Best route to avoid debt crisis

sfjnet

Hi all,
I am asking this in behalf of friends (honestly!) who are overwhelmed by things and need advice for first steps to sort out their problems. Specifics are:
- married couple, 58 & 56
- joint homeowners with reasonable equity in their home (they paid top ups to their mortgage in the good years)
- husband is a self employed antique dealer but business has been disastrous for the past many months and he is bringing in very little income
- wife works part time with disabled children but suffers frequently from debilitating migraines and other health issues which mean she is often unable to work and cannot keep a normal job
- they had been paying bills, etc with credit for some time meaning they had racked up about £30K debt, but as they had good equity in their house they were able to increase the mortgage by that amount to pay off the cards, etc. This was fine for a while but since then their income has fallen further and so they are back on the treadmill of paying for day to day expenses on credit (mainly the wife's cards and overdraft) and the amounts are adding up fast
- currently they are trying to cope by selling possessions but obviously this is not sustainable in the long term
- they are anxious that any debt solution would not involve them selling / losing their home as it is all they have in the world (no pension provision, no expectation of inheritance, etc).

Is there any route they could investigate that could help them out without threatening their home. If they were in negative equity they would probably qualify for bankruptcy but that is not an option they can consider.

Any advice in the first instance would be appreciated. If I have something I can take to them to get started then it will be easier than just saying speak to CCCS or whoever (which I've suggested but they are ashamed/afraid to do).

Many thanks.

Tixy

Hi

Given that they want to keep hold of their house and they have equity in it then they may well want to look at a debt management plan (DMP) with one of the charities.

On a DMP they charity would help them work out how much they should have left from their income after paying priorities and basic living costs and this left over amount is then paid to their creditors even if its less than the contracted minimum payments. This means they can still afford the mortgage etc but to have to live to a budget.

On a DMP the creditors will often agree to freeze interest & charges on the debts so that they can focus on just paying off the balance.
This factsheet might help them understand how it works
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=29_debt_management_plan

Can you get them to do a statement of affairs to work out how much they should have left from their income after paying out all essentials (and without reusing credit by spending on the cards or increasing the overdraft?).

Can you help them check they are getting all/any benefits they are entitled to? Eg are they entitled to tax credits? can wife get carers allowance etc?

Another possible avenue to explore with the debt charity would be an IVA, but if their income can flucutate and might reduce further still then a DMP might be more suitable. On an IVA they wouldn't lose their home, but might need to release equity from it towards their debts.