Friday 20th of November 2009
The case of a Winsford couple facing bankruptcy after relying on a high-interest personal loan could force others also dependent on unsecured borrowings to consider an individual voluntary arrangement (IVA).
Michael and Suzanne Walker took out a £17,500 loan in 2005 but fell into financial problems and were unable to meet repayments, which resulted in the amount they owed growing to more than £40,000, reports the Winsford Guardian.
The couple took the case to court, hoping to prove that the loan was invalid from its very conception because it was charging interest on a ‘one-off’ administration fee.
After the case was thrown out by a judge, the Walkers were instructed to pay £100,000 in legal costs, increasing their debt to £140,000 and making bankruptcy near-inevitable, the newspaper states.
But the indebted pair - and thousands of others with similar high-interest borrowings - could have improved their situation by taking out an IVA earlier in their plight when repayments became difficult.
By employing an IVA they could have negotiated with their creditor to make repayments more affordable for them over a fixed period, which may have averted the need to miss an instalment.
By Kimberley Parsons
- 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
- IVA advice could allow homeowners to continue prioritising mortgage
