The Scenario
Hilda is 82 and has been retired for a number of years. Hilda has devoted her life as a poorly paid anti-war campaigner, meaning that the only income she has now is from a state pension.
Even though Hilda hasn't ever earned much she did manage to purchase her own house and save about £20,000 in savings before she retired. Hilda's money problems arose through a number of poor investment decisions and some cowboy builders. Ten years ago Hilda was persuaded to release some of the equity in her house, to invest in a new business being started up by her daughter called Jungle Tours. Hilda got the money by an equity release method and because of the huge increase in house prices, she no longer has any equity in her property.
The business failed and Hilda lost all her money but was not too despondent as she did not have to pay a monthly amount for the release. However, her problems worsened when she decided to do her house up. The building work was originally quoted at £20,000 but "unexpected" problems kept occurring and the bills started mounting. Hilda had to keep paying as the builders threatened to stop work altogether and leave her house resembling a building site. Hilda had to keep getting credit cards out to keep up with the payments and soon realised she had spent a further £20,000 on top of the quote.
Straight away Hilda had no way of meeting the payments and came to us to see if we could help. She has very little in the way of a surplus and is at a loss of what to do!
How we could help
There is only really one option available to Hilda:
- Bankruptcy - Hilda has no more savings and her property is in negative equity (so it would not be taken in bankruptcy). She is also only on state pension which is only supposed to be enough for essential living. Because of all this, bankruptcy is the only option.
Is an IVA ever an Option?
In an IVA, the debtor would have to contribute at least £200 per month, which is usually very hard for pensioners to commit to. If the debtor really does want to do an IVA then they would have to write a letter stating that we have advised the best option for them would be to go bankrupt but they would like to do an IVA instead.
* Please note that all characters and scenarios described are fictional, and are purely for illustration purposes
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