House Equity

bvenus

Please help. I am new on this forum and hope someone can help me. I started a business as a sole trader about 3 years ago using my divorce settlement and credit cards for funding. My business did not go well and the current recession has not helped and I ended up owing around £30,000 to credit cards and loans plus another £14,000 in VAT arrears. I have since been thinking about bankrupcy as my current income does not meet the repayments and I am currently paying only the minimum. I have not missed my morgage payments.
I have around £60,000 of equity in my house and I do not mind using that money to pay everyone off and avoid bankrupcy. However, my problem is how to get hold of the funds without selling the house. I got my morgage on the basis of my income at the time and I am just thinking that in order to re-morgage, the bank will ask for proof of income and this will work against me as my company made losses the last 2 years. Another option will be to sell the home but in view of the economic climate this might be difficult, and I also do not want to uproot my 2 young kids. Any advice? I am very stressed at the moment and had a couple of debt collecters at my office two days ago.

tigerfeet2006

Give Business Debtline a call and chat to them about all your options. Link and no.in my sig.

As to the house IF there is enough equity in it to cover your debts then you are NOT insolvent and will have problems with going BR.

Some others will be along soon with some more suggestions but being the weekend and start of half term it is quiet. If your posts drops to far down, bump it up.

nervousmother

If your not earning any money how do you propose to pay a higher mortgage?
As tiger says call business debt line but in your position I would already have the house up for sale..

CeeBeeDeeBee

Hi I am in a similar position to you.

Have you had the house valued at all?

From what I can see you probably have a few realistic options, if you can sell the house and move into rented you will clear your debts and maintain your credit worthyness. I think house prices and interest rates will be low for a while yet so you may be able to get back on the ladder in a couple of years if you still want to.

Alternatively if you ask the agent for a realistic price for a quick/forced sale you might find that there is not as much equity in your property as you think. If it turns out you have little equity in your house then you might be able to buy back your share of the house when you go bankrupt, that way you clear your debts but keep the house. It a riskier option and your credit will be zero for 6 years.

First thing to do would be to get on to one of the debt charities as Tigerfeet says and talk to your creditors, you may be able to come to an arrangement for reduced payments which will buy you time to sell the house.

Chris

bvenus

Thank you to all who have responded to my plea for help. I will definately call Business Debtline on Monday. To respond to CeeBeeDeeBee: No I have not valued my house yet but I will do that as soon as possible to see if my equity is still enough.

fiveyearplan

I don't have anything to add to the good advice already given but want to welcome you to the forum.