Monday 25th of January 2010
Bankrupt Kerry Katona has blown all her money on shopping, rather than meeting her mortgage repayments, a claim suggests.
Kerry Katona faces losing her home after spending £140,000 in one month on clothes and her celebrity lifestyle, rather than making repayments on her mortgage, a claim suggests, although an individual voluntary arrangement (IVA) could help people who also have large debts.
The former I’m a Celebrity Winner and mother was declared bankrupt in 2008 and has been given a monthly allowance by accountants dealing with her bankruptcy so she can cover costs such as school fees and her mortgage, the News of the World reports.
But a source tells the newspaper that Katona has "stuck her head in the sand" and refused to face up to her debts. An IVA could help other families who are worried about losing their home live up to their financial problems.
While an IVA is not an easy answer to debt - it leaves a mark against a credit reference and can take up to five years to repay what is owed - it could be more favourable to those with children who are worried about losing their house.
"She has even run up £200,000 in fees concerning her bankruptcy, " the source claims.
Rather than go through the financial overhaul of bankruptcy, individuals with debts of more than £15,000 may prefer to undertake an IVA as this could prevent a home being lost as long as repayments are kept up with.
By Neil Burton
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVAs could reduce the climbing rate of unsecured debt
