Will this be a Catch 22?

Gazzamemate_2

4 years ago my business went under, I renegotiated with credit cards etc, communicating every step of the way and agreed to interest free payments of which I have not missed a payment. My house has been up for sale for some time and has been reduced in price substantially. The idea being to buy a cheaper house and settle the outstanding debt. Obviously I cannot reduce my house price much further without it being a waste of time, however, in this current environment, I am concerned as to whether or not I will be able to get another mortgage once my house is sold and debt is settled. Outstanding debt is just less than £20k, mortgage is £150k, House up for £240k reduced from £275k, originally £289k. I would hate to go through all this pay off the debt and yet still be refused a mortgage. Considering finding a house in the £170k bracket. Also joint income is £50k with 3 dependants.