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  • FIRST POST
    • pbsmiles
    • By pbsmiles 8th Mar 17, 2:24 PM
    • 80Posts
    • 43Thanks
    pbsmiles
    Advice On How To Play This
    • #1
    • 8th Mar 17, 2:24 PM
    Advice On How To Play This 8th Mar 17 at 2:24 PM
    In 2009 I went via Stepchange on a DMP with a debt of 75k,

    In 2010 my marriage broke up and my husband left with no responsibility for the debt it was all in my name and I took on the house.

    My parents gave him 10k and we had a legal separation agreement put in place so that he couldn't claim on the house moving forward but wasn't responsible for the mortgage even though I have never been able to get him off the mortgage.

    We are now 8 years on and my debt with Stepchange is now 38k and I still have my house although nothing paid off as its an interest only mortgage. I made the decision to stay in the house so that my kids could see through there eduction and stand in the family home. Its been tough, affected my health but I still feel it was the right decision.

    Anyhow my son is about to turn 18 and my daughter 23 and I am now thinking that maybe it is time to sell the house. Yesterday I had it valued and there is about 45k equity in it.

    If I do decide to sell I will have to go into rented accommodation and pay six months rent upfront due to my bad debt. Things have dropped off my credit file but there are still some issues.

    My question is 1. Do I need to declare to my creditors the equity I get or can I use this to negotiate a Full Settlement figure? 2. I only have two debts which are still with the original creditors the rest have been sold on, how does this affect me do I treat these different? And has anyone else had a similar situation and what happened. Really look forward to your advice. Thank you.
Page 1
  • National Debtline
    • #2
    • 8th Mar 17, 3:22 PM
    • #2
    • 8th Mar 17, 3:22 PM
    Hi pbsmiles,


    To answer your questions: -


    1. Do I need to declare to my creditors the equity I get or can I use this to negotiate a Full Settlement figure? No - as long as you pay the equity into a safe bank account away from your debts, your creditors will not be aware how much you have and that will enable you to try and make full and final offers. The exception to this would be that if any of they debts have taken court action and have a charging order on the house they will be automatically paid in full, as part of the sale.


    2. I only have two debts which are still with the original creditors the rest have been sold on, how does this affect me do I treat these different? This make absolutely no difference, negotiate with them all in the same way.


    I would just add that you need to talk to your solicitor about the separation agreement and how this affects what you do with the equity. Separate legal documents can affect whether or not you have to split the equity 50/50, but you must find must make sure you tick all of the boxes your end to avoid any 'come back' later.


    Laura
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • pbsmiles
    • By pbsmiles 8th Mar 17, 3:28 PM
    • 80 Posts
    • 43 Thanks
    pbsmiles
    • #3
    • 8th Mar 17, 3:28 PM
    • #3
    • 8th Mar 17, 3:28 PM
    Thanks Laura.

    The separation agreement was quite detailed to say that he had no claim on the house once he worked away with 10k, but also said that this was because I walked away with the whole of the debt. At the time the solicitor thought he was getting away very easily as the debt helped him set up his own business and retrain but I wanted a good solution. I spoke with the solicitor yesterday as they also do conveyancing and I feel more comfortable that its the same person who would deal with everything.
    • January2015
    • By January2015 8th Mar 17, 5:01 PM
    • 1,754 Posts
    • 4,721 Thanks
    January2015
    • #4
    • 8th Mar 17, 5:01 PM
    • #4
    • 8th Mar 17, 5:01 PM
    How do your mortgage payments compare to what you would be paying in rent?

    Also, remember that with rent - it's literally dead money. At least with your home and mortgage you have been building a nest egg. Maybe not huge - but if you had been renting all these years there would be no nest egg.

    Weigh up if it's worth trudging on with the mortgage and clearing the debts via DMP or if selling up really is a long term answer (rather than a short term fix).

