Equity previously released but still in debt

[jdncoke]

Hi All,

Firstly what a great forum and it just goes to show when people help each other great things can be achieved.

I'm worried about my parent's and wondered whether an IVA would help them. They are both retired and are 70yrs+ they have around £35k total debts (mum £25k and dad £15k) two years ago that figure was around £100k between then including the mortage. Due to their debts back then and both being retired and only having a joint income of around £600 per month my sister helped them out by mortgaging their house / (instead of that equity release as they wouldn't get as much). The house is worth £250k but my sister borrowed £80k on it so my mum and dad could pay off their mortage and some of their debts. Obviously it wasn't enough to fully pay off all their debts. Two years later they are paying all their pensions out on debts and have nothing left over. I work full time and help them financially every month. I don't want them to lose their house and am trying to find a way so they can stay in it.

What can I do ?

thx everyone

[MelanieGiles]

Hi there and welcome to the forum

An IVA is never really advisable for people who have retired, unless there are special circumstnaces - or they could comfortably afford to make ongoing payments from their pensions.

If they have equity in their property in excess of £35k, then they are not insolvent and therefore an IVA would not work. Could either of you borrow any more money to try and effect an informal settlement with creditors?

[jdncoke]

thx for the reply.

they can't get a debt consolidation loan because they now have bad credit due to missing so many payments. They can't comfortably make the payments, i will be making the payments for them. They technically don't own the house right now as its mortgages is my sisters name. They are considering moving and using the money raised to pay off their debts but I/they dont want to lose their house they live in right now.

[Sarah]

Hi

I may be very wrong here but i am sure someone else will let you know, if they dont own the house outright and it is in yours and your sisters name would they not be able to go bankrupt and still stay in the house... sorry if i am wrong

[jdncoke]

Hi Sarah,

i thought about doing that, but because the house was sold at less than market value, then it looks completely fishy and it says in order to go bankrupt then the house must not of been sold in the past x years for less than the going rate.

[jdncoke]

If an IVA is not possible, does anyone recommend something else or like the baines and ernst thing?

[kallis3]

I presume you mean a Debt Management Programme?

These are ok, but do take a long time to pay off, perhaps not feasible if your parents are elderly?

[indebtforever]

i do hope you sort it out for your parents it must be a nightmare living on a pension having to service these debts at a time in life when they dont need this worry can they not get advice from your local CAB to sort out a dmp they will write to their creditors and sort a plan for them on less payments and hopefully interest frozen so as they have a decent standard of living.

[MelanieGiles]

"They are considering moving and using the money raised to pay off their debts but I/they dont want to lose their house they live in right now"

Surely it is better to be debt free and happy than continually struggling to repay unaffordable amounts to creditors? How much equity is there currently in the property - by valuing it at true value?

[jdncoke]

the house is worth £250k less £80 owed to my sister, less their debts doesn't really leave them much of a retirement or a decent place to live.

Thx for the advice so far guys/gals much appreciated!! I will goto the CAB and see what we can do.