Massive massive problems

Thrifty_Pixie

This might sound harsh, but I mean well!

I agree with others here in that your main problem isn't your failure to sell your house. Your main problem is not planning your finances adequately to live within your reduced means in the first place (and perhaps having a child at this time wasn't a particularly smart move either? Just sayin'). £80k of unsecured debt is absolutely ludicrous, even with a £2k income drop. You obviously continued to enjoy the lifestyle to which you had become accustomed, but this time on credit (I notice that you refer to your debts 'spiralling' almost as though you have no idea how it happened).

Your failure to sell your house is affectively not allowing you a 'quick fix' to your problems, but then (playing devil's advocate here) maybe that's just as well so you can learn a very valuable (albeit painful) lesson - that you need to drastically change your lifestyle and attitude to money.

[That's the 'school-teacher' bit over!]

Unfortunately, with your level of debt, I think the best option is going to be bankruptcy, however there is lots of help available on this site if you want it.

Also, filling out a SOA might not help immediately (I agree that saving a few pence on internet, mobiles or gas bills would be a drop in the ocean for a debt your size) HOWEVER you will need it going forwards to change your financial habits forever.

I do hope that you see that unless you change your THINKING (what we old hands here on MSE call your 'lightbulb moment'!) even if you do sell your house you are more than likely to end up back in debt in the future.

I hope you take this in the spirit it is meant, and I wish you luck.
Peace,
TP
:coffee:

james_toney

looks like link to this thread is posted on house price crash,

I used to be a memeber there, until they delelted my account.

loadsadet

Thank you all for your comments. In terms of reasons for getting into debt: my parents got divorced when I was at school, all their money went on solicitors and selling assets, I had to pay my own way through university and left with £25K of debt. I paid all this off but I fell into the trap of getting a 125% mortgage to get on the housing ladder as I had no savings because so much of my income went on paying off debts. The five years in which my debts went from £25K to £80K were basically because I had to commute 140 miles a day, during which petrol prices rose astronomically, I was getting up at 5am and sometimes not getting to bed until 1am because of work deadlines. Courses I had to go on had to be self funded, and yes I partly lived with my head in the sand because I was too tired to think about anything sensibly, and I honestly thought that when we sold our house we would be able to make a fresh start by renting for a few years and saving aggressively. I was so tired that on a fair few occasions I had to stop at 3 service stations on the journey home for power naps. I've mulled over how this could have happened and looking back through credit card statements it's all petrol, petrol, petrol, car service, petrol, petrol. Between 2006-2011 I spent £36,000 on petrol. The interest rate on the credit cards rose from something like 11% to 20% APR over this time. I honestly didn't think I had any other choice otherwise I wouldn't have done it. I knew where every penny was going - every transaction went into Microsoft Money and I had budget plans and 'what if' scenarios ad infinitum.

Just before we put our house on the market similar properties were selling for far more than we put ours on for. We have dropped our price £100K! We will have to drop further, realistically. Another £25K. We made a gamble that some of our spending would be absorbed by equity in our property. We gambled poorly. At the time we bought our trendy expensive house 'negative equity' had almost dropped out of the English language, we weren't even aware such a concept really existed. We were probably a bit naive combined with receiving poor advice.

So feel free to judge me. I don't feel I was particularly reckless. I had a plan in place that would have worked exactly as planned if we'd sold up a year earlier when properties like ours were shifting like hot cakes. The whole point of a housing 'ladder' is that you work your way up it. Ironically, if we had dropped off the housing ladder 5 years ago we would have found it remarkably easy to get back on as houses are so much cheaper now. We didn't spend obscene amounts on 'lifestyle' - we got a huge mortgage with a huge monthly outgoing to get our dream house as we thought it would be a safe investment that would give us a safe return, and made a conscious decision to forego a lot of other nice things that our peers were spending their money on to do this. Most of my big personal spending was on work related things to make me more employable in the future and give me the edge in a very competitive market, and was probably the difference between getting a job at all or having to retrain.

We have already made enormous lifestyle changes. No holidays. Cheaper shopping. Get £100 cash out at the beginning of the month and that's all I spend, except in emergencies. If I manage to get any extra work it pays for things like car servicing and presents for the little one. Cheap mobile phone tariff. Have ebayed a ton of stuff just to pay bills and buy food. We have spoken to CAB, Payplan and National Debtline. ND have been the most useful in my opinion.

It's been quite cathartic getting this out. It's so useful having these fora. All those that feel the need to lecture me - I hope you feel better for it, but I've done a great deal of introspection over the last 18 months, feel wracked with guilt, sometimes depression but I know there are people out there in a much worse situation than me. I've already had the lectures from parents etc.

