Equity is the money which would be left after a property is sold and all outstanding mortgages and arrears owed to the bank are paid off. In effect it is the asset value that the owner personally has in the property, which can have implications for your IVA.

When it comes to an IVA, many people are concerned about how it affects the equity in their property. Equity is the difference between the value of a property and any secured borrowing against it.

If you are considering an IVA, it is important that you understand how this debt solution will affect your equity.

With an IVA you pay your creditors a fixed monthly amount for 5 years. However, if you own your home, your creditors will want to know how much equity you have. This is because your equity is a valuable asset thatcan contribute to paying off your outstanding debt.

Under the legally binding terms of an IVA, your creditors cannot force you to sell your home. However, in some cases,your creditors may request that you release some portion of your equity and put it towards your IVA. Creditors can request you release up to 75% of the equity to the IVA. This amount is payable either during or at the end of the IVA.

If you cannot release 75% of equity, your creditors may accept a lower percentage. However, if this is the case, you may be required toextend your IVA term by 12 months. . This would mean you do not lose your home but your IVA would be for 6 years instead of the usual 5.

When dealing with the equity in the home or property in an IVA: .

• Creditors can request up to 75% of the equity in the home or property.
• Most IVA contracts allow you to release equity in the final year of the IVA.
• Your Insolvency Practitioner will help you with the paperwork and work out the equity.
• Your creditors will usually request the maximum equity they can.
• If you are unable to release 75% of your equity, your creditors may ask you to extend the IVA to 6 years.