Partner has debts of 50k I didn't know about, advice please.

houseiseverything

Thanks for reading this, sorry it's long but you probably need the full story.

The background is that last Friday my partner told me that he has 50k of unsecured debt. 30k is on 2 credit cards, 20k is an overdraft. This debt is related to his business, which was in trouble and he 'lent' this money to the business 5 years ago. He can't pay himself a salary now, so had to tell me about the debts as he can't pay the minimum payments and he thinks the bank is about to call in the overdraft.

This is what we have done:
One credit card company has agreed to freeze the interest for a month and then talk again.
The other credit card company has agreed to freeze the interest for 6 months and he pays £200 a month. After 6 months they renegotiate.
Nothing with the bank yet, but he will begin negotiations when they call the overdraft in.

We have been through loads of options- borrowing the money, remortgaging the house in various ways, but we can't raise enough that way.

We have an endowment mortgage, and could potentially cash that in and it would cover the debts. However, at the end of the mortgage period we would not have the money to pay the capital off the house- 128k. We could go on a repayment mortgage based on my income alone,and I have been in and discussed this with a mortgage advisor and it was agreed in principal, but it would mean paying £300 a month more than we do now, and over an extra 8 years. I am self employed in a very ageist industry, and I'm not sure I will get enough work that far in the future. Our current mortgage would have ended in 11 years.

We went to Citizens Advice yesterday. They said our only option is to cash in the endowment so we can pay everyone off.
However, it feels to me like giving up 128k in order to get our hands on 50k now. They also said not to make any hasty decisions.

My questions:
Will the credit card companies keep to any agreements we make with them?

What impact will making these agreements with the card companies have on his credit rating? Will that have an effect on my ability to remortgage, which I would need to do to get on a repayment mortgage? (he has never missed or been late with a payment)

If I can't remortgage, could we be in a situation that we can't have a mortgage at all because of his credit rating? Do they ever do that? That is my worst fear.

Thanks for any help you can offer.

falldown7timesgetup8

Someone will be along to help you soon who knows better than me, but if you post an SOA we can help figure out where you can reduce your outgoings? x

antonic

If the business isnt making a profit then he seriously need to consider if he should keep it going, as his money is going into a bottomless money pit.

Also, if he has personally guarenteed the CC`s and o/d then they can be called in and he is liable for the debts NOT the company.

This may mean that you have to cash in the endownment in anyway to clear the debts.

Sorry to be the bearer of such bad news.

Lensman_2

Your questions as posted:

1. They may. Unless you have agreements in writing I might assume the worst. A reasonable expectation is that they will default the accounts and pass them to in house debt collectors.

2. His credit rating should be treated as toasted. It might not be right now but if one of the cards registers a default it will be. Fast forward 6 months and it probably will be.

3. Do you have any joint accounts? If you do can you close them or remove yourself from them?

If the answer is to 3 is that you do not have joint accounts then you should not have a "financial association" with him and his credit rating should not affect yours.

You can check Noddle for free (requires registration). If you don't have a joint account but you ARE linked you probably have a good case for getting the link removed.

If a link shows up on Noddle you will need to tackle all 3 agencies.
http://www.ico.gov.uk/for_the_public/topic_specific_guides/credit.aspx

If you can maintain financial independence from him you should be able to get another mortgage based on your own finances.

houseiseverything

Thanks for the replies. We will close our joint account next week, but our mortgage is in joint names so would that still be a problem with me being financially independent from him do you know? I just want to be sure we can keep our house through all this. It seems we will have to sell the endowment to pay the debt, but his credit rating will presumably be awful now just because he asked them to freeze the interest for a month while we await the funds? does anyone know if a mortgage provider can just withdraw a mortgage because of a bad credit rating? Thanks.

Lensman_2

Please do not worry about your mortgage. If the debt is paid you are safe.

You are at least 3 months away from any creditor defaulting his accounts and any further action being taken. So you have some thinking time.

Please give one of the debt charities a ring. CAB have given me the best advice (it took a bit of persistence and waiting but I saw a very shrewd financial guy). National Debtline also give good advice (although it can be a slightly biased in favour of the creditor IMO).

If you are as worried as you seem from your post (and the implications of this are quite serious) I think you need advice face to face or on the phone. (Have a notepad to hand either way).

bess1234_2

Hi
I asked you to come over to this board.

Thanks lensman

It sounds like its all been a bombshell to you, and I'm sure your partners been suffering too. Your life has taken a very sudden and sharp turn down a different path which will take a while but you will come out of it again.

I don't know the answer to your immediate crisis, so will leave it to those better informed, but I can feel your worry from your posts.
1. Visit the debt guide and credit rating guide on the site .
2 take a deep breath and write your SOA. long term you need more money,to chuck at debt or house . Don't post it if you don't want to, but read other threads on here, and see how easy it is to spend money when you had it, cut what you can, sell your clutter. I think you said your partner has wound up the business, so if your outgoings are as low as they can be, whatever he can earn now can regain your long term security. It will involve sacrifices.

And take care . Sorry if you already doing this. Best wishes x

RAS

houseiseverything

Please, please STOP. Stop completely before you get in a tangle.

Your OH needs to open an new basic bank account urgently. Do this before talking to the bank, please.

Please get him to talk to one of the debt charities here urgently https://forums.moneysavingexpert.com/discussion/2077631

He also need to totalk to businessdebt line (see the national debtline info).

As this debt is unsecured and some seem to be personal rather than business, they may well go for CCJs and charging orders but that does NOT mean you should sell the endowment policy.

So please stop or you will make it worse.

chevalier

http://www.makesenseofcards.com/soacalc.html

Before you commit to ANYTHING fill this in and get a TRUE reflection of your income and expenditure.

I mean it would be a shame to throw the endowment away if you spend 1000 a month on food, which you could cut down, or spent 500 a month on heating, which could be changed by having an extra jumper on.

I am making light of this a bit, but take a day to take stock before you do anything in a panic
chev

houseiseverything

Thanks so much for the advice and care you have shown. He has phoned a debt chatity today, and we both think that a Debt Management Plan is the way to go. The debt could be paid off in 8 years if they agree to it- we are going to start the process asap. Does anyone have any experiences to share that might help- i.e. can the creditors suddenly change their minds and whack the interest back on for example?
Thanks for the advice about an soa, but we really are very low spenders, even before I knew about the credit cards he wasn't taking a salary from his business, so we have already cut right back-we grow our own vegetables, make bread etc, the car is 7 years old, we went out 3 times last year...
I honestly mean it when I say that reading these boards has kept me going over the last few days. I hope that one day I will be able to be offer such thoughtful advice to others on here.

Heffi1

Hey houseiseverything, I know how scared you must be right now, but a DMP is a good way forward and if it means the endowment is safe then that is a good thing too.

I am with CCCS and to be honest, it was the best thing I ever did, taking the time to talk to them and having someone impartial looking at my figures as I had got myself into a dreadful state, fearing the bailiffs would knock at the door any day, I know now that this does not happen, i think I had frightened myself so much that anything was possible.

Anyhoo, the person I spoke to made me feel a lot calmer and gave me a plan to work towards, it was not going to be easy, but with a lot of hard work re working budgets, and seeing where I could cut down, I began to sleep again at night, and I now look forward to the day.

It may be a long road, but you will get there, my only advice would be to check you are going to do a DMP with a 'free' company, like CCCS or Payplan, they do not charge a fee and everything you do pay goes to your debts (you probably already know this anyway)

Good luck.