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IVA - Property Assets Abroad - Paul 2006-06-22 12:11:10
I am at the point of entering an IVA.

In December 2004 my wife and I sold our property and used the equity to buy abroad. She went to live in it to look after her aged parents. We own that property 100%, debt free and freehold.

I remain in the UK to work and support my family abroad, with frequent visits there. The lack of my wife's income since Dec 2004 has forced me to apply for an IVA on my debts. All of the debts are in my name solely, we paid all of my wife's off at the point of departure.

I have attempted to raise a remortgage on the property abroad, to payoff the UK debts but the banks in Malta, say there is a Government restriction on moving the cash out of the country for this purpose.

We have no debts in Malta.

Is our property abroad safe from possession orders etc?

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Re: IVA - Property Assets Abroad - Simon Wiggins 2006-06-22 18:00:22
Hi Paul. The whole point of an IVA which is by the way only an option for a person domiciled in the UK (i.e. living here permanently) is to prevent independent creditor recovery action against the borrower and is a mutually acceptable legally binding repayment plan brokered by the acting IP involved. In other words once agreed and in place as long as you stick to your side of the bargain (the IVA's terms and conditions) then no action can be taken by any of the creditors against you. So while in place no action is possible against your home in Malta.

However there are two issues to point out to you here. The first is in relation to the IVA failing at some point in the future. Almost all IVA's these days have a clause within them put there at the creditors behest to the effect that the IP will retain such funds as is necessary to bankrupt the borrower should the IVA fail. While I obviously hope that your IVA dose not fail and that a clause like this is not contained within your proposal the chances are it is. So if your circumstances change lets say 3 years down the line and you can no longer meet the agreed repayments and you have used up any flexibility that was agreed to re payment breaks in the original proposal (most IVA will say that the debtor must make 60 out of 65 payments thereby allowing for payment breaks if absolutely necessary) then the IP will have no choice but to fail it. If the clause mentioned is in IVA proposal they will then go on to bankrupt you. The threat to your home in Malta would then become a nightmare as in bankruptcy the OR or acting trustee can go after any assets you have world wide and that includes your 50% share in the house.

The second issue is that at the four year point or at some specified time in year four the property would have to be valued and the creditors will want an extra sum in recognition of that assets value or to be more precise your share of it. Most people would then re-mortgage but thats not an option for you of course to raise the extra sum required and cover any reaming payments due under the IVA thereby bringing it to an early close. If a person wont or cant raise the lump sum then the IVA is usually extended instead to compensate the creditors for not receiving a lump sum usually by one or two years. This happens with all assets of the type you have be they in the UK or outside of the UK as yours is. In essence then when the creditor find out the value of your share x number of years and month down the line they may insist on 100% repayment. So at best your IVA may end being a repayment program you can afford with no interest or other charges being added from the outset which goes on far beyond the usual 5 year term because of the value of your share in your home on Malta. I just wanted to make sure that you were aware of this.

Next comes the issue of assets and income disclosure. If you fail to disclose and asset to your IP or creditors and they subsequently find out then the IVA is immediately invalidated and be failed by the IP. All the interest and charges that would have applied had the IVA not existed would be added straight back on and all the creditors would be free to restart their recovery action against you which would include going after your home in Malta and even bankrupting you themselves. You would also run the risk of having committed purgery and risk prosecution as a result. Even if you were lucky enough to complete the IVA without them finding out at any time in the future the whole lot could be undone (because they were not given the real situation you were in at the outset) and they could pursue you again for any percentage not repaid plus charges and interest that were never charged because your IVA had been in place preventing this at the time etc etc etc. So I strongly urge you to fully disclose the home you have in Malta and specifically your share in it is. This would normally be 50% unless set up specifically by the conveyancing solicitor on its purchase. Even if it was if your IVA was found to be based on non full disclosure then they can go to the courts to undo and set up designed to put any of your past assets (i.e. your share of the net sale proceeds from your former home) beyond your creditors reach.

So to simply answer your query as long ads you fully disclose your situation both in terms of your ability to pay and income as well as assets then if you maintain your side of the bargain the house in Malta can never be put at risk. If your IVA is failed or you are subsequently either chased through the courts for repayment or bankrupted then the insolvency service can and does go after property world wide. The only thing that can never be at risk is your wifes 50% in the property which remains hers whatever action may at some point be taken against you personally in whatever form.

So as long as you appreciate all of the above and the creditors agree the proposal then you have nothing to fear as long as you carry on paying as agreed. Of course each year your ability to pay will be reviewed by the IP and a report sent to your creditors re any adjustments to your payments as required.

I hope this covers your query but to aid you further I have sent you some in depth info on IVA's which I hope will assist you to understand the solution you have chosen and are shortly to enter a little better. If after reading this you have any further concerns or if I can help you any further by all means come back to me again. Best wishes

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