What I really need now is some practical advice. What will life be like when (probably not if) we go bankrupt? You know, day to day stuff. When do we file for bankruptcy? Now, or when the house gets sold / repossessed? If we get an offer on the house, will the mortgage company try to block the sale if there will be a shortfall? Presumably they can't do this as it's likely to be a better price than if they tried to sell it themselves. Could we find ourselves in the situation where we go bankrupt and the house still isn't sold by the time the bankruptcy is discharged? Then we're no better off! These are the things that are getting me stressed at the moment.

leoetal19

Sorry I dont know much about life after bankruptcy..except i have friends who were and now are home owners with more money than i could ever hope for. No one should ever judge another person and i see above people are trying to offer constructive advice on the whole...live and let live.... just VERY VERY good luck..do what you need to do and take one day at a time xx

National_Debtline

Good morning,

Really gald to learn that you found our service useful. I'll answer a few of your questions for you:

What I really need now is some practical advice. What will life be like when (probably not if) we go bankrupt? You know, day to day stuff. When do we file for bankruptcy? Now, or when the house gets sold / repossessed? If we get an offer on the house, will the mortgage company try to block the sale if there will be a shortfall? Presumably they can't do this as it's likely to be a better price than if they tried to sell it themselves. Could we find ourselves in the situation where we go bankrupt and the house still isn't sold by the time the bankruptcy is discharged? Then we're no better off! These are the things that are getting me stressed at the moment.

Life wouldn't be much different as far as day-to-day things are concerned. You can still have a basic bank account (although only Barclays are left out of the mainstream lenders that will allow an undischarged bankrupt a bank account). Sometimes utilities firms may expect for you to have meters, pay a deposit or have a guarantor (this varies depending on the supplier).

You can petition for your bankruptcy at any time. If the property isn't sold at the point you're discharged any shortfall will still remain a bankruptcy debt - even if the property doesn't sell for years to come. The reason for this is that you incurred the debt prior to the date of the order, as such any shortfall will always be included. You are likely to have read that you should never sign a declartation stating that you are happy to remain liable for the shortfall after the date of discharge; please do NOT sign anything like this if the lender asks you to - this is really important!

In case you have not seen them, here are links to our Negative Equity and Bankruptcy fact sheets:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=07_negative_equity

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=01_bankruptcy

Really hope I've answered your queries, if you have any more please post them up and we'll do our best for you.

Best wishes,

David @ NDL.

LannieDuck

Apols if you've already answered this, but why aren't you living in the house? Presumably that means you're paying rent as well as the mortgage (even if you've managed to get tenants in to offset some of the mortgage payments). It seems a bit silly to me... but maybe that's because I don't know your reasons?

olivia84

i think the op said he had to move out of the area for work x

hey, don't feel that people are judging you too harshly, honestly, many people on here are very matter of fact and it may sound harsh to you but they are honestly just trying to give you the facts to help you out. FireWyrm was right - the housing market insn't dead in your area, your house is overpriced. just because it was worth £100,000 more a few years ago is irrelevant, it's only worth what someone will pay for it now and that just happens to be alot less.

but we've all made mistakes on here! (we probably wouldn't be here if we hadn't!) i know you are justifying your level of debt because it was work related and not extravegance as you see it but although you felt you had no other choice but to pay the fuel etc etc, you did. you could maybe have sold up when the market was hot and moved closer to your job, or got another job etc. please please don't feel that i'm judging you as well; i'm just pointing out that we all make decisions that we feel are right at the time but that may not work out. no, you weren't extravegant as in, blowing money on nights out, clothes, holidays etc, but the decisons you made at the time lead you to your debt, whether it was 'your own fault' or not.

but hey, it's all in the past. it doesn't matter why you have the debts you have, the point is you have them and you are getting it sorted. bankruptcy looks like the way forward to me. but please remember, it's only money. your family and your health are more important and i'm not saying don't bother about it and ignore it; you're obviously a good person and you will learn from this and be super super financially good for the rest of your life now! i know i have certainly learned my lesson; pay my mortgage, food, heating and council tax and whatever's left over is a bonus! millions are in the same boat as you, you're not alone.

there's a good bancruptcy board on here that will give you great advice. i think that once you get the ball rolling you will feel a huge weight lift from your shoulders and at least feel more in control.

good luck and keep posting to let us know how u get on xx

LannieDuck

olivia84 wrote: »

i think the op said he had to move out of the area for work x

Thanks

Was that before or after the massive commuting costs? I'm wondering whether he still has those costs, or whether the move to rented was in order to deal with them?

i.e. if you were to move back to your house, would you begin to incur lots of expenses again? Or do you already have massive commuting costs, in which case there may not be a lot of difference?

nimbo

are you currently living within your means - or are are you still putting stuff on a credit card? - because that wouldn't be an option after bankruptcy...

You need to do a statement of affairs (you can keep it private) at least for your self, to figure this out... AND BE HONEST - I find it really easy to lie to myself - and actually justified that I spent £5 on a coffee to myself the other day, and after sitting down just after Christmas I counted my trips to evil coffee shops, and realised I'd spent £50 in December in them - not even on meals just frothy milk....

Pop across to the old style board - they eat like kings for tiny amounts of money (they helped me cut my food spending in half and I still have the odd bottle of wine and too much chocolate)...

Look at your outgoings realistically you need to find ways of saving a 'few' quid here and there to try to get this sorted... you may feel time poor - but it will take a while to make a start on this.

is your wife on board with this process?
Can you start selling old baby stuff to fund new baby stuff?