Newbie? should I or not?

wannaBfree_3

Hi I'm new and need a little advice. I have alot of debt and after talking with the CCCS it has been pointed out that me and my OH should think about going bankrupt. However the idea worries me. I work full time and have a good job but our outgoings are way more than my income.

We are £400 short for just our livings expenses, which doesn't include our 16 unsecured debts totalling £29,000. We own a house currently valued at £115,000. Our mortgage is for £113,000. Plus we have a secured loan of £7,000.

If we go bankrupt we need to save about £3400 to rent a house, pay for bankruptcy fees and by a second hand car for me to get to work as we currently have a £10,000 car on HP, which I assume would be taken off us.

My mortgage payment is £616 and we are in arrears of £714. To go bankrupt we would have to not pay our mortgage or secured loan in order to save up the £3400. I really do not want to do this but I cannot see a way out, but I feel bad about not paying my mortgage and secured loan. And what if they evict us before we have saved enough money or the secured loan company try to take our house off us to pay their loan? It will take us about 3/4 months to save this amount. We have 3 children.

Do you think if we made a small payment of £50 to the mortgage company a month this would keep them of our backs?

Any advice welcome!

So_Sad_Angel

Hi WBF....first of all welcome. I know how difficult it is to make that first post....so well done.

Don``t just speak to CCCS try Nat Debtline & CAB if you need 2nd even 3rd opinion. Main thing is DO NOT PAY for advice.

Right that out of the way....you have more outgoings than incomings!! join the club!!

If BR is the way forward then check out the rental options or if you can afford to stay in this home (mtge & SL) then (in neg equity) this is very do-able option. ie - if you are not paying the unsecured stuff then can you afford to live where you are???

Main thing is not to worry about how overwhelmed you feel & think positively about looking for a solution.

Angiexx

fiveyearplan

Hi and welcome! I agree with everything SSA said above. If you do go BR and all your debt (aside from SL) is cleared you will still need to either cut back or increase your income to find the £400 you are short now. Does this £400 include your car payment?

We are still short of money each month after my BR and are still having to juggle financially - I have overdue gas, elec, water and won't be able to pay my mortgage this month either.

mazzatee

Hi WannaBfree

It is unlikely that your secured lenders will take any action for at least 3 months and will then start to look at possession proceedings so you will have enough time to save for the deposit & bond for rented property.

With regard to the car, much will depend on what the HP company says - check whether there is a clause about bankruptcy in the agreement - as most will let you keep the car as you probably owe more than its worth! However it would then depend on whether the OR dealing with your bankruptcy feels the payments as not excessive.

Ring the bankruptcy support team at CCCS for further advice & as a note of warning check your agreement as some companies claim it is HP but when you check it out its actually a personal loan! Again CCCS will help you with that.

wannaBfree_3

So_Sad_Angel wrote: »

Hi WBF....first of all welcome. I know how difficult it is to make that first post....so well done.

Don``t just speak to CCCS try Nat Debtline & CAB if you need 2nd even 3rd opinion. Main thing is DO NOT PAY for advice.

Right that out of the way....you have more outgoings than incomings!! join the club!!

If BR is the way forward then check out the rental options or if you can afford to stay in this home (mtge & SL) then (in neg equity) this is very do-able option. ie - if you are not paying the unsecured stuff then can you afford to live where you are???

Main thing is not to worry about how overwhelmed you feel & think positively about looking for a solution.

Angiexx

Hi Angie, if i don't pay the unsecured stuff i might be able to afford to stay in our home but it would be very very tight, buying food would be very hard to do. I am maternity leave at the minute so when i go back to work my petrol bill goes up by £40 a week which would be an extra bill.

mel x

wannaBfree_3

Hi, i hope i am this reply will make sense. i'm trying to highlight your question and my answer.

fiveyearplan wrote: »

Hi and welcome! I agree with everything SSA said above. If you do go BR and all your debt (aside from SL) why do you say (aside from SL) will this debt not be included if i go BR? i'm worried now! is cleared you will still need to either cut back or increase your income to find the £400 you are short now. Does this £400 include your car payment? the £400 does include the car payment of £188.

