Friday 11th of September 2009
Late credit card payments have left one couple with a poor credit card rating, they explain, although seeking individual voluntary arrangement (IVA) advice before applying for plastic credit could be an ideal move.
Speaking to This Is Money, the wife questions whether they should sell their home, move into rented accommodation and use the money from the sale to clear their debts.
Some families may not want to cause such upheaval, especially if children are involved, and rent could prove an expensive outgoing further down the line.
Pamela McGrath, from the Money Advice Trust’s National Debtline, suggests that an IVA could be one way that the couple can clear their debts, which could remove the need for them to move home.
She advises them to stay clear of further credit, saying: "If you take out a loan you risk getting deeper into debt if you later cannot afford the new instalments. Any new loan that you take out would include interest."
Rather than taking on the burden of more interest, choosing an IVA could mean that interest on unsecured debt is frozen, giving the couple a chance to meet their monthly repayments.
By Chris King
- 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
- Business owners may find it's time to ask IVA questions
