Case Studies Husband & Wife Owe £157k

Scenario:

A husband & wife owe £157,000 between them - what’s the solution?
A young married couple with debts to unsecured creditors of £77,000 and £80,000 respectfully. They had a mortgage on the marital home of £187,000, against a house value of £230,000. Also two cars were on Hire Purchase with a combined monthly payment of £486. Their total net income was £2,614 and expenditure £2,500, leaving just £100 per month to offer a Debt Management Company, DMC. Under pressure from creditors they called for help.

Advice Given:

It was obvious the DMC was a waste of time as the debt would not be cleared for at least 50-60 years, if at all. There was also concern as to the level of borrowing for someone as young as 23 years of age. However, something positive needed to be done and the husband was advised to seek alternative employment to increase his take home pay and one if not both vehicles would have to be sold to be replaced by a cheaper alternative, thus freeing-up £486 each month. The only real way forward was either bankruptcy or an IVA. Both are now coming round to ending their unaffordable lifestyle and accept that they need to do something to end their nightmare.

The Outcome:

Proposals will soon be drawn up for an IVA for each of the couple with them making monthly contributions. It is envisaged that creditors will accept the debtors’ best offer giving a return of approx 33 pence in the pound. It is most unlikely that creditors would receive any dividend in a bankruptcy situation.