Home Ownership and IVA (individual Voluntary Arrangements)

[12qwaszx]

Hi really need some good advice here.
Home is in jointly owned by person A and B (son and mother).
Person A is in considerable debt (county court judgments etc, the whole shabang). As Person C has been paying towards mortgage for over 5 years, person C would like to jointly own the house with person B, removing person A from the deeds and ownership.
However, some of Person A's debt are aligned into the house (not sure how), up to approx £10,000. Person C is concerned that taking ownership will result with debts falling on Person C, ruining their credit rating and chances of getting future mortgage etc.
Person A intends on filing an IVA (individual voluntary arrangements) to clear up to 60% of debt and repay the remainder over approx 5 years, however, can only do this after names are changed - is this true? and is this the best method? or is it really person C who has to apply for IVA?
Person C is not fully aware of the implications this can cause Person C and would like some advice. Person C is a very responsible person and has a promising career which should help gain them a mortgage soon but does not want to engage in anything that may ruin credit rating. At the same time Person C does not want to lose the house they've been paying mortgage for because of Person A's stupid debts, also as almost half the mortgage has been paid off. Person C has little savings as Person A has milked them dry.
Ideally, Person C would like to take ownership of the house and continue to pay the same amount of mortgage that is currently being paid but does not want to carry person A's debt. But if Person C applied for a mortgage then it is likely mortgage payments would end up being considerably higher than they currently are (also person C has little savings now and seems like name transfer is easiest way to get rid of person A as owner).
Any advice and best solution to this tricky situation would be greatly appreciated.
12qwaszx
uk england

[nemesis45]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Hi welcome to LB.
As debts are registered to an individual not an address when you say "aligned to the house" do you that loans have been secured upon the property?
If so were these taken out without person C's knowledge/approval?

Joint accounts make the parties " jointly and severally " liable for the debts.

Person it seems has no share or equity in the property on a formal basis, only contributing to the mortgage payments informally is this correct?

[12qwaszx]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Hi,
The mortgage is jointly owned but there are no credit cards that r jointly owned. The mortgage is not in arrears. And yes person C has only been informally contributing.

Thanks

[DebtSanity]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Hello. I shall try and chip in a bit. The best way to think of persons B and C becoming the new owners of the property is to think of it as a new purchase. In real terms that is exactly what it will be anyway. The "debt aligned to the house" indicates a creditor of person A has obtained a charging order on the property. That can only ever be apportioned against the equity of person A. It remains their debt and doesn't implicate person B as joint owner in being responsible for the debt.

Person C has nothing to worry about here at all.

The problem for person C comes towards the end of your story where you say they want to pay a similar mortgage amount to now but that if they get a new mortgage they will pay more. Unfortunately that's the only way any transaction can proceed-ie as a new purchase like I said earlier.

There is no method of switching names in and out- no mortgage company will let you do that.

Finally as for the timing of when person A can propose an IVA-they can propose one whenever they like. it is tidier all round if they propose one free and clear from the property though.

[12qwaszx]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Thanks for that.

Iv been told that as its a joint mortgage creditors cant place charging orders but rather charging restrictions? And so long as they are informed about it theres not much they can do as often its too late to react (law recommends 14 days but your not obligated to give 14 days? From what i know creditors use charging order of restrictions as scare tactics?) ?

I understand that u cant swap names but if u speak to the bank you can potentially have names changed if the bank agrees? Im thinking if this is possible, person A can apply for iva after name change which wouldnt have an impact on person b and c, and person c will have their name on the mortgage?

[DebtSanity]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Hi.

Yes, thanks for reminding me about the effects of a charging order on a jointly owned property. It can "over-reached" as the saying goes. That is to say the property can be sold and the charge holder left swinging.

I don't believe you will be able to achieve what you want to achieve with the current mortgagee. In fact I am certain of it.

[12qwaszx]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Thats right iv been told that a lot, really difficult in terms of mortgagee wise.

Thanks for your help guys.

Il keep you updated on any further developments.

[DebtSanity]

Re: Home Ownership and IVA (individual Voluntary Arrangements)

Cheers- feedback and updates on future developments are what keeps us all better informed. I look forward to hearing more of how you get on down the line.