Help with moving forward

Chip1967

Hi,

Here's some history. It's long but I'd rather give all the details:-

Since November 2009 we've been managing all of our debts ourselves. Our current unsecured debt is around £46k. Our mortgage owing is around 88k on a property worth around £130k. We also have 2 secured loans totalling around 15k, one of which is with our mortgage lender Northern Rock and ends in September this year.

I was a company director and my wife works 2 days a week. With the financial meltdown I found myself unemployed like a lot of other people.

On the first day of becoming unemployed I contacted PayPlan and got a reference number then proceeded to call all of my creditors to explain our circumstances. I also rang the mortgage company, Northern Rock, and got a 3 month payment holiday to help. During this time I went onto jobseekers allowance and our tax credits were raised. We paid our 8 creditors the £1 minimum amount each month.

After our mortgage payment holiday ended I managed to get a 1 year extension on interest only which made a big difference. After 6 months of unemployment I got a job, it wasn't big money but was a job which was pretty secure.

It took a while but eventually all creditors agreed to stop all interest and accept our minimum payments. At each stage of a change in circumstance they were all written to and given a new income/expenditure document and list of pro-rata paid creditors. I'm very good with paperwork and so things have been kept like this until now.

Due to the fact that our income had now gone up our tax credits were recalculated then reduced. This once again reduced surplus and all creditors were written to once more. We also managed to extend the interest only on our mortgage for another year.

This year we checked our tax credits to find that they had missed off my wife’s small wage. This should of been spotted straight away but was months before we noticed. I called the tax credit office and got this added and was told that we had now gone over the "Disregard" rule for 2011 (dropped from £25,000 to £10,000) and that our tax credits would be stopped. Not only that but that we had now been over paid. I was assured that this overpayment would not be asked for but we would not have a claim after April. The removal of tax credits had the effect of taking a huge pay cut at that point and we then had to go back to paying creditors £1 per month once more.

After this I managed to get a promotion and wage rise to counteract this removal of tax credits. It finally felt like we were moving forward, getting away from reliance on the state.

Then came Northern Rock yearly discussion about interest only. Northern Rock have now become very strict on interest only mortgages. We have been in constant contact to see what options we have. Extension of mortgage term etc. We have a personal loan with them ending in September which helps with this negotiation. At one point we were waiting 6 weeks for them to call us back but fortunately they extended the interest only whilst they were talking to us.

To put the nail in the coffin, this week we get a letter from the tax credit office explaining we owe them £2300 for over payment. A fantastic stressful thing to get Saturday morning and stew over for the Bank Holiday! We have no means to pay this whether in one amount or even spreading over the next 5 years in our current circumstances.

In this entire time we've managed all this on our own. I now see no way out of this except for extending our mortgage term with Northern Rock to create some surplus. As for Inland Revenue I will have to call and see what can be done. I suppose we require an expert here to give us some advice. We're now at a point where we need a little help to know what the next step should be.

1. We've never had enough surplus to look at an IVA as I believe we need around £200 for that. Is this correct?
2. Should we be forced to extend our mortgage term to create surplus? To add to this we are on a fixed rate of 5.89% until 2019 !
3. Can the Inland Revenue force us to pay them before other people such as the mortgage company? As far as I know they cannot put you under further financial hardship.
4. Is there a possibility of a re-mortgage with another company with our bad credit?
5. Should we just give up, sell the house, pay off what we can and rent?
6. Go bankrupt? I understand this is by no means an easy option.

I think we need to see the light at the end of the tunnel, our debt has to be cleared one way or another and at this point after 2 ½ years we haven't made a dent.

Thanks in advance

camuk81

I would suggest you speak to the citizen advice as there are several factors. Unfortunately I haven't the necessary experience to be able to tell u the right action however I would say call citizen advice and talk through it with them

Chip1967

Hi,

Thanks for your reply. I have had very little luck talking to Citizens Advice. When I first needed help in 2009 I tried to talk to them but was told that I'd need an appointment. When I tried to get an appointment I was told they couldn't offer one as they were so busy and I actually had to arrive 2 hours before they opened and cue in the hope I got to see someone. I turned up several times only to be turned away without being seen. This left me very disillusioned in them and I haven't gone back since. I instead spoke to Payplan who helped me straight away.

Perhaps my experience is not common but this is how it was where I live.

DVardysShadow

Chip1967 wrote: »

1. We've never had enough surplus to look at an IVA as I believe we need around £200 for that. Is this correct?
2. Should we be forced to extend our mortgage term to create surplus? To add to this we are on a fixed rate of 5.89% until 2019 !
3. Can the Inland Revenue force us to pay them before other people such as the mortgage company? As far as I know they cannot put you under further financial hardship.
4. Is there a possibility of a re-mortgage with another company with our bad credit?
5. Should we just give up, sell the house, pay off what we can and rent?
6. Go bankrupt? I understand this is by no means an easy option.

I suggest you do a Statement of Affairs and copy it here.

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

When you have filled it in, click 'Calculate' on the Statement of Affairs form, click 'Format for MSE'. This gives you a popup window. Click 'highlight text', right click on the highlighted text and copy the highlighted text including all formatting codes. Paste the copied text into a post for other posters to comment

Some people will have a go at trimming your budget. Others will have a go at the scheduling of your debt. It looks to me like the ending of one of the unsecured debts in September may cut you a little more slack. Ideally we need to know how much longer each debt has to run.

savvykaz

Hi chip
Have you considered a DMP rather than bankruptcy or selling your house??

Chip1967

DVardysShadow : Thanks I'll try that.

savvykaz : I suppose that's what I've been doing on my own really without using PayPlan or CCCS (just a PayPlan reference) but without negotiating a reduction of the amount owing. The problem right now is having sufficient surplus to do anything.

I'll have more information today after I call the Tax Credits office to know exactly what situation I am in there and if I have to pay then how much over what time. I should also get my quotes for mortgage extension through so I will know my surplus from September onwards which is when 1 personal loan finishes.

downsizer3

The tax credit people don't hammer you to pay back quickly - they do help you to pay back what you can afford - and it may not even need to start immediately.
I think you'll be relieved when you speak to them.
Tax credit over payments are common ( esp for us self employed) and they do understand that if we need tax credits anyway - its not like there is much surplus to play with. Speak to them today.