any child benefit and also outgoings ranging from clothing and food through to nursery, child minding and school expenses. Giving this information is in no way going to affect your child as they are usually to young to actually have a credit report, and even if they did it wouldn’t be registered on there anyway as the law changed several years ago regarding what is registered on your credit report. It is no longer the property or family name that carries the credit report, it is the individual it is recorded against. If your children or any one else for that matter is connected or affiliated to you by means of your credit report by accident or by means of a previous financial connection (e.g. a mortgage or loan), you can write to the credit report companies such as Experian or Equifax and get you or them disassociated from them or your respectively. Debt Advice Features 2007-07-04T20:13:00+00:00 http://www.opendoorsmoney.com/content/site/property_abroad_in_debt_solutions/ http://www.opendoorsmoney.com/content/site/property_abroad_in_debt_solutions/#When:20:12:00Z Before you go ahead with any debt solution you should seek further advice regarding property you own abroad, and I would not advise trying to hide the details of the property as this could be classed as fraudulent behaviour. Here are the different ways it could possibly be affected. In bankruptcy, if there is any equity in the property you may have to surrender the property into the bankruptcy as the equity will go some way to paying your creditors off. However if there was no equity or you were not in a position where you could actually release it – which can often be the case the property abroad, as long as you’re honest about you may be able to keep it. Another factor that will be looked into is how much the property costs you on a monthly basis for example. If paying for the property meant you were insolvent, and that if you weren’t paying then you could afford the debts, then the judge administering your bankruptcy could turn round and say well sell the property and you won’t need to go bankrupt… If you were paying a large amount towards the property regardless of whether you could afford your debts if you had it or not, it is going to be frowned upon, however if it is hardly costing you any thing, and is deemed as reasonable along side hardly having any releasable equity in it then you may be able to keep the property. In an Individual Voluntary Arrangement the rules regarding property abroad is pretty much the same as the rules regarding any property you have in the United Kingdom. If there is any releasable equity you will be asked to release it in the fourth year of the Individual Voluntary Arrangement by means of a remortgage. If you jointly own the property abroad, and the other person is not entering the IVA then you will only be expected to release your share of the equity, perhaps 50%. If there is no equity or again none that is releasable, then as long as your honest about the property you may be able to keep it. Again like bankruptcy it will be looked at how much you are paying out for the property, and this would need to be seen as reasonable also for you to keep the property. If you look at something like debt management you are not likely to be asked about it, as you don’t need to release equity from your assets in this type of solution. With the property being abroad it is also under different laws and legislation and so the creditors wouldn’t easily be able to access any equity in the property. If you are asked about it my advice is to be honest as always, but like I said you are unlikely to even be asked about it. Debt Advice Features 2007-07-04T20:12:00+00:00 http://www.opendoorsmoney.com/content/site/ivas_and_home_equity/ http://www.opendoorsmoney.com/content/site/ivas_and_home_equity/#When:20:10:00Z Firstly what is equity? Equity is any money left over once you have sold or cashed in an asset. So for example if you sell your property, the equity is what is left over after you have paid your mortgage off. If you cash in a pension it is what is left after all the fees and charges have been taken. In certain cases you will have to release equity from any assets you own with the exception of perhaps your vehicle. This may includes properties in this country and abroad, unapproved pensions and life assurance polices, caravans and motor homes, and if your vehicle is deemed excessive to need, for example a £30000 Porsche, you may be asked to exchange it for a more suitable vehicle and put any equity into your Individual Voluntary Arrangement. If you rent your property obviously you will not be asked to release any money from your property as you do not own it. However if you are a home owner, it will be examined how much your property is worth and how much you owe against it in mortgages and secured loans and possible charging orders. A charging order is when a creditor has applied to a court to get their debt secured against your home. This usually only happens if you stop paying the debt, so for example you have a credit card with Barclaycard – unsecured, and you stop paying, they can find out if you have equity in your