Sharing household expenses between IVA and a bankrupt

After a long time keeping heads in the sand and pretending that it just wasn't happening, we are finally facing up to the financial mess that we have made and trying to deal with it. For a long time we have been using credit cards to pay huge interest payments on other cards, kept on increasing credit limits, took out more 0% cards that after a few months incurred interest etc etc and of course the whole thing spiralled out of control. We also have bank loans.

At the end of March we went to CAB and made an income/expenditure statement, cut up and returned all the cards and no longer have any credit at all. We have reduced our spending a lot and also looked at ways of increasing our income and have contacted all our creditors and tried to make arrangements with them. It was a frightening time, just a panicky nightmare, and we were clutching at straws. The end result is that in order to try and gain some space to think we have made informal agreements to make payments that it is now obvious that we cannot actually maintain.

So now we are trying to figure out what to do next. We are tenants and have very few assets. Believe it or not, despite the huge debts, we actually lead a very quiet family life and have very few valuable or expensive possessions. We each use an old car (i.e. the one I use is the newer one and cost £1200) as we both need transport for work. We are unmarried but have been together for years and have two children.

We no longer have a joint bank account and none of our debts or possessions is in joint names.

I owe about £80,000. I am a supply teacher so my income varies from £19,000 to £21,000 depending what schools I am sent to. I have been offered a short-term contract of 12 months from September 2005 that will pay £28,000. After that I may well be back on the supply salary, depending what else turns up. I am willing to go bankrupt if that is the best option (CAB advised me that this is likely to be our best option) just to get it over with and be able to move on with my life. Being able to get credit in the future is the last thing I am worried about at the moment.

Problem I can see with me trying to arrange an IVA is that there is no way to know what my salary will be after September 2006. I am in my mid-50s so getting offered even a one-year contract is unusual as older teachers just don't get jobs (someone straight out of college will cost £19k instead).

My other-half owes about £50,000. She is self-employed and her business is growing but is still small (she is a private tutor). From current bookings she expects to have about £5,000 taxable income next year. She wants to avoid bankruptcy if at all possible. Is she likely to be able to get an IVA set up with this sort of earnings/debt ratio and if so how much is she likely to be able to keep to put towards her share of the household expenses?

If I go bankrupt then what proportion of our household expenses will the OR allow me to pay - will I be able to pay more than 50%? If other-half already has an IVA set up then will her surplus income (i.e. after the IVA) be all that she is expected to contribute to the household if that is all that she has?

Many thanks to all who have taken the trouble to read this long post. Any advice and information will be very welcome.

"Fixing the hole" (where the rain gets in...)