Is bankruptcy our only real option?

Maxnana

Hi, I'm new here, just desperate for any advice.

I know it is our decision in the end, but I just would like someone else's take on this (maybe their own experience).

We (me and my husband) are getting closer and closer to thinking we should consider bankruptcy. I'm getting now where it's all I think about and I'm not sleeping well. I'm writing this at 1.45am!

Our situation - in a nutshell - is this:

Both of us work. Son at home who works also (21 years old). Own our home - mortgage (and 2nd mortgage) with Abbey, up to date. Secured loan (and THIS is the killer!) with First Plus - in a few months arrears with this. Both myself and husband have IVA (in place one year now).
Husband in the motor trade (sales, commission), bottom fell out out of the market, now getting about 1K a month less than 2 years ago, but of course everything else has gone up! My job may be hit in job cutbacks.

First Plus monthly payment is now MORE than what I earn a month! Now, with the arrears, they want even more. The money just isn't there - have explained to FP that since we have had problems paying the usual monthly payment, how do they think we can pay that and more on top?! This fell on deaf ears - said we just have to pay it.
We can afford our mortgage and second mortgage (Santander), but what is the point if we can't pay FP?

We REALLY REALLY do not want to lose our lovely home (lovely to us, anyway), and if not for this, would have gone bankrupt ages ago. But, we can't see any other way now. I hate the situation we're in now, but I might hate the situation we might get into more. I feel like I'm between the devil and the deep blue sea. My OH seems to be able to sleep through this, and has resigned himself to 'what will be will be', but I can't - wish I could!

What would you do? Hand the keys back (I'd HATE that)? Wait for repo (I'd hate that more!) Starve, so we can pay what FP want us to? (Joke!)

If it makes any difference, the house (because of the FP loan) is in negative equity. So I think only Santander would get their money back. Only - would they even want it since we're paying them anyway?

I'm probably sounding confusing and not clear, but I am SO tired, just can't sleep.

I'm sorry if this isn't in the right format or if I've not provided enough information, but if anyone has any thought, questions etc. I will be very grateful.

Thank you.

themull1

You don't have to lose your home if you're bankrupt, how much equity do you have in your house?

nuttyp

Have you contacted one of the debt charities? Contact your local CAB and take all your documents in to get advice.

tigerfeet2006

Hi and welcome to the board.

As Nutty says get in touch with someone like National Debtline (links and no.'s in my sig.) They will go into everything with you and explain what your best options are.

If you decide on BR then the things to consider are secured loans are not included in BR, they will still have to be paid. Unless your house is repo'd and sold and then they become unsecured and then fall into your BR. This applies even if the house is not sold until after you are AD.

What the OR (official reciever) will consider is if a house of similar size is significantly cheaper to rent than you paying your mortgage, 2nd mortgage and secured loan, which I am guessing it is. If this is the case then you will have to do this. If it isn't then as long as you can pay the secured debts and have a reasonable standard of living without the unsecured debts then you should be able to stay where you are.

If you decide on BR then your best bet will be to stop paying the mortgage, 2nd mortgage, secured loan and IVA and save the money for your deposit, rent, moving costs and BR fees. Find a property, move in and then go BR.

You will have to get a letter from the IVA co. to say that your IVA has failed. This usually takes about 3-6 months.

Maxnana

Thank you for your quick replies.

To answer the questions asked:

There is no equity in the house, in fact it is in negative equity. The house is valued at approx £170,000. The mortgage and 2nd mortgage with Santander amount to about £80,000 and the secured loan with FP is about £100,000. Does this make a difference? You say (themull1) we don't have to lose our home. How is this possible? It looks like (tigerfeet2006) you don't agree?

NuttyP - we went to CAB over a year ago, and it was they who referrred us to Payplan who then put our IVA in place. We haven't managed to even pay that for a couple of months though. We have asked Payplan for bankruptcy advice on several ocassions, but they don't seem to want to give it, they seem just interested in the IVA. I can understand why - looking at our first year statement from them, very little has been paid to our creditors and most of what we have paid has gone to Payplan! Maybe this is how it works? We haven't contacted anyone else apart from CAB and Payplan. Won't the others just be telling us the same?

I SO don't want to lose our home - it's the only good thing we've got left, it seems, these days! Everything else of any value went on eBay to raise money to pay bills! But, if we try to struggle on, will we just be 'flogging a dead horse' and end up losing it anyway?

I am so grateful for your responses - it feels like some sort of support where before I felt I was alone in this, trying to fight the big companies.

One other question - as we are up to date with the mortgage with Santander, but are in arrears with the secured loan payments to First Plus, if we made FP an offer to pay the arrears at a much lower amount than they are asking, are they bound to accept our offer? We pay them £1000 a month - that's the normal monthly payment (which is hard enough to find), but they want £300 on top of that to clear the arrears! They have done a income & outgoings budget with us and agree that (even before the extra £300) we have more going out than coming in, but they STILL want the extra money. If we, say, tried to keep up with the monthly payment then offered to pay £50 extra a month off the arrears, would they have to accept that, or am I just being niaive? Maybe it's being niaive even thinking we can keep that up!

Half of me wants to just let go and go BR and get rid of all the stress and worry, and try to start again, but the other half just SO wants to keep our home no matter what! Is it normal to have this struggle, or am I just being stupid?

Again, thanks so much for your replies.

JCS1

BR would cover unsecured debts, if these were gone would you be able to afford the mortgage, 2nd mortgage and secured loan payments?

silvercar

JCS1 wrote: »

BR would cover unsecured debts, if these were gone would you be able to afford the mortgage, 2nd mortgage and secured loan payments?

And if the answer is yes, does the amount you would pay to rent a home be as much as you are paying for the mortgage, 2nd mortgage and secured loan payments?

Because if rent would be a lot less the OR may not allow you sufficient money in your budget to make all the payments, particularly if new rules come in regarding surpluses.

Tupperware_Queen

I had a similar situation, decided in the end, after much heartache, that the best option for my long term future, was to get a rental property and allow the house to be repossessed and the shortfall go to the BR.

BTW first plus have been really really really kind to me......they offered to extend the period of my secured loan by 7 years so as to reduce my monthly payments and make them more affordable. How much a month do you think I would have saved?


go on....guess......


£37 !!!!!!! yeah thats going to make a big difference!!!

kepar

I totally agree with silvercar, the OR will only allow the average rent for the area and in some cases maybe an extra £50 or so. But you are in the same situation that we found ourselves with the secure loan payment taking us well above the average rent. We were allowed spare money two years ago as my wife had a 70% IPA but even that wasn't going to be enough to keep paying.
You sound in a worse position as now the OR will take all the spare less £20, I feel after talking to the relevant debt charities you will realise that you will have only one course of action.
We were devastated to lose our house, but looking back over the two years we feel our life has moved on and it was only bricks and mortar. In time we hopefully will be able to afford too get back on the property ladder and the way the markets are today , house prices are going to keep falling.
Good luck with which option you choose but life has to go on and striving to keep a house is one way to really suffer.
We were lucky we found a house, larger and in a better area than we were living, the landlord had no problem with us being br, as long as we pay it is not an issue.

Tupperware_Queen

kepar wrote: »

We were devastated to lose our house, but looking back over the two years we feel our life has moved on and it was only bricks and mortar.

Good luck with which option you choose but life has to go on and striving to keep a house is one way to really suffer.

hear hear...I agree with this wholeheartedly