property and if so apply to a court to get the debt secured against your home. This secures them a return should you ever sell the property. Therefore this would also reduce the amount of equity in your property. Usually equity is released in the fourth year of your Individual Voluntary Arrangement, and so it may be calculated how much equity you will have in your home after the four years has passed. This is because it may not be worth your while re-mortgaging at the beginning, but after making four years worth of payments there may be a sufficient amount to release. When your Individual Voluntary Arrangement is put forward to your creditors, this may sway their decision to accept it or not as they will consider it more favourable obviously if they are getting more money back. However if you are in negative equity with your property, and at no point during the IVA will you have any equity, you will not be asked to release any as obviously there is nothing to release. If you have a large amount of equity in your property, that is more than you actually owe, an Individual Voluntary Arrangement is no longer the favourable option for you. This is primarily because when the Individual Voluntary Arrangement is put forward to your creditors, in the paperwork it is directly compared to bankruptcy. This means they will look at how much money they could get back in an Individual Voluntary Arrangement and how much they will get back in bankruptcy. If you have more equity in your home than you owe in debts, obviously the creditors will get more back by claiming your home in bankruptcy, and to avoid this you should go for an Individual Voluntary Arrangement. It may be better for you to examine remortgaging for example if you are in this situation or if this is simply not an option, you may need to sell your property and release the funds that way. If you jointly own your home with someone else, and this other person is not doing the Individual Voluntary Arrangement (you can do joint IVA’s) then only your proportion of the equity in the home only will be considered, under normal circumstances this is usually half. Equity is released as mentioned previously in the fourth year normally. This is usually done by way of remortgage. So for example your home is worth£100000 and you have a mortgage of £60000, you would remortgage usually up to 85% of the value, so £85000. The percentage of equity to be release would be set down in your contract or proposal at the beginning of the Individual Voluntary Arrangement. It isn’t normally 100% so you can be secure in the knowledge you don’t lose all the equity. You may have a problem with this equity release, but it is just part of the terms of the Individual Voluntary Arrangement, and if you don’t like it unfortunately pretty much the only other option is not to do an Individual Voluntary Arrangement. However this usually means you go down a route such as debt management and you should be aware that the creditors are becoming wise to this and are going for far more charging orders, so you end up losing some of the equity in your home any way without the added benefit and protection of the Individual Voluntary Arrangement in getting some debt written off. These rules are pretty much the same for properties abroad, but you should just be honest with your Insolvency Practitioner about such properties so they can advise on them. The Insolvency Practitioner is the person who sets up and runs your IVA. Obviously with unapproved pensions and life assurance policies, again you would just need to be honest with your insolvency practitioner so they can decide if they need to include them or not. And again with vehicles, usually vehicles are protected under the IVA, but if there was a problem with a vehicle it would be raised at the beginning before your Individual Voluntary Arrangement was made official. This could be something like swapping it for a slightly cheaper vehicle for example. Other assets can include caravans and such vehicles and even horses and ponies! Again you would need to reveal these as it would be fraudulent if you didn’t, and your insolvency practitioner would be able to decide what to do with them. Debt Advice Features, IVA Focus Features 2007-07-04T20:10:00+00:00 http://www.opendoorsmoney.com/content/site/debt_advice_that_counts/ http://www.opendoorsmoney.com/content/site/debt_advice_that_counts/#When:10:27:01Z Please visit us and get in contact if you are struggling with your unsecured debts.  We provide free debt advice for individuals who are struggling with debt in the UK. Advice and assistance in arranging solutions, including Individual Voluntary Arrangements, Debt Management and providing up to date advice on Bankruptcy. IVA, Bankruptcy, Debt Advice If you thought that the only way out of debt was to consolidate the debt, re-mortgage or simply keep paying your loans off ‘forever’, you thought wrong. Recent changes in debt legislation have led to the introduction of the IVA (or Individual Voluntary Arrangement). The IVA process is designed as a legally governed way out for people in debt. Did you know also that your lenders are willing to discuss helping you to ease the burden of your debt, if you are having difficulty repaying? 