negative equity in unsuitable property...what are my options?

jenfleur

Hi there, was recommended this forum for my problem - any advice would be fantastic - thank you

considering bankruptcy to get out of too small house in negative equity

Currently own 1 bedroom maisonette - 4 people (parents and 2 small children - 2 and 4) sharing bedroom and no other suitable room to turn living space into bedroom space. We owe about £176k in mortgage & secure/unsecured loan on house but house currently worth £165k. Have just over £10k in other debt and on debt management plan so paying off but will be about 6 years to pay off (or longer) Cannot rent out as would lose about £200 a month plus ridiculous management fees/ground rent/buildings insurance which costsabout £75 a month so we would be almost £300 down before even trying to rent a larger placeforourselves. Wondering what options are open to me - it's more about the house and needing to get out as getting unliveable but couldn't cope with extra debt if repossessed along with existing debt. I don't even know if bankruptcy is an option but with my credit rating bad already due to existing debt i'm resigned to never being able to buy another property - just need my living situation to be better. Any advice or options - would be grateful for any help Thank you

Tixy

Hi

Certainly does not sound like a good living arrangement as you are.

Who is your DMP with? is it one of the charities? If so then it would be a good idea to discuss the situation and options with them.

It sounds like you might be left with something over £20k debts and certainly people do consider bankruptcy for that sort of level of debt (obviously depending on their income/living costs etc).

If your DMP is not with a charity/free provider then I would still get some advice from them, and even if you don't decide on bankruptcy it would be worth switching your DMP to a free provider.

jenfleur

Payplan but they weren't very helpful when I had my review on Monday - my case worker was off sick though so will phone again and speak to him as he was aware of my predicament (reason why he was off sick?!!)
From reading other threads my best route maybe to stop paying mortgage, secure a rented property and then inform mortgage company once i have moved. Once house repossessed then bankruptcy or other debt plan to deal with debt?
(It sounds so simple.....hmmmm!)

dancingfairy

Have you spoken to your mortgage provider? I would see if they can asist you before taking the drastic step of not paying the mortgage. Would they allow you to sell and then arrange a repayment plan to pay off any shortfall?
If not then it does appear as though repossession and the maybe bankruptcy may be your best option. Why not give National Debtline a ring or CCCS and try and get some other opinions.
df
Edit: you might want to hop over to the bankruptcy board on here:
http://forums.moneysavingexpert.com/forumdisplay.php?f=136
as many people have done what you are cotemplating and can advise you on the process and any pitfalls. The most logical way is to stop paying the mortgage, move into rented and then go bankrupt as if you go bankrupt first you need to make sure you don't sign any acknowledgement towards the shortall of the house but I believe you can do it either way round if you want to.