Handing back the keys and starting over?

northern_worrier

I currently have a mortgage on my property for a total of 86k (roughly), which includes a 12k unsecured loan. I took a Together Mortgage, which is why it's all lumpted into 1. I also have a seperate unsecured for about 9k.

At the minute only I work, my partner is looking after the baby, so money is very tight. In fact it is none existant. We're basically at the stage where we need a miracle to survive. So what I am wondering is:

If we hand back the keys to the house, then declare myself bankrupt (everything is in my name, not my partners) then am I debt free? I know it is an incredibly large price to pay, however I can't really see any other option. I have contacted the CAB to help with the loans but they haven't done anything. Would this mean I would lose my car etc, as I need that for getting my baby around.

Any other advice would be appreciated as I'm not sure what else I can do.

dean_ham

I think you need to post your full facts and figures, im sure you can work something out and cut back on somethings that you dont need.

£95k of debt in total is managable sureley? like i said would need a full set of facts and figures

northern_worrier

The mortgage itself is 72k, and 12k unsecured. It also has a 3k ERC, so about 85 - 86k total. The other unsecured is for 9k approx.

My income after tax is 1000, and the Mortgage + Loan is 880

Once you have included Food, Petrol, Utilities and Council Tax, it's well over 1400 pcm. I do get Tax Credits, of 150 pcm, but I'm still 200 - 300 over every month. There is nothing else that can be cut back on, we're living on the bare essentials, buying the value brands and not going anywhere in the car to save petrol.

I'm currently trying to get a 2nd job which would help, but there isn't much going around. My partner can't work as we would then have to pay for Child care, meaning more money.

Any idea's?

Frugaldom

Hi Norther-worrier, welcome to MSE forums.
Sorry to hear about your money problems but my first question has to be, have you worked out an actual budget and statement of affairs so you can see exactly how much money you NEED and how much you actually have.
Can you increase your income any?
Can you reduce your outgoings?
Have you checked to find out if you qualify for working tax & child tax credits or any other benefits?

Walking away from the house does not mean you become debt free, it simply means you could be making yourself homeless. You haven't said if you have substantial arrears on any of your loans or mortgage etc, so I'm not sure how the bankruptcy route works. I do know that when you walk away from a house you are still liable for any monies owed after the sale if there is a deficit, so perhaps you should contact a FREE debt councelling service for advice, there are several featured on this website.

Hopefully, someone who knows what they are talking about will be along soon to respond, but I wouldn't consider volunteering to make myself homeless if I was in your situation with a partner and baby to think about. Work out your options then tackle, prioritise your paymenst, speak to your lender and take it one step at a time. Keep in contact with all your lenders and they should be a great deal more helpful.

Edited in: sorry for repeating anything, we must have been posting at the same time

GDB2222

Hi Northern-worrier. I think you may be better off going bankrupt, unfortunately. The effect of that is that you lose the house, but you also lose all the debts, as you know. You couldn't keep the car. Sorry to be so pessimistic.

On the bright side, the sooner you walk away from the mess you are in, the sooner you emerge from bankruptcy (it only takes a year) and the sooner you can start again debt-free.

The alternative is to agree some reduction in your debts with your lenders, and then you struggle on for years to pay that lot off.

northern_worrier

That's what I was thinking. I understand that the only debt not cleared by Bankruptcy is Countil Tax arrears, is that correct?

We not currently in arrears yet, but will be within the next few weeks. If I can find a 2nd job we should be able to struggle on, but not sure how much longer for. Whereas if I was bankrupt we could "start again" and learn from our mistakes: no debt! Save for what we need.

I've tried going to the CAB to agree reduction, but I couldn't go anywhere. Are there any FREE debt companies that might be able to help me before I go down the bankruptcy route?

Pitlanepiglet

Can your partner not work in the evening whilst you look after the babe?

northern_worrier

We've tried looking for either of us in the evenings and weekends, I've even looked at night work, just doesn't seem to be anything that we can find. Plus if she got a job I would have to drive her, costing us more in petrol

Ideally we would find her a job in the local area, but it is there is only 2 shops, none of which are hiring. However if I could get another job we should just be breaking even a month, hopefully. We should then be able to struggle on for a few years, maybe,

bobbie78

If you go and ask on the debt free wannabe board they have a lot of help with charities, like cab but different, who you can talk to about different ways to try and resolve things before it gets as far as bankruptcy. If you ask there they also have a bankruptcy board with people going through it so they can help as they have been there done that etc etc.

minimoocow

Are you sure you are claiming everything you can be? If the only income for the household is £1000 a month are you sure you are not entitled to more tax credits, council tax benefit etc? Try entitledto.com to do a quick check.

katjamum

If we hand back the keys to the house, then declare myself bankrupt (everything is in my name, not my partners) then am I debt free? I know it is an incredibly large price to pay, however I can't really see any other option.


Hi, I am in a similar situation but for different reasons and have been advised not to hand in keys as I wouldn't be a priority for council housing (not that there is any in this country anymore!) because they would view it as me making myself homeless. I'd contact your mortgage company and explain the situation asking for them to negotiate the monthly fees; and yes - carry on paying the council tax - apparently not paying this is a big no-no and the debt will follow you around for life! Anyway, good luck, let me know if you find a miracle - I could sure use one too xx