We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Should I sell up to settle CCs?

I owe around 25k on CC's and have around the same amount of equity in my house, which I'm currently letting. The rent I'm getting in doesn't even cover the mortgage and council tax - I am out over £100 a month on these. I'll also have a tax bill for around 3k coming in at the end of the year and to cap that off I have a wedding to pay for as well. I have no idea where the money is going to come from.

So I figured selling up may be the answer. I hate the thought of dropping off the property ladder, but if it would clear my debts then at least I could have the chance of a fresh start.

Comments

  • Hi barryjohn

    First, you should re-evaluate the costs of the rented-out house against the rent you're charging. The aim is for the rental income to cover all the costs.

    Occupants of a house, if 18 or over, as opposed to owners, are liable for Council Tax (CT) (and may also be eligible for some CT Benefit) so you should consider getting the tenant(s) to register with the CT Dept of the local authority and pay any CT liability themselves. They are also liable for all utility bills, which presumably they are paying!

    The tenant(s) may also be entitled to some Housing Benefit (HB) (help towards the rent). You should check if the market rent for the house is more than you are currently charging and consider an increase (which may be covered by HB) providing the tenancy agreement allows for such an increase at the present time. Even if it doesn't you might be able to review the rent at a later date.

    I would not normally advise unsecured debt to be converted to secured debt but even this may be better than selling the house. Secured interest rates are generally lower than unsecured (but the repayment period is also usually longer!) and you would then still benefit from continued increase in equity. The sums need doing very carefully.

    An important thing to remember is, if the CC's are paid off, not to start spending on them again, unless it's for small amounts which are paid in full each month to keep the cards active and improve your credit record.

    Hope the above gives food for thought. Think clearly and carefully.

    Best wishes, Graham B

    ps Re. the wedding - postpone it or let someone else pay ;)
  • mattp_3
    mattp_3 Posts: 270 Forumite
    It may be possible to arrange reduced payments to your credit cards, to give you some breathing space but that depends on how you were planing to fund your wedding (obviously not a good idea to max out your cc's just to get married! -otherwise your new wife will not be to impressed to find out how much extra debt she has married into!!)

    it does seem silly to have a buy to let mortgage where you are having to pay an extra £100pm?

    if you do sell the house and get a lump sum you could try writing to each of the creditors to see if any of them would take a small lump sum to clear the debt - then at least you would have a bit more change to put towards the tax bill and or the wedding?

    Could be a good idea to speak to a professional assessor who can work through a financial plan with and outline all your options properly.

    Try contacting one of these free companies:

    Payplan - https://www.payplan.com <http://www.payplan.com&gt; (0800 085 4298)
    National Debt Line - https://www.nationaldebtline.co.uk <http://www.nationaldebtline.co.uk&gt; (0808 808 4000)
    CCCS - https://www.cccs.co.uk <http://www.cccs.co.uk&gt; (0800 138 1111)
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.2K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.3K Spending & Discounts
  • 240.7K Work, Benefits & Business
  • 617K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 253.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.