Mortgage Arrears and other Debts

MagicalGala

Hi all, been reading these forums for a while without posting anything.

Bad news first: We are in arrears with Lloyds TSB, approx 5 months/£2500, we have an agreement with them that as long as we can keep up with our monthly payments they'll leave us alone until December at which point we need to repay the whole arrears. House value is ~£120000, mortgage + secured loans on property = £105000. House is on the market but in the last two months we have had zero interest. Other debts are unsecured...credit card, overdraft, small payday loans (fantastic I know). Basically monthly outgoings for these come to about £1600. Plus bills we struggle every month.

Better News: I have been accepted on a PGCE course this September. Funding comes to much more than I am earning at the moment and basically even with our current debt burden we'd be better off each month. However Uni is too far to commute, so me, wife and daughter (18 months) need to move to make it possible.

Without finding a buyer, the only option at the moment seems to be to rent our current home, and rent a new place cose to uni.

Advice I'm looking for is...does anyone think Lloyds would entertain the idea of restructuring our mortgage, adding arrears to the balance and paying as little as possible in short term with the view of selling sooner rather than later. Would they take into account the difference in my earnings between current work for min wage and funding as a fulltime student? Plus the bonus of a teacher's salary from next September if things stretched that long?

Obviously these things are getting pretty stressful for the two of us, especially as time gets tighter and tighter as September approaches, but it seems that as long as renting our house is secure enough, we'd have such a better year ahead than if we continued with the status quo.

Mrs_Bumble

Have a look at this:

http://www.moneymadeclear.fsa.gov.uk/pdfs/mortgage_cantpay.pdf

I wouldn't expect Lloyds to restructure your arrears at this time and I don't see the benefit of leaving the arrears untouched until December and then them need to be repaid in full. December is notoriously the month that everyone has reduced cash flow, would it not be better to make an arrangement now with Lloyds to make your monthly payments plus XYZ towards the arrears, so that they are repaid gradually?

Are you in arrears with the secured loan?

What payment arrangments have you made with your unsecured creditors?

What event triggered the financial difficulties?

You might find these sites useful

http://www.nationaldebtline.co.uk/
http://www.cccs.co.uk/
http://www.capuk.org/home/index.php