60 Second Advice works alongside your lenders in certain cases to arrange more favourable repayment terms and even to freeze the interest. IVA, Bankruptcy, Debt Advice Debt Advice Features 2007-04-30T10:27:01+00:00 http://www.opendoorsmoney.com/content/site/i_am_struggling_with_my_debts_but_i_expect_my_circumstances_to_change_in_th/ http://www.opendoorsmoney.com/content/site/i_am_struggling_with_my_debts_but_i_expect_my_circumstances_to_change_in_th/#When:19:23:37Z The most important thing to do is to communicate with your creditors. This may be directly or through credit counsellors. How long do you expect to be struggling for? Is it until your house sells for example so possibly at least six months?  If it is under six months, it may be a good idea just to contact your creditors directly. Before you get in touch with them, make sure you work out a detailed income and expenditure for your entire household that shows how your circumstances are going to mean you will struggle paying. When you communicate with them do it in writing and always keep a copy of the letter. You can request that they only contact you back in writing and you should detail the reasons why you are going to struggle paying and when you anticipate your circumstances to change for the better and how. You will get one of two responses from this either positive or negative. If you get a positive reaction from the majority or all of your creditors then obviously you should manage fine until your circumstances change, just stick to the agreement you have made with your creditors, and if any other problems arise or your circumstances change for the better sooner just simply communicate with them. If one or two do object try to negotiate further with them as if you can’t get these to agree then it could put your whole financial situation in jeopardy as you can’t be preferential to particular creditors ֖ it is not fair on the ones who have agreed. If continuous negotiating doesn’t get you anywhere then it may be time to get outside help from either organisations such as the Citizens Advice Bureau or from credit counsellors, who should be able to provide advice free of charge. If you feel it is going to take you longer than six months to a year to get your financial situation on track it may be wise to seek further advice from credit counsellors. They will examine your personal circumstances and outline your options. Sometimes they may even give you options you haven’t previously thought of or even heard of. For example you may be able to do what is known as a full and final Individual Voluntary Arrangement. This may be applicable if you are expecting to come into a sum of money for example from a house sale or windfall or inheritance. You could owe £50000.00 and be coming into £30000.00. This could be offered to settle the debts, and the remaining £20000.00 would be written off. Credit counsellors could help you arrange this, and so it is worth contacting them. Credit counsellors can also hold more swayӔ with the creditors. Where you may have not succeeded in negotiating with the creditors, they may be more successful as the creditors tend to know that they can’t get away with as much, and know that credit counsellors are more familiar with laws and regulations surrounding debts. In other words they are less likely to take advantage. Either way you have stuck to your credit agreement by communicating with your creditors, and even if your income and expenditure shows you have nothing left each month currently until your circumstances change as long as you offer a token payment of one pound, you are still within your credit agreement and this means the creditor cannot take further action against you. You must make what is know as a reasonable offer of repayment. This has to be justified by an income and expenditure, and if this shows a disposable income (what is left over) of one pound or less, that is a negative amount, then just paying a pound to each is deemed as reasonable. If this income and expenditure was to be submitted to a court and they agreed with it, it is all they would also ask you to pay each month, so if you consider this it is not worth the creditor’s while to take you to court as they will incur the costs of it. Remember this if they threaten you with court action. What I would;d say though is if they start to threaten or begin any sort of court proceedings, seek further advise immediately. Offering your creditor one pound per month is likely to get you more rejections in the negotiations early on, but it is worth keep negotiating sometimes as they will just try and push you further at first. If any creditor tells you they can’t accept a payment that low because of company policy for example. It is not correct, they may not like it, but as I said you are within the regulations of your credit agreement. What they may do is pass it on to a debt collectors. This isn’t something to worry about as usually they will stop the interest and charges, and are more likely to accept the offer of a pound. Again just keep trying. Debt Advice Features 2007-04-29T19:23:37+00:00