my parents cannot afford to pay their debts

[dave_]

Hello, i have a question. My parents are currently experiencing financial hardship and cannot affort to pay their debts, although they have done so without default for many years. It is now just a case of them, my Mother actually, working simply to pay her debts with no surplus cash for everyday necessities, food etc. I am finding this whole afair very distressing as a can see that she is simply working all hours to just meet are debts. This has been going on for some years and now it seems that she cannot meet them anymore. I wondered is a debt management plan is a better solution than an IVA. Does she stand to lose her house either way. She currently has a house with an outstanding mortgage of £15K the value of the house is around £95K There is 8 years left on the mortgage. She is 57 and her husband is 60 but he is unable to work due to illness. She works from 7am till 6pm monday to friday and earns around £11k a year. We have taken a look at her finances and it is reasonable to accept that she can affort £300-£400 per month for now and for a few years but given her age will creditors accept a DMP. Here total debt excluding here mortgage is £45k. I hope this is not too much information. Thanks for your reply in anticipation.

[MelanieGiles]

Hi Dave and welcome to the forum

Your Mum has enough equity in her property to repay her debts in full, so I would suggest that she remortgages now and gets them paid off.

A new mortgage will cost much less than the debts she owes, where she is probably only covering accruing interest charges each month without reducing the capital balances at all.

I appreciate that this leaves them with a much larger mortgage, but with £300 to £400 spare money available each month this should easily cover the increased payments.



Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk