Some advice please

Irn-Bru-Kid

Hi there,

Apologies if this is in the wrong forum, but it seemed the most appropriate.

My partners parents are in a bit of a situation and I would like to steer them in the right direction.

Four years ago, my father in law had a heart attack. He was a self employed builder for 35 years and was suddenly unable to work. He has been unable to return to work since. He is 61. He is now claiming ESA and this is his only income.

Over the years they have accumulated a debt of around 40k on various credit cards and are now in a situation where they are unable to maintain the payments.

They have depleted their savings paying the cards over the years (whilst unable to work) and currently have only 900.00 left in the bank. Another month of payments will wipe them out.

However, they own their home which is mortgage free and is worth approx 160-200k.

They do plan to sell their home and clear the debt, but this will take time and they simply cannot afford another round of monthly payments.

I have advised them to cancel the credit card direct debits. I am not sure if this is the correct advice or not. I thought they should try to keep hold of what little they have left in the bank, rather than pay another month of minimum payments.

They are absolutely terrified that they will lose their house before they have the chance to sell and repay the debts.

Can a credit card(s) company force the sale of their home? The debts are unsecured.

I would be very grateful if someone could advise on the best course of action. Would an IVA be a possibility? They have no cash, but obviously significant assets. Could they enter into an IVA on the understanding that the property will be sold within the six years and the debts repaid?

Should we contact the card companies, explain the situation and try to come to some sort of agreement with them directly?

I feel very sorry for them. They worked hard their entire lives and now feel they are about to lose everything. I would like to reassure them that a solution can be found, but I really have no idea where to start.

Thank you in advance for any/all advice you can give.

debt_doctor

Hi,

Clearly all forms of insolvency are out of the picture including an IVA as it seems they would have no money to offer in monthly payments.

There is every chance that they could keep the creditors at bay for a long time by going down the token offer £1 per month route.

They could as you suggest sell their home to clear the debt. It would be best to have the debts in debt management for a while first as then they could likely make reduced full and final offers to clear the debt at possible 50% of what is owed.

If they are both aged 55 or over, they could do equity release to gain money from the home without selling - and using 50% settlement in the same way as above. Financial advice needs to be taken if considering equity release. There are no monthly repayments to be made in equity release.

Some things to think about.

DD

Irn-Bru-Kid

Many thanks for taking the time to respond.

I will pass on your advice and take it from there.