We are still short of money each month after my BR and are still having to juggle financially - I have overdue gas, elec, water and won't be able to pay my mortgage this month either.

mel xx

wannaBfree_3

mazzatee wrote: »

Hi WannaBfree

It is unlikely that your secured lenders will take any action for at least 3 months and will then start to look at possession proceedings so you will have enough time to save for the deposit & bond for rented property.

With regard to the car, much will depend on what the HP company says - check whether there is a clause about bankruptcy in the agreement - as most will let you keep the car as you probably owe more than its worth! However it would then depend on whether the OR dealing with your bankruptcy feels the payments as not excessive.

Ring the bankruptcy support team at CCCS for further advice & as a note of warning check your agreement as some companies claim it is HP but when you check it out its actually a personal loan! Again CCCS will help you with that.

Hi,

Do you suggest that i pay something towards my secured loan and mortgage even if its a token payment? I am already in arrears one months mortgage payment. Or would you suggest not paying them anything and using the money to save towards moving?

Also should i tell them my plan of going bankrupt or just ignore them. i'm looking at places to rent but i'm scared incase i save up enough money, default on my mortgage then when i come to move out, the estate agents do a credit check and say that its bad and won't let me rent from them. therefore we will be homeless.

Mel

a7man

Have you thought about increasing your mortgage to cover the unsecured debt? This will reduce the premiums due to a lower interest rate. You should obviously make sure you are paying the lowest rates on your existing loans and if not, switch.

Have you got any spare space in the house and could handle the idea of a lodger to help with the payments?

I would also say get rid of your HP car as its a waste of money, but a cheap run around until your finances are sorted...

wannaBfree_3

a7man wrote: »

Have you thought about increasing your mortgage to cover the unsecured debt? This will reduce the premiums due to a lower interest rate. You should obviously make sure you are paying the lowest rates on your existing loans and if not, switch.

My mortgage won't increase. We have just remortaged last April 2007 to a 100% mortgage to pay off other debts we had. We then had to get a secured loan to pay off some more debts that we not covered by the remortgage.

Have you got any spare space in the house and could handle the idea of a lodger to help with the payments?

we live in a 3 bedroom house and i have 3 children so we have no space for a lodger.

I would also say get rid of your HP car as its a waste of money, but a cheap run around until your finances are sorted...

we need a car to transport our children to school and for me for work. i work 25 miles away and there is no public transport that can get me to work. if we could save enough money to buy a cheaper car we would, but this means not paying our mortgage.

mel

shadowdragon

I think what you really need to do is post up a Statement of Affairs (theres a link at the top of the forum for it), so we can see your income and expenditure that way we will be able to advise you better, as we can see where your income is going and IF you are going to declare BC you will need to do one anyway for your forms, and we can tweak it so that you get all the correct expenses down.

The general advice is not to borrow to pay off debts as its a bit of a vicious circle.

Edit - sorry you are considering BC by CCCS advice. What tends to happen when someone has decided they are going to declare BC they stop paying there Creditors (This is NOT essential payments such as rent, council tax, gas, electricity etc), and use the payments that would have gone on creditors to save up for the fees, with having a mortgage it makes it more complex, but if you are resigned to loosing the house and it has little or no equity, people also stop paying that too (it takes a while before you get evicted/taken to court) the only thing yu have to do is weather the phone calls/letters/general harrassment from your creditors.

With the Car situation the HP can be included in the BC, and they should seize the car, but if you have a vehicle of value the Official Receiver could take it sell it, and give you a nominal amount back to purchase a cheaper "run about" vehicle, if you need it for work ect.

deedee_3

Wannabefree please talk to one of the debt charities as at the moment you are tying yourself in knots.

If you want to keep the house when you go bankrupt then you must be able to afford the mortgage and secured loan. If you feel that you can't afford it then stop paying the mortgage and the secured loan and save the money for your deposit and maybe a new runaround car.

I know quite a few posters have done this and have had no problems renting. Will try and find some links.

http://forums.moneysavingexpert.com/showthread.html?t=596237

http://forums.moneysavingexpert.com/showthread.html?t=620013