remortgage or dmp

nursekitty

hi all,
need to get sorted owe 17K
not sure whether to remortgage - if i can, have enough equity but think i have poor credit rating or should i go down the dmp road
any suggestions

sistafromanothermista

Hi, have you thought to try and pay a little more off each month without going down either of these routes?

If you post up your SOA the nice people on the board will take a look and see if there's anything you can reduce....

nursekitty

thanks for replying - new to this will get info and report tomorrow
cheers

fatbelly

As a general principle, it's not a good idea to convert unsecured debt to secured.

Let's take a look at your statement of affairs

HappyMJ

nursekitty wrote: »

hi all,
need to get sorted owe 17K
not sure whether to remortgage - if i can, have enough equity but think i have poor credit rating or should i go down the dmp road
any suggestions

If you have a poor credit rating it's unlikely that you would get a good rate on a remortgage and you need a lot of equity and time left to even consider it. I would remortgage in only very limited circumstances.

bluemonday3

I did that on poor financial advice and in a panic. I now have more debt than ever as could not realistically afford the remortgage and unsecured loan as recommended. I now have £40k worth of debt, £27 of this now secured against the house by means of a charging order. Now in DMP and have cleared £7500 so slowly chipping away at it. Hind sight would have stopped me making foolish mistakes, now learnt. Good luck

endora

I would tend to agree with posters above, never a good idea to convert unsecured debt to secured, remember you can lose your home if you can't keep up with your mortgage while the most you can lose with unsecured debts is your credit rating.

simon_mdp

However as bluemonday3 posts above you can end up with a fat charging order, which could ultimately end up with the creditor applying for an order for sale (don't want to be alarmist - rarely happens).

Anyone who has unsecured debts and property equity needs to tread carefully as the two have all sorts of ways and means of finding each other.

A well managed secured loan can be a reasonable option given expert consideration of all the circumstances.

Best Regards

fatbelly

Successful applications for orders for sale following a charging order following a ccj are so rare I've yet to see one.

As for repossessions following defaults on secured loans my local court sits twice a month and hears them at five minute intervals for three hours each session!

endora

simon_mdp wrote: »

However as bluemonday3 posts above you can end up with a fat charging order, which could ultimately end up with the creditor applying for an order for sale (don't want to be alarmist - rarely happens).

Anyone who has unsecured debts and property equity needs to tread carefully as the two have all sorts of ways and means of finding each other.

A well managed secured loan can be a reasonable option given expert consideration of all the circumstances.

Best Regards

The best laid out plans.... have a habit of going pear shaped!

If you can't pay your secured loan the likelihood of repo is virtually 100%. Worst case scenario you're out on the street and being chased for a huge shortfall for the next 12 years.

If you default on unsecured debt:

1. they don't always take you to court
2. depending on the debt, you may be able to defend/challenge it via CCA
3. if the above doesn't apply, you could make a reduced repayment offer
4. if everything else fails, you get a CCJ
5. they need to then apply for a CO, if property is jointly owned, then it would be just a restriction
6. the creditor would have to apply for an order for sale and these are virtually never granted for consumer debt under 25k

Worst case scenario you have a charge on your property but still own it and live in it.

simon_mdp

Not the worst case scenario unfortunately.

Once a CCJ becomes enforcable, the debtor is opened up not just to the possibility of a charging order but also to other nasties such as attachment of earnings and bailiffs.

More importantly they could also be made bankrupt resulting in certain loss of property. And don't say it doesn't happen because it does, I have come across a number of cases (1st Credit).

I certainly couldn't tell a client who had a CCJ, 'oh just chill, you can take a bit of a punt and probably nothing really bad will happen'. That's just not good enough I'm afraid. It's completely unreasonable to ask someone to bear years, possibly decades of uncertainty in the hope that 'probably' nothing bad will happen.

Secured loans (and IVA's) get a bad press and possibly rightly so but both offer an immediate solution and relative peace of mind - that's why they are so popular and they have their place.

Regards