Case study - couple - IVA and Debt Management Plan
Chris and Caroline had recently become partners. They had each experienced periods of unemployment in the past few years and as a result found themselves in considerable debt that was showing signs of becoming out of control. Chris owed around £25000 to a number of creditors and Caroline owed around £10000 to 3 different creditors. Happily they were both now in stable jobs, but the repayments on debts was crippling them.
Chris & Caroline were determined to find a way to sort out their finances. However there was a complication. Chris & Caroline rented the property they lived in but Caroline had a property she owned that was rented out. This rent from the property covered the mortgage payment but there was some equity in the property that meant Caroline was not insolvent. Her asset in the property was significantly more than her unsecured debt.
An IVA for one
Chris researched potential solutions and at first thought that an interlocking IVA for their £35000 joint debts was the answer. He could afford £200 from his income and Caroline could contribute £150 monthly. The combined repayment of £350 was considerably less than their current repayment level which was really unaffordable. It was then that Chris read about the equity issue for Caroline. Her creditors simply wouldn't agree to her debts being included in an IVA when at least on paper, she could sell her property and repay her debts in full.
The solution became clear as they talked things through. Caroline's property was no obstacle for Chris. He could propose an IVA based on his debts and Caroline would use her share of the £350/mth disposable income to repay her debt at an affordable rate. They calculated that if all worked according to plan, their respective solutions might end at similar times and the equity problem that seemed to have scuppered the joint IVA was overcome.
Finding the right solution
Things don't always work out quite so neatly – but it is always worth talking though all options with an experienced debt advisor. Sometimes the joint solution is unworkable but two separate solutions can overcome the problem.
Search for IP/IVA Firm
Last 10 Reviews