Hi - Newbies 1st Post, £60k unsecured debts, your advice appreciated!

liferenewed

Hello Folks,

Long time lurker, not had the confidence to post my problems until now!

My wife and I have been maintaining our debts for the last 4-5 years, its now got to the stage where we are using our savings to pay the monthly and work situations have changed, so we need to rethink.

Just turned 31 this year, we have a small family now so things need to be sorted so we can look forward to the long term, rather than having this hanging over our head.

5 years ago, my wife and I got involved with property and to cut a long story short, ended up needing an £8k bailout using a barclaycard.

Got married, moved house and since 2005 have been paying minimum monthly on £60k of credit card debt. Very niave I know, we should have been overpaying, but work was always available and we always put it off.

Over the last 12 months, our business has dried up (we were self-employed) and therefore our income has also. We were relying on self-cert mortgages for our property, currently we still own a place having recently moved in the last 6 months, £20k deposit, probably worth £210k if repossessed, so say £30k in equity including our deposit.

We have been using our savings to maintain the debt and to the best of my knowledge, we still have an excellent credit score. The problem is now that while I can get work, I will not be able to declare the income to the bank, and to the best of my knowledge self-cert deals arent available much anymore. Plus the savings are nearly done!

Over the last 4-5 years, we must have made between £65-75k of payments on these cards, being late with just one or two due to direct debit mixups. I am so angry with myself that we have allowed this to happen, but things always looked like they were getting better, so we continued to just maintain, rather than clear.

Dont get me wrong, we didnt flash the cash! Aside from our honeymoon, there have been no holidays, or flash cars, shopping sprees etc. It just was spent 'living' and we took (calculated) risks with our earnings (which werent always regular), some of which paid of in the short term, some of which didnt.

Things are very tight now and I dont want to loose our house or for my family to be threatened by the CC companies.

(Sorry, this feels like im rambling, Im trying to get this out of my head and on screen!)

What are my options folks?

£60k of debts, all unsecured. £210k property with £30k equity (if they can sell it!)

In an ideal world, I would like to start clearing the principle, but the interest is crippling, is there anyway they would freeze this and allow me to reduce the debt?

I read elsewhere that someone managed to negotiate a reduced settlement figure with Credit card companies as they were wanting to settle the account? - is this possible? or is it possible to get the figures reduced on the basis that you have a 12 month plan to clear the overall debt?

In this climate is it possible to take a further advance on the mortgage to part clear the debt?

Can they take the house from me if we went bankrupt given the low amount of equity, and what is the process of bankrupcy in England?

I think our future earnings (which arent guaranteed to continue beyond 3 months from now) should cover the monthly payments, but I am resenting continuing to pay this money given what I have paid, and the current financial climate. I just dont want to make our situation worse by losing the house over our head.

If it was a case that bankrupcy meant we did not loose the house, then I would consider it. Im frightened by this debt but dont want to loose control, I need to try and deal with it rather than ignore it as I have done over the years.

I have read many inspiring stories here and elsewhere and it gives me great hope for my own situation. Your help is very much appreciated and will be valued by us both when making our decisions for our future.

Thank you, liferenewed x

Prudent

liferenewed wrote: »

Hello Folks,

Long time lurker, not had the confidence to post my problems until now!

.





Over the last 12 months, our business has dried up (we were self-employed) and therefore our income has also. We were relying on self-cert mortgages for our property, currently we still own a place having recently moved in the last 6 months, £20k deposit, probably worth £210k if repossessed, so say £30k in equity including our deposit.

We have been using our savings to maintain the debt and to the best of my knowledge, we still have an excellent credit score. The problem is now that while I can get work, I will not be able to declare the income to the bank, and to the best of my knowledge self-cert deals arent available much anymore. Plus the savings are nearly done!

Why can't you declare the income?

cazziebo

No useful advice to give, just wanted to bump you up before you disappeared off the front page. The board is busy today so didn't want any of the wise ones on here to miss you.

You have come to the right place, and at the right time, because you're here before it becomes a disaster. (Sadly, I was in dire straits before I found the saviours on here! And my life is so much better now. Thanks all the MSE-ers :money: )

good luck - hope someone is along shortly.

Little_Miss_Uni-Debt

Hi,

Welcome to the site! Firstly in order for the wise-ones to work their magic - we'll need to ideally have your Statement of Affairs, to look at the numbers better and start to break things down and suggest ways of cutting chunks off that amount. It is good that you both still have an excellent credit score. This keeps many options open for you.

Write down a comprehensive list of all your exact debts, the interest rate on them and what the minimum payment is. If you don't know what you're paying then call them asap.

Go to http://www.makesenseofcards.com/soacalc.html and work out what comes in and goes out for you each month and post it up here.

Then go to http://www.whatsthecost.com/snowball.aspx this site will show you the best way to pay off your debts and in what order.

I understand it is tricky when you are unsure of guaranteed income but I'm sure getting exact figures is the best start. I shall let the more experienced MSE'rs guide you from here onwards.

liferenewed

Thanks for that cazziebo,

I think this is the best place I have found so far and with great people too. Glad to hear you are now sorted for the best!

In response to the income question, I think I have phrased that wrong. I cant prove my income, obviously over the last few years my earnings have come through the sale of our own principle properties (so not liable for tax) and therefore our 'earnings' were more than what we were officially paying in tax, so accounts have been useless when applying for mortgages, hence the self-cert.

At the moment I have been offered private security work in the UK (a driver), but this is cash-in-hand from the individual involved (on their request), and work is work, especially at the moment.

Our declared income business will still file a return, but its not making any money!

tyllwyd

To be honest, if you have £60K of unsecured debt, minimal equity and an uncertain income, you need proper advice sooner rather than later - its probably worth putting the figures together by doing a statement of affairs on the makesenseofcards site, but then you need to talk to one of the debt advice charities like PayPlan or CCCS.

liferenewed

Thanks tyllwyd, on that now!

milliemonster

Hi and welcome, please fill in the SOA and post it up when you can, BR in England is an absolute last resort, even with £30k equity in your house, they would sell your house probably a year after you went BR (so give you a year to leave) as you have a young family or unless someone could buy out the beneficial interest which would be around £15k, after all £30k is half of what you owe.

You need to speak to CCCS/Payplan or National Debtline, these are fee free debt charities that give excellent advice. It may be they suggest a DMP for your unsecured debt and will be able to negotiate with your creditors regarding freezing interest, obviously though this will affect your credit rating considerably.

If you have savings left, you could offer full & finals to your creditors, however, if you have been managing payments until now, they are unlikely to accept as they will think you are just trying it on, it's really onlt when you start missing payments, defaulting and the debts being passed to DCA's before they will consider a full and final settlement.

Please please don't think of taking out another mortgage/secured loan to pay some of this off, at the moment, this is unsecured debt, if the worst came to the worst and you did go BR, if you secure this debt on your house, you would still have to pay for it (unless you gave up the house)

Get your SOA up on the board, speak to CCCS and lets take it from there

liferenewed

Thanks for that Mille, im working through the SOA at the moment and will get it posted over the weekend.