    Wishing you all the best whatever you decide is right for you and your family.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • alianza
    • By alianza 8th Mar 17, 5:34 PM
    • 26 Posts
    • 29 Thanks
    alianza
    • #5
    • 8th Mar 17, 5:34 PM
    • #5
    • 8th Mar 17, 5:34 PM
    Am in a similar position in that my wife walked out and I am now living in our house with the kids. They are getting older one is at uni the other in 6th form. I don't have as much equity in the house but I wouldn't consider moving as I am quite happy to pay the interest only mortgage which is probably 35% of what I would have to pay to rent. Why not stay there and rent a spare room out and use that to build up a settlement fund.
    • dirtycredit
    • By dirtycredit 8th Mar 17, 6:23 PM
    • 133 Posts
    • 235 Thanks
    dirtycredit
    • #6
    • 8th Mar 17, 6:23 PM
    • #6
    • 8th Mar 17, 6:23 PM
    Wow you are superwoman! You have done so well! That is an amazing amount to pay back on your own and I know the feeling when you just want to get it done and dusted.

    But please reconsider the decision to sell. It is so much more difficult to get a mortgage these days and you have been lucky enough for the mortgage company to let you pay interest only until you get sorted rather than force you to sell your home.

    Renting can be an absolute nightmare, the rent goes up every year, you can be asked to move out after just six months in a property, everytime you have to move it costs a fortune, then you have to fight the landlord for your deposit back while you have to pay out another deposit for the new place. I would never ever go back to renting its wasted money and you feel like you have no control over your life.

    For 45k I don't think its worth giving up the security that you have of owning your own home.

    Good luck and I'm in awe of what have achieved so far especially on your own and whilst bringing up teenagers.

    DC x
    LBM-May 2015 DFD-Oct 2017 Total debt £27077/5681(77% Paid)
    Halifax-3124/2690 Lloyds-4326/2991
    StudentLoan-1173/
    PAID Tesco-4616/PAID Home improvements- 11000/PAID
    MBNA-4014/PAID


    • somuchindebt
    • By somuchindebt 8th Mar 17, 8:37 PM
    • 83 Posts
    • 55 Thanks
    somuchindebt
    • #7
    • 8th Mar 17, 8:37 PM
    • #7
    • 8th Mar 17, 8:37 PM
    As others say, it is very big decision to sell the house. I have done it, but had a bit more complicated situation, ie still owned with the ex, I wasn't happy in the house and felt like everything needed doing and I could not afford it. I sold it, I live in rented house now and pay dead money on rent. But I love this house, and don't have to cover the costs of repairs etc... But it's true, nothing is certain and I may never be able to buy a house again. Also, there is no guarantees that full and final offers will be accepted. But even though it was such a difficult decision, I don't regret it, I have a new fresh start.
    I like the idea of renting a room out, especially that your kids are at the age when they may move out soon. Good luck!
    • zippygeorgeandben
    • By zippygeorgeandben 8th Mar 17, 9:06 PM
    • 667 Posts
    • 774 Thanks
    zippygeorgeandben
    • #8
    • 8th Mar 17, 9:06 PM
    • #8
    • 8th Mar 17, 9:06 PM
    Good look with the OP here you've done fantastically well so far.
    Regarding renting, obviously it is your choice but I get really frustrated with posters talking about 'dead money' 'down the drain' and don't get me started with the above poster who seems to have encountered the landlord from hell.
    We cannot all simply afford to purchase a house. The housing market is broken. Unless you've got someone helping you out with an inheritance and been given money for a deposit, it's zero chance here in London.
    I'm fed up of people suggesting, however gently implied that being a renter means you are somewhat less worthy. I just don't get why many people in this country think it's essential to own a house. Is it pressure from family members? Have to follow a certain path in life?
    Keep going OP, doing really well.
    End Sep 2016 End August 2017
    £8236.57 £4876.49
    (Tesco 4.8%) £222.61pcm
    £6185.75 £851.34 (Zopa 4.0%) £48.99pcm

    £5344.50
    £2890.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1333.35 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £11499.70 Original DFD May 2019.
    • January2015
    • By January2015 8th Mar 17, 10:12 PM
    • 1,754 Posts
    • 4,721 Thanks
    January2015
    • #9
    • 8th Mar 17, 10:12 PM
    • #9
    • 8th Mar 17, 10:12 PM
    Good look with the OP here you've done fantastically well so far.
    Regarding renting, obviously it is your choice but I get really frustrated with posters talking about 'dead money' 'down the drain' and don't get me started with the above poster who seems to have encountered the landlord from hell.
    We cannot all simply afford to purchase a house. The housing market is broken. Unless you've got someone helping you out with an inheritance and been given money for a deposit, it's zero chance here in London.
    I'm fed up of people suggesting, however gently implied that being a renter means you are somewhat less worthy. I just don't get why many people in this country think it's essential to own a house. Is it pressure from family members? Have to follow a certain path in life?
    Keep going OP, doing really well.
    Originally posted by zippygeorgeandben
    Hi Zippy

    Nothing wrong with renting and renting does not make anyone less worthy. My post to the OP was merely stating that as they already have a mortgage they weigh up the pro's and con's of selling up just to clear the debt.

