How to provide for my wife and child?

deepintrouble

Hi all, I'm in a bit of a pickle as to how to approach the next few months and what to do for the best, I would appreciate you all taking a look at my situation and giving me your thoughts. Sorry for the long post, but the detail is important.

Basically, I'm on a DMP with CCCS and owe about £55k across 8 creditors (the result of a messy divorce). I currently live with my new wife in the house that I still own with my ex wife. The house is on the market but is about £10k in negative equity (its priced to break even on the mortgage). The ex wife currently pays a percentage of the mortgage as the house is still in joint names.

After 2 years of trying we’ve finally managed to get pregnant and couldn’t be happier about it, however the financial situation is keeping me awake at night with worry. I want to be able to provide for my child and need to take decisions now to ensure security for the future.

In April next year the wife wants to take 12 months maternity leave, she gets some maternity pay and I can cut my DMP repayments, I think we can manage.

Wife has some money saved up for a house deposit for when my ex marital home eventually sells, the plan is that she will have to get a mortgage in her own name as my credit rating is shot to pieces. Obviously she will not be able to do this if shes on maternity leave, so if the house sells while she’s off work then we are stuffed.

I’m getting worried that my creditors won’t want to accept the vastly reduced payments I would need to make while she’s on maternity leave, one or two are already threatening court action (Halifax and MBNA).

So here are my options as I see it (this is the bit I need opinions on).

1. Stay as we are and hope the house doesn’t sell, the creditors don’t play up and the ex wife stays out of our hair. I really don’t need CCJ’s, bailiffs etc with a new baby.

2. Let the wife buy us a house with her deposit before we have the baby and simply leave this house. I know the mortgage company would chase my ex wife for the money but I’m really not bothered about that. Eventually I think I would have to declare bankruptcy, but not until I’ve supported the wife during her maternity leave.

3. Let my wife buy the house we currently live in from me and the ex, this would end up with her ”buying” our negative equity and us having a house that is completely in the wrong town for both of us to be near our families when we need them most. The only one to really gain from this is my ex wife.

These are the only options I can think of so far, and none of them are ideal.

Any suggestions…………

ItMightBeUsefulOneDay

deepintrouble wrote: »

Basically, I'm on a DMP with CCCS and owe about £55k across 8 creditors (the result of a messy divorce). I currently live with my new wife in the house that I still own with my ex wife. The house is on the market but is about £10k in negative equity (its priced to break even on the mortgage).

You need a clean break from the old life to move forward with any chance of supporting your family. And it's hard enough starting from zero let alone the above debt weighing you down. Pricing the house to "break even" isn't going to wash as no-one is going to pay an extra £10k just because you owe more than it's worth. More likely they will offer less and there's going to be a shortfall of some substantial amount.

I don't know what your income is but having £75k+ (depending on house sale) debt isn't going to be easy unless your a banker and have a guaranteed tax-payer funded bonus of 6 times salary coming in October.

In answer to your options:
1. Unlikely if you reduce your payments, court summons and a visit from "Big Ron" is a possibility depending on who sells on the debt.
2. The bank will chase both of you for the shortfall, not just the ex. Again an ugly choice.
3. You'll very much regret this one, I wouldn't recommend this at all.

I confess this one has got me thinking because there is no easy way out I'm afraid. My suggestion is to price the house to sell and get yourself financially untied from the ex as soon as possible. Give you and your new family a fighting chance here. Then deal with the debt. Depending on your income IVA or bankruptcy are possibilities. Go over to the Debt-Free Wannabe forum and the Bankruptcy forums for advice.

bottleofred

Hi deepintrouble,

The decision on what to do for the best really is up to you. Option number 3 does appear to be a non starter though, as you've already said it's in the wrong area. From what you've said though it doesn't appear you can just leave the house either though, as the Mortgage company will also be looking for you. This leaves option 1 and if you choose to do this, keep plodding along with the DMP and when the time comes that you have to reduce the payments, contact those concerned. As I said, it really is up to you, but someone with more knowledge than me will be along soon.

Good luck with the new baby

RAS

Hi a few pointers.

Mat leave - your wife will accrue holiday during her mat leave, so one year includes a whole month on full holiday pay. She needs to work out when she can take this - some companies do not allow you to carry it over into the next leave year.

You may well get some benefits in addition to Child Benefit either during her mat leave or when she goes back to work - check this out on www.entitledto.com. You need on paid leave after baby is born, on unpaid leave etc, so may have to run several versions.

