IVA Articles
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IVA : What Is A Secured Debt?
Secured debt is not admissible in an Individual Voluntary Arrangement (IVA), so knowing what type of debt you have is important.
There are two types of personal debts, Secured and Unsecured. Establishing the category of your debt is not difficult if you still have your original contract. If your debt is secured, and an Individual Voluntary Arrangement (IVA) is not possible, the contract will spell out clearly what will happen if you fail to pay your monthly payment. In the case of secured debts failure to pay will eventually lead to the goods on which the loan is secured being repossessed.
If you do not have the original paperwork, secured loans can generally be said to fall into the following categories:
Hire Purchase Agreements also known as H.P. Agreements
These are loans given and secured on the property on which the money was borrowed. They are normally, but not exclusively, associated with motor vehicles, caravans, motor cycles and boats etc. Hire Purchase Agreements are typically for shorter terms , say upto, 5 years and levels of borrowing of between £5,000 to £50,000.
Mortgages
These are also loans given and secured on the property on which the money was borrowed. They are associated with houses and other buildings. Mortgages are normally for longer terms say, 10 years plus, and are for higher levels of borrowing usually £50,000+.
Second Mortgages and Secured Loans
These are loans which are taken in addition to a main mortgage. They are given and secured, through a second charge, using any releasable equity in the property. They are associated with houses and buildings with typical durations of 10 to 15 years, although they can last for longer than that.
Maintaining normal payments on secured loans is essential to avoid repossession of assets. For that reason these assets should not be considered in an Individual Voluntary Arrangement (IVA), unless the possible loss of the property is acceptable.
If losing these assets is acceptable, you may choose to give them back to the lender and put any shortfall into an Individual Voluntary Arrangement (IVA). Any shortfall is now classed as an unsecured debt and can be treated the same as any other unsecured debt.
If you are struggling with serious debt and need to know more about your option of an Individual Voluntary Arrangement (IVA) you can call 0800 088 7503 and speak to one of our experienced Individual Voluntary Arrangement (IVA) specialist advisers. Or download one of our free guides if you visit our specialist IVA website at myIVA-Adviser.com
