You must declare any property abroad that you own if you start an IVA. This will have implications particularly if there is significant equity or it generates income.
- Is Property you own Abroad included in an IVA?
- What happens if there is equity in the Property?
- How is an IVA affected if your Property generates income?
- Can you just keep quiet about the property?
Want help to start an IVA?
Give us a call: 0800 011 4712 or complete the form below to speak to one of our experts
Is Property you own Abroad included in an IVA?
When you start an IVA you have to declare all of your significant assets. This includes any property you own both at home or abroad.
If you own property abroad how it will be affected will depend on the amount of equity in it. Where there is little or no equity there will probably very little risk.
You still have to declare it in your proposal. However you will be able to offer your creditors a nominal amount to waive any further interest in it. The amount required could be as little as £500-£1000.
If your property abroad it is likely to increase in value creditors may require a larger sum to waive further interest.
What happens if there is Equity in your Property Abroad?
If there is equity in a property you own abroad you must declare this to your creditors in your IVA proposal. However the way it is then dealt is generally different to property you own in the UK.
Releasing equity from the property by remortgaging may well be impossible. As such it is normal to deal with the equity by offering to pay an agreed lump sum at some point during the Arrangement.
You will normally be able to offer an amount significantly less than the actual value of the equity. This reflects the fact that creditors would face considerable challenges if they were to try and force equity release.
Creditors may accept a relatively small lump sum in return for giving up further interest in your property abroad. This reflects the costly legal challenges they would face trying to force you to sell.
How is an IVA affected if your Property Abroad generates Income?
If you are receiving income from your property abroad such as a regular rental payment this must be declared in your IVA. It should be added to your income and expenditure statement.
The income will then be used to calculate your dispoosable income. As a result it may increase the amount you are required to pay into the Arrangement each month.
Of course you can include any costs that you incur such as mortgage and local management payments in your living expenses. These could offset some or all of the income you get.
Any income generated from a property abroad must be declared and could affect your monthly IVA payments.
Could you keep quiet about your Property Abroad?
The fact that you own a property abroad will not show up on a Land Registry search in England, Wales or Northern Ireland. As such you may think that if you could get away with simply not mentioning it.
This may be true. However in the majority of cases there will be a record of the existence of the property on your bank statements. This could be in the form of regular income receipts or transfers from the UK to cover mortgage payments and other expenses.
If these these kind of transactions are showing they are likely to be discovered by your IVA Company when they draft your proposal document. Given this where such transactions exist the property must be declared.
You should always be honest about any property abroad that you own. If you do not disclose it in your IVA and it is discovered later this could lead to the failure of the Arrangement.