I'm £55,000 in debt and worried about losing my home. What can I do?

12 August 2013


I'm 54 years old and only in the past five years have I turned my mortgage into a repayment one, so I still have 20 years to go. I also have credit card debts of around £55,000 due to my wife having cancer twice in the past 10 years (she’s fully recovered now) and also having two children, aged 15 and 17. Is there any way to right off or reduce the credit card debts without losing our home? My only glimmer of hope is my company final salary pension – now closed and frozen as of the last two years - may be taken at 55, even if I am still employed. This would probably release around £42,000 in a lump sum and a pension of £400 a month. I now pay into a new company scheme, which is not based on final salary.This scheme runs until the age of 66. Although I will still carry on working for the same firm, it will mean I will go into the 40% tax band for around £6,000 per year. The house is all we have and I really do not want to lose it. I cannot afford to add £55,000 to the mortgage, as I will shortly start paying £1,386 a month when I move to the standard variable rate. It is also doubtful I would get that loan under today’s new criteria. I cannot pay off my debt by any more than around £200 a month. If I enter into an individual voluntary arrangement (IVA), does that mean I could lose my home?


An IVA is a legally-binding arrangement to pay an agreed amount off your debts over a set period. Any unpaid parts of the debts that were included in the IVA are written off when the arrangement is completed.There are both advantages and disadvantages to IVAs.

We would urge anyone considering taking out an IVA to seek full advice to ensure this is the best option for them. From the information that you have provided, an IVA would not be a good option for you. This is because you will pay back far more than you owe.

The terms and conditions of the IVA will outline that a pension, equity in a property or a lump sum of money can be used to repay your total debt on the final year of the IVA.

We would also advise you not to borrow further funds against your property because you are putting your property at risk. If you feel that you do require further financial assistance, then please contact the Money Advice Service, which is an independent body, on 0300 500

You have specifically asked whether creditors will write off your debt and, based on the circumstances that you have provided, I feel it is unlikely. However, there may be alternative options for you when dealing with your debt.

Lastly, it is important to complete a realistic household personal budget sheet. You can call us directly to do this on 0808 808 400 or you can go online at mymoneysteps.org. A budget sheet can help you to offer reduced payments to all of your creditors but, based on your circumstances, you may also be eligible for a Free Debt Management Plan.

This is where you will make one payment towards all of your debts each month. As we are not fully aware of your situation, it is probably best that you call us directly to discuss your options in much more detail. Please be aware that this is in confidence and you can contact us at National Debtline on 0808 808 4000.