No way out.

Magnox

Hi all,

My wife divorced me in Dec’08 without financial disclosure, our son lives with her and I see him regularly. I stayed in the family home (a small semi) as I was on a higher salary & in a better position (we agreed) to be able to buy her out.

Later though, the mortgage company said I couldn’t, because of all the debt that I had. (Because I was left with most of the debt due to accepting a divorce without financial disclosure). So, a nice vicious circle there.

I continued to pay off the debt bit by bit and have been ever since, but still there’s £19k outstanding. Then recently, I was demoted at work, with a salary deduction of £5k pa. It meant I’ll struggle to pay even minimum payments on everything now.

I approached the CAB, who gave me a booklet on debt & said I could have an appointment in 3-4 weeks with a debt councillor, if I had no luck sorting it out myself.

So I contacted the CCCS who were in the booklet and ran through my situation. They 1) advised a debt management plan to deal with the 19k of debt and 2) just gave me the no. of a mortgage company for my mortgage issues.
I haven’t done the DMP yet, nor contacted the mortgage company, as I’m afraid to make the wrong decision and make things worse. I’ve not missed any payments yet, but that will change soon and I feel a bit let down by the CCCS regarding the lack of mortgage help/advice.

I can’t see another mortgage company being able to help, if the one I’m already with can’t. Even if I found the money to buy my ex out, the mortgage co. won’t take her name off the mortgage until the debt’s gone and I’m in a better situation.
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I know a consolidation loan could compensate for the reduced income, but it still wouldn't enable me to sort the mortgage out.
-Going on a DMP is a solution to the monthly debt repayment issue, but still doesn't cover the mortgage problem. (Even if mortgage providers do consider people on DMPs and the DMP arrangers allow you to apply for a mortgage once you're in the 'contract' of their help.

The way I see it; 1) I can't remortgage with the current provider due to the outstanding debt. 2) If I go on a DMP or take out a consolidation loan, will a mortgage provider then consider me? 3) If I'm forced to sell the house, I'll end up paying more in rent than my mortgage is now (plus I really don't want to move or come off the property ladder) 4) local housing association waiting lists are in the thousands and now work by a 'bid' system and I wouldn't be considered a priority case.

I really can't find a solution to this

Any help or advice would be amazing, as I feel like no one's able to help.
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getmore4less

This is realy one for the debt free wanabee board to establish where you are financialy with a SOA.

Also what is the mortgage deal and what is the house worth.

One solution that often helps if the house has a spare rooms is to get lodgers.

riverboat2001

all i can say is we used the CCCS about five years ago, they were great with dealing with the companies chasing us, and as such we are now debt free and saving about 1k per month.

We didn't have a mortgage at the time, but we were in dire straits and they were fantastic. Please give them another try.

Conrad

Bankcruptcy is a final and quick solution in many cases whereas a DMP merely exstends the pain over a much longer period. Bankcruptcy compared with a DMP has no more or less impact on your credit rating going forward. A bankcruptcy nwill be discharged far sooner than a DMP, meaning you can start rebuilding your credit rating sooner.

Magnox

Thanks for the replies,

Getmoreforless:
I can’t see what an SOA is, maybe a statement of actual position? but I posted here as I need help more with the mortgage 1st than anything, although I appreciate it’s all connected.
I have no spare space for lodgers as my son stays weekends.
The mortgage is 43k borrowed against a house value of c.75k, with me needing to find 19k to pay ex off.

Riverboat2001:
My experience of the CCCS so far is they seem to be able to help with arranging DMP’s and stopping companies chasing (that’s not happening yet) but their idea of advice over my mortgage was to give me the phone no. of Compass Mortgages. I really feel like they either can’t or didn’t want to help with that.

Conrad:
The company I work for won’t allow employees to declare bankruptcy, it’s part of our T & C’s. (Although I haven’t ruled-out a better job on a higher wage, but we all maybe know how hard jobs are to come by at the moment) I’m gonna hold on to what I got!

getmore4less

SOA, Statement of affairs.

http://www.makesenseofcards.co.uk/soacalc.html

You won't solve the mortgage in issolation more likely to make things worse if you try.

You need to look at it as part of sorting out the overall problem thats why the debtfreewanabee board, they deal with mortgage options as well.

THe problem is that with the equity there is not a lot you can do with the mortgage

The way things are at the moment(given thr limited info)you are not going to be able to raisethe money to pay the ex off without selling.

As for the rent against mortgage, it is not the current mortgage that you need to compare but what you would be paying to borrow all the debt and pay off the ex.

Bankruptsy is not really an option since you have more equity than the debt.

One solution seems to be leave the mortgage as is go onto a DMP for your dent and the ex can wait.

Magnox

Thanks,

I see what you're saying. But I've made the ex wait since Dec'08 & she's talking about getting a solicitor to make me sell to get her share and I do feel lousy that it's taking so long too, until I remember about the debt I was left with.

The CCCS said a DMP would pay 400/month for 4 years and pay the debt off, provided the companies stopped the interest. A consolidation loan would only take a year longer. Given that I've read in posts that many companies won't stop interest, wouldn't a loan then be better? I mean, isn't a loan better than a DMP to a mortgage provder?

This is the 2nd posting of this, as I 1st wrongly posted it in the debt-free-wannabe forum. Do you really think I should repost?

getmore4less

OK lets do the basics.

You have debt and a mortgage you are struggling with min payments

Goal £19k more debt to pay the ex off.

£75k house
£19k debt
£19k ex
£43k mortage

-£6k so you cant stick it all on a mortgage

CCCS say £400 over 5years thats £19200 so thats about right if interest frozen.

still does not help raise the £19k that will cost you more and you are strugling

Actualy why are you paying her £19k the equity does not make sence if you have been paying the mortgage for 2 years.

Problem is it is difficult to see what you might be able to do without a SOA breaking down the debts, amounts, interest rates, min payments, terms etc.

But I cannot see anyone lending you another £19k whatever you do other than get a better paid job.

Whats the income?

You might just be hanging on to house you can't afford.

Magnox

Thanks,



Income is 1655/mnth now. I’ve been paying the mortgage for 14years (2 of them since divorce).It’s an endowment mortgage, which is why the mortgage figure owed hasn’t altered. We have a much-underpeformed endowment worth c.£4k (which we couldn’t claim against due to us knowing it may not perform at the very start) and the figure of 19k payoff is based on the agreed percentage of house value at the time of divorce.

Outstanding debt totals £17979 with monthly payments on these of £743. I was managing this until my wages dropped recently.
The mortgage is due to end 2022 and costs 290/mnth.

getmore4less

Is that £1655 net after tax or gross?

Mortgage £290pm interest only on £43k is over 8%

Does that include the endowment
why are you still using that if it is underperforming?
When was this mortgage take out?

Whats the breakdown of the debt,

Have you looked at snowballing? (google it)


AS you can see a SOA is so important to get the details.

The ex is getting nothing till you sort this out even if you sell
It will take time anyway so you need a plan.

Magnox

Hi

That's £1655 net. The £290 is mortgage (£229) endowment (£49) & life cover (£12). The plan (before separation & divorce) was to convert to a repayment type & was taken out in 1996.

Have read about snowballing and I've managed to pay off 4 credit/store cards in the past 2 years based on it.

I did an SOA from ur link, but didn't know whether to just post it in here or not. It's as complete as I can get it. (eg my son stays with me at weekends etc, but there's not much provision for irregular outgoings like that.

Cheers