Is bankrupcy the best way forward for me?

Sandgrownun

I posted this on the bankrupcy board but perhaps not the right place, I've also made the first call to stepchange (CCCS) and waiting for the longer phone assessment on weds morning...

Hi Guys

Hope you can advise.

I took out an ill fated NR Together mortgage in 2006 ish when I was very young and very naive. I owe 105,000 on a house that I don't live in and have been renting out I(not agreed by NRAM). I had to move as the house was only 1 bed, and I fell pregnant so took the opportunity t rent a bigger house at £100 less than the mortgage. I've never missed a payment though and for several years have topped up the £150 ish shortfall with the mortgage after the rent.

Tenants are out now, and I have realised that i do not have anywhere near enough money to be a landlord, its not agreed anyway so it would technically be mortgage fraud maybe? So I'm thinking to sell the house.

It's been valued at £70,000 - £75,000 and I have someone poss interested. However then I would owe approx £35,000. I also have credit cards totalling £4000 and an overdraft of £2000.

So as you can see I'm in a big mess. I have a steady secure job (more secure than most but I don't want to reveal the exact nature). I earn about £28,000 but am due to go on mat leave for a year so will earn about half of that roughly for the next year or so. I don't know if I'll be able to go back full time as childcare might make it to be no point, and it's not best for the children. I will always work part time though - I don't want to give up work.

What are my options? Is bankrupcy the best possibility do you think? I can't see how I can pay it back, and I just have to face facts that a astronomically stupid decision when I was much less financially savvy in my early twenties has possibly ruined my entire life (financially at least!).

Hope you can help, many thanks for reading x x

exarmydreamer

Why don't you consider moving into the 1 bed for a year or so, whilst the baby is small and give yourself a little breathing space. Live in it, whilst putting it on the market if necessary. Do you have a partner, what about his income?.

Put up a Statement of Affairs and the people here can assist in cutting bills and giving good suggestions. Bankrupcy, is such a life changing thing it literally stops your credit for years and also some jobs won't allow you to be declared bankrupt.

FireWyrm

Um...did you declare your rental earnings to HMRC at all? If not, I suggest you get that sorted out ASAP because they are going to be more than a little upset with you. There is no point choosing a course of action without all the facts.

I'm sorry, but this could actually be a bit worse then you think.

However, one ray of sunshine :

One form of debt you cannot include in bankruptcy are secured debts such as a mortgage or charge on a property, however if the property is repossessed, and there is a shortfall, the shortfall now is unsecured, and can be included in bankruptcy.

Sandgrownun

There was no earnings because the mortage was £579 at the most and then £449 at the least over the three years. I looked on the HMRC website and as far as I could see I didn't need to declare the earnings as I was actually making a loss, plus the insurance and repairs and safety certificates etc. It's no longer rented out so empty and I get no earnings from it. The most rent I took after agents fees was £407.

Also - I also have a 3 year old - and it's really tiny only just big enough for 2 ppl. Unless one of the children slept in the bathroom then we'd not fit. Wouldn't fit a sofa bed in the lounge either so the kids could have the bedroom.

steve808

You have a 3 year old and another baby on the way. I may be a bit old fashioned asking this but, where does the father/s of the children live?

Sandgrownun

richardc316 wrote: »

You have a 3 year old and another baby on the way. I may be a bit old fashioned asking this but, where does the father/s of the children live?

Hi he lives with me x

Ps not old fashioned at all!

steve808

Sandgrownun wrote: »

Hi he lives with me x

Ps not old fashioned at all!

That's good. I therefore assume he has a salery coming in to help out? With you on £28000 (I wish i earnt that much!) plus his salery I don't really see any need for you to go bankrupt. Sure you're gonna be in debt for a while, but the point of bankruptcy is for people that have no way of ever paying what they owe. If for example you and your partner are both earning £28000 per year (£56000 in total) then there is no reason why you can't afford to keep paying the remainder of your mortgage after selling the flat (as well as renting a bigger place for about £700 per month). I understand that this might not appear like an attractive course of action, but bankruptcy shouldn't just be to help people write off debt they don't want to pay. Of course you might get less while your on maternity pay, but this will only be a temporary 6 month set back.

Sandgrownun

Ok that's interesting, I had thought it would be best to go bankrupt but the issue is that when I return to work child care full time will be £700 approx per month, which is half my wage. We wouldn't be claiming benefits either so no help that way. So I may earn a decent amount but its actually halved after this baby is born.

exarmydreamer

Your not giving a clear picture, the best thing to do is post up an SOA and let poster have a look at your current spending compared to your income.

You must of realized when you planned/became pregnant a second time that it was going to cost more to live. Have you checked your mortgage paperwork are you allowed to sublet on your mortgage, if so start looking for a new tenant to ease the load.

Start budgeting for your maternity leave, put a little away per month. Use the snowball calculator on here to tackle your biggest APR bill first whilst paying minimum on the rest, then repeat. Use a spending diary to alter your spending habits. Write everything down and see if there are any patterns of spending that can be changed.

Bankruptcy is a last resort, post up an Statement of Affairs (SOA), there might be cuts that can be made. You ask for advice but without a clearer picture i.e partners income, relevant advice cannot be given.

Sandgrownun

Ok I will do. Re renting nram have said I can't let, but then they don't yet know my difficulties.


SOA
Per month
wages £1447.15
Cb £81

Partner wages £1120

Petrol £240
Rent £500
Tv licence £13
BT £30
Interest £18
Mortgage £449
Barclaycard £71
Mbna £88
Food £400
O2 £37
Netflix £6
Gas £99
Water £28
Swimming £28
Clothing £150
Car ins £27 & £37 = £64
Hmrc £10
House ins £35
Acc fee £7
Child care £158
Toiletries and cleaning £80
Road tax £35
Car maintenance £20
Hair £20
Presents £40
Holiday £100
Council tax £117
Electricity £40
Zurich £10
Landlords ins £27

Sandgrownun

Ps I don't want ppl to think I have a problem with repaying the debt, if I did I wouldn't have been struggling to reduce it for the past 7 years, working a 60 hour week whilst pregnant and since my baby was 6 months old! It's nearly killed me.

I know there is defo savings to be made, those expenses are for all of us, food is high but that's all meals inc lunches. Swimming is an activity for my son.