Could creditors force me to sell my home?

Q We are around ?59,000 in debt as our daughter developed cancer some time ago and we stopped caring about money; we decided instead to spend whatever we had to make her life more comfortable.

I am now writing letters to all 15 creditors and asking them to accept reduced payments. Could they force me to sell my home? The equity is about ?12,000 and my mortgage is always up to date.

DO

A Strictly speaking, anyone to whom you owe at least ?750 could force the courts to declare you bankrupt. This has a lot of unpleasant implications (see Should my daughter declare herself bankrupt?), not least of which is that you could be forced to sell your home to repay your debts.

However, most creditors prefer to see a steady stream of cash coming in than to take drastic measures like enforced bankruptcy, so they may be willing to accept your offer of reduced payments, though they are in no way obliged to.

Creditors might also be encouraged to accept such an arrangement if it is made on a more formal basis through an individual voluntary agreement (IVA). This legal process also prevents any further interest accruing on what you already owe.

I think you would benefit from some help from your local Citizens Advice Bureau, if only with drafting the wording of your letters. This is something CAB staff do regularly, so they know which wordings are most likely to succeed.

You can find out more about CAB at nacab.org.uk.