A newspaper has been looking into options to clear debt and has concluded bankruptcy may be the appropriate action for some households.
The Birmingham Mail, using a couple from Redditch as a case study, indicated self-petitioned bankruptcy may help some people on a low income and have large amounts of debt.
Debbie and Gary (not their real names) ran up debts of over £30,000 due to rent arrears, water bills and credit card debt when Gary was temporarily out of work. In total, they owed money to 20 different creditors.
Unfortunately, Individual Voluntary Arrangements (IVAs) or a debt management plan – options available from debt help companies such as ClearDebt – were not appropriate due to their low combined income of around £2,000 a month.
Therefore, after taking advice from a charity, the couple decided to declare themselves bankrupt to start over debt free.
According to ClearDebt, households struggling with repayments could be entitled to write off as much as 70 per cent – and sometimes more – of their debts with an IVA, which can be arranged in less than 24 hours.
By Morwenna Kearns