Put up and SOA here now and we may be able to help you skin your budget and save a bit for when you misus is off work.

There are at least two pieces of paperwork that most creditors must have if they are to sue you successfully. have you requested the CCA for all loans, credit cards and store cards taken out prior to April 2007? have you got the default letters? if not you need to know who you can stop in their tracks if they start legal action, so get them.

Did you have PPI on any of the accounts?

You will be a much less attractive proposition to take to court when you sell the house. They will not be able to put a charge on. So get it sold at a loss even if you have to get the missus to pay off your half of the negative equity. Get your ex to agree to this if you can and to pay the other half.

The nuclear option would be bankruptcy; you would not lose the house because of the NE and you need to make sure that you have no joint acconts with the missus. it would clear the unsecured debts but might mess up your ex as she becomes liable for all the unsecured debt including the shortfall. You may have to pay a sum for three years but the BR SOA is more generous than the DMP one. it does rather depend on your salary though. Forget unsecured credit, but in 5 years you could still mortgage.

deepintrouble

Hi, thanks for all the advice, just a few points if you don't mind.

I didn't think I could sell the house for less than the value of the mortgage? What happens to the shortfall?

My ex wife probably wouldn't agree to selling for below the value of the mortgage anyway.

If the missus has to pay my half of the neg equity then we wont have enough house deposit to buy anywhere else so this is a non starter.

I've got all my default letters and have sent off for CCA's last week, hopefully I can use these when I need them.

The only a/c with PPI was MBNA and that was defaulted ages ago.

Any more thoughts?

MrC1977

I am kind of a similar position - without the marriage and the baby but still same in regards property with ex.

As much as i thought owning a house was important I know realise to me it is not. Owning a property helped me get in my debt situation so i am not sure it is all its cracked up to be.

Just a thought but what about sell the house (or even rent it out) and rent somewhere with your new wife which is affordable to you financial situation? focus on your new wife, baby and having a life and worry less about owning a home until you have sorted out the issues.

Good luck anyway

deepintrouble

If I rented the house out it wouldnt cover the mortgage payments.

RAS

deepintrouble wrote: »

I didn't think I could sell the house for less than the value of the mortgage? What happens to the shortfall?

You can sell for less than the mortgage but you have to make up the loss/deficit.

Suggest as a starter head over to the housing and renting forum here and see if they can help you sell the place, or help you decide whther you have a cat in hell's chance of seilling the place at the current price.

My ex wife probably wouldn't agree to selling for below the value of the mortgage anyway.

You may have to push her. Point out it will be a lot harder if any of the creditor get a CCJ and then charging order on the house.

If the missus has to pay my half of the neg equity then we wont have enough house deposit to buy anywhere else so this is a non starter.

Do as above first.

I've got all my default letters and have sent off for CCA's last week, hopefully I can use these when I need them.

Good. What you need to do is find out which are legal and which are dodgy, now rather than when they start legal action.

The only a/c with PPI was MBNA and that was defaulted ages ago.

So, you can still reclaim any unfair PPI with interest. Even if you do not do it immediately, work out how much you would get back.

Any more thoughts?

Yes, put up you SOA and lets see what can be done.

Anythign that you no longer use and can sell?

deepintrouble

Thanks for all the info, I've already sold everything of value, even my laptop belongs to work (as does the car).

I'll do an SOA in a bit, don't think there will be much to cut there, I already did all that when I started my DMP.

Taking a step back a bit, if a creditor were to get a charging order on the house, does that mean I'll have to put the sale price of the house up to pay for that too?

RAS

The chances of you being able to put the sale price up are bordering on nil. There is a catch, to which i will link which might enable you to get out of a charging order as the property is jointly owned, but if the company get it right, then it means that your negative equity goes up even more and it is much harder to move.

Could your ex buy you out?

The_Saver_2

I was in a similar position and I took my house off the market and sold the house to my ex. (Check the T&Cs of the contract you signed with the Estate Agent as, because they wouldn't have introduced your ex as a potential buyer, you might not be charged any Esate Agent's fees).
Secondly, (and this is the bit you may not like), hard as it is to go from being a homeowner to renting, from what you have outlined, I don't think you can currently afford to buy a house. That is my honest opinion. Also, by renting, then none of your creditors can threaten you with repossessing your home on any secured loans that you fall behind with.
Sometimes in life we have to take a (temporary) backward step in order to better things for our long-term future.
Whatever you decide, I wish you and your family the best of luck.