    As the OP already has a mortgage then moving to renting would literally make the monthly payment for housing 'dead money'. At the moment her payment may only be covering interest on the mortgage, but the house is increasing in value. Therefore her monthly payment can be seen as an investment of sorts. Useless until the point she sells the property I admit, but it's building up a nest egg. Moving to renting means the monthly payment is dead to her once it leaves her account. I recognise house prices go down as well as up but at the moment her home is increasing in value.

    Whatever she decides to do I wish her all the best. Only she will know what feels right for her.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • dirtycredit
    • By dirtycredit 9th Mar 17, 8:08 AM
    • 133 Posts
    • 235 Thanks
    dirtycredit
    zippygeorge no one at any point said they think people that rent are less worthy. I really don't know where you get that impression from.


    You say you don't understand why owning a property is essential. I live in London too..my mortgage is a quarter of what my rent would be. In fact I wouldn't be able to afford the rent so to me it is essential that I own where I live. I certainly don't look down on anyone..I rented for most of my life and it was a nightmare which is why I think giving the opportunity up if you are lucky enough to get it in the first place is madness.


    I totally agree that the housing market IS broken and the people that own somewhere now are very lucky which is why the OP should seriously reconsider selling.


    DC x
    LBM-May 2015 DFD-Oct 2017 Total debt £27077/5681(77% Paid)
    Halifax-3124/2690 Lloyds-4326/2991
    StudentLoan-1173/
    PAID Tesco-4616/PAID Home improvements- 11000/PAID
    MBNA-4014/PAID


    • zippygeorgeandben
    • By zippygeorgeandben 12th Mar 17, 2:55 PM
    • 667 Posts
    • 774 Thanks
    zippygeorgeandben
    Yes I wouldn't sell OP, agreeing with other posters here.
    End Sep 2016 End August 2017
    £8236.57 £4876.49
    (Tesco 4.8%) £222.61pcm
    £6185.75 £851.34 (Zopa 4.0%) £48.99pcm

    £5344.50
    £2890.04 (Sainsburys 0% until 06/19) £140pcm
    £2000.00 £1333.35 (Sister 0%) £133.33pcm

    Total debt
    £19.766.82 £11499.70 Original DFD May 2019.
    • angelpye
    • By angelpye 12th Mar 17, 5:24 PM
    • 988 Posts
    • 3,667 Thanks
    angelpye
    Is it worth looking at a fair rent from your children now they are grown to take the pressure off of you and also make up for any help you might loose (thinking maintenance) for 18 year old?

    I own a small house as I downsized post separation so maybe that could be an option? Cheaper area or much smaller property?

    Renting a place like mine would be at least £400 more than I pay in mortgage so I was keen to buy in order not only protect my money for my future (haven't been in a position to sort a pension yet) but also its cheaper even with costs of maintaining etc. I like the security of owning and found private renting quite unsettling due to little security for the long term.

    Goodluck
    Last edited by angelpye; 12-03-2017 at 5:29 PM.
    Happiness is wanting what you have...
    Debt Jan 2017: £2589.22 DFD: Sept 2022 April 2022 but this Marching Minimalist can beat that!
    Use it or Loose it gym target: Feb'17 5/6 Mar 4/6
    EF £0/£4200
    • bilbodreams
    • By bilbodreams 13th Mar 17, 7:58 AM
    • 101 Posts
    • 175 Thanks
    bilbodreams
    Hello OP, my sister found herself in similar circumstances.
    She decided not to sell. 10 years on, she said to me recently that it was the best decision ever. She is now debt free, she has now a small mortgage, (she pays much less than what she'd have to pay renting) and the house has increased in value.
    I'd devise a plan to pay debts/get more money in, getting a lodger or renting room out to foreign students it's quite profitable and they only stay for a few weeks at the time.
    Obviously only you know your full circumstances, all the best OP
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