This is Penny's story - thanks to Penny for allowing me to bring it to you all:
We went through similar problems about 8 years ago and entered an IVA in November 2002. Boy I wish your blog had been there then!
We both agree that the whole process of becoming insolvent, dealing with creditors and going into the IVA was the worst and best thing that ever happened to us. We had months of threatening phone calls, letters and stress and then the feeling that we were somehow morally lacking because we were in a financial mess and needed someone elses help to get us into the IVA.
We were the same as you - no exotic holidays (we have never taken a foreign holiday as they are too expensive), no flash or new cars (could only ever afford second hand ones), a smallish mortgage for our ex-council house and our food and clothes bills were very much made up of necessities rather than treats and luxuries. We both worked full time and at the time our four children were aged between 7 and 16.
We made ends meet with credit cards, catalogues (for clothes for the kids) and small bank loans for when we needed to replace the car. It didn't take much for us to cross the line into financial disaster. Although we entered the IVA with unsecured debts of 35k, what triggered the whole thing was a catalogue company starting court proceedings against us for a £230 bill. We had been struggling for a while by that point and had tried to reach agreements with the creditors, but the catalogue firm wouldn't play ball.
The sound of the phone ringing or post coming through the door was enough to send me running for the toilet to vomit (really) and X (my hubby) had a breakdown and needed 6 months off work - the last thing we needed at the time. Despite starting IVA proceedings, we still had letters and nasty phone calls until mid 2003 and after the IVA was made one of the banks tried to force us to sell the house for a 7k bank loan. This was totally illegal, but the stress of that set both of us back to square one emotionally.
To cut a long story short - we got through it and so will you. We paid off the IVA early (although the administrators didn't want us to) and we now have perfect credit scores. We still only have our little mortgage and only ever deal in cash - no overdrafts or cards and if we can't afford something we wait till we can. Its hard but my one fear in life is being back to where we were in 2002. It broke both of us emotionally and its taken us a long time to get over it.
Almost 8 years later we are wiser and far more appreciative of the things we have that don't cost money - its just a shame we had to hit rock bottom to realise it. Corny but true.
I think what I am trying to say is hang on in there. There is life after financial hell and at the end of the day its only money. If you haven't got it they can't take it and they can only take your dignity if you let them.