Case Studies 75k Debt Reduced to 22k

Scenario:

A husband hid debts of £76,500 from family - creditors accept £22,000 in full settlement.
An individual had approximately £76,500 of unsecured debts which consisted of loans, credit cards and overdrafts. The debts had arisen over a number of years following the breakdown of his marriage and the requirement to relocate due to his work. For years he borrowed from one lender to pay another and his liabilities had reached such a level that his monthly payments to creditors far exceeded his income.

The debtor’s second wife was unaware of the extent of his borrowing and they resided together with their three children in a property which had been recently valued at £115,000. They had a joint repayment mortgage with approximately £73,000 outstanding. Creditors were threatening legal action against the individual due to his inability to meet the repayments which naturally made the debtor feel anxious about being declared bankrupt and in so doing potentially lose the family home.

Advice Given:

We suggested that the individual make his wife fully aware of the situation. That done and with the support of his wife and our guidance they were able to re-mortgage the property to enable a lump-sum of circa £26,000 to be raised which was offered to the creditors via an IVA in full and final settlement of the debts.

The Outcome:

Within 3 months of the individual making contact with us, his proposal for an IVA was accepted which resulted in the creditors receiving approximately 29% of their debt value, and with the debts legally discharged. Because the wife pledged some of her share of the equity in the property which the creditors would not be entitled to receive in a bankruptcy, the creditors received a higher return by accepting the IVA as opposed to what they might have expected to receive in a bankruptcy and the family were able to remain in their family home. The new mortgage that they obtained was at a lower interest rate which was fixed for two years which also allowed the family a breathing space to get back on their feet.