My son owes £35K on 6 credit cards

[m2db]

My son owes @£35K on 6 credit cards; he also pays nearly £200 a month on a mortgage (I believe his property will currently be in negative equity). The joint income of he and his wife is @£2K a month - this is variable, though seldom more; currently she is on maternity leave and they have repayment exemption on their mortgage for 6 months.
I am in a position to offer some assistance but he is reluctant to accept this. From my research I feel that an IVA offers him the best and safest way forward. Are some companies more reputable than others? Can you comment?
Is a Debt Consolidation Loan worth considering? Is it an unsecured loan or could his house be at risk? Will he end up paying far more than an IVA?
Is a Debt Consolidation Mortgage a possibility? I understand that failure to repay could result in repossession but how could this route be of benefit?
I will be very appreciative of any clear advice you can offer on these issues.
Many thanks.

[kallis3]

Hi and welcome.

I think an IVA may be useful for your son. His income certainly seems to support this. Is his wife going back to work when her maternity leave finishes?

I personally wouldn't recommend a consolidation loan because it is a) secured and b)more debt which has to be paid back. The credit cards would still be there and there would be the temptation to use them again. I speak from experience as this was what I did a few years ago and still ended up in an IVA.

I recommend that he speaks to an Insolvency Practitioner as soon as possible to sort out his options. There are several who post on here, as well as debt advisors who all come highly recommended. You can visit www.iva.com for a list of companies, or try Melanie Giles, Size5, Andy Davie or VikiW. Their contact details can be found on the left hand side of the page under the expert link.

I can understand your sons reluctance to accept from you as it is a terrible feeling to be in this position, but I think he is very lucky to have understanding parents like you.

[Michael Peoples]

Hi m2db. Your son certainly should seek advice and you could be of great help to him. Should any equity be available in bankruptcy you could offer to pay that to the Official Receiver to protect the family home. Alternatively, depending on his and your personal circumstances a single payment from you could offer his creditors enough as full and final settlement.

It is always risky to secure unsecured debts but even it this was a viable option it is almost impossible to obtain finance at high loan to value and if he is in negative or nearly negative equity the refinance option is almost certainly not available at this time.

[MelanieGiles]

Michael is right - and I do a lot of full and final settlement based IVAs where parents are assisting their children. If you were able to offer a lump sum, to make some form of contribution to creditors, then this has every chance of acceptance as creditors get their money earlier without the risk of a contributions based IVA which is sensitive to your son's income - which is bound to be effected now given that his wife will not be earning full money, and there will be another mouth to feed.

If you can persuade your son to take professional advice from an insolvency practitioner, they will be able to go through all options with him and then he can decide whether to accept an offer from you, or whether bankruptcy is a better option given the lack of assets which would be affected by this process.

[David Mond]

It is unfortunately in the hands of your son. The fact that he has confided with you helps. Get him to speak to an IP and he will be given the most appropriate advice. Your financial help will be a big plus factor and an IVA is probably the best route - but until your son gives all of the information to an IP we are only guessing - good luck.

[kallis3]

I hope that your son realises that he needs to seek professional help soon.

Tell him that he is welcome on this forum if he has any questions he needs to ask, or if he just needs support.

We're always around.