Advice on BR.

Family_in_debt...

Please can I get advice or mainly shared experiences

I am a mum with 3 young kids and myself and the OH have got into 40k worth of debt after years of struggling since OH got made redundant from a good job, on top of a large mortgage. The OH has struggled to get work even though he is a very experienced individual, basically the market is dire.

We have been advised by SC that BR is our best option, but as the OH will not be working or on a low income we will not be able to afford the mortgage also. (We bought at the peak time and when everything was good) This means that we will have the house repossessed and be effectively homeless. The house is in negative equity also so cannot sell up really. We just want to make sure the kids are looked after.

I came on her looking for a positive viewpoint on this and if anyone with numerous kids has been through this and how they fared. Its a bit unknown for me and I worry for the kids future. We may be able to stay with OH parents but this would be a bit cramped. Basically we have fallen from a high, enjoying life to being very stressed. We would like to think we could make a fresh start and rebuild but feel it looks bleak at present and we are united as a couple to make the best of a bad situation.

Any thoughts pleassssse....we are very worried

Family_in_debt...

Bumping up

Can anyone offer any advice/thoughts....

Family_in_debt...

People are viewing the thread can anyone offer some advice or is it too bad a situation

PippaGirl_2

Hi there. You've done the right thing talking to step change.

I'm unsure what you are asking, are you asking for advice about whether to go BR, what to do about the house or something different?

If you feel the property is unaffordable then an option would be to move into a rented property. I would advise looking for a property that has a rental cost of your LHA or lower, so that when you apply for HB at any stage you know the rent will be covered.

Family_in_debt...

I was really asking for shared experiences.
We feel that we are very irresponsible having 3 young children and getting into this situation and feel in a hopeless situation.
We may end up homeless and with limited financial resources and I am concerned about the impact on the children and their lives.

I came on to see if we were alone to go through this in at this level of complexity or can I find some people who have been through it and can put my mind at ease a bit. We need to make sure the children are ok

watcher27

Hi,
I went through a similar situation last year, but with the main difference that I managed to find a job, and so could pay the mortgage.

The basics of my story are:
Purchased house in 2007 at peak value. All together mortgage (£16K unsecured element)

Northern Rock went tits up.
My Son was born on 31/8/2008. I was made redundant the previous month. Mortgage reduced to interest only.
I found another job at ALOT less pay, wife went on maternity pay.
Got made redundant again.
Found another job but on even lesser pay, wife went back part time.
I got another job with same pay as my original job. But...
Interest only period ran out, NRAM wouldn't extend, then next month fixed interest term ran out, so in total mortgage went from £425 upto £1110 a month.
We couldnt make payments for the mortgage & CC bills racked up from being out of work etc.
House in around £30K negitive equity.

Applied for BR.
Unsecured element wiped off in BR, reducing mortgage payment to £975. Alll CC bills wiped off.
So now we just about manage. There was nothing left after all bills so no payment order set up. They recommended us for ED in March (BR in Jan), but missed the window to complete all paperwork, so BR lasted the full 12 months.

So fast forward to today! BR has had relatively little effect on our lives (at the moment). The OR was helpful & understanding, we got to keep both cars & haven't had to loose anything. My OR interview lasted less than 5 minutes.

So it can work out ok, and they will never leave you homeless.

Your main problem will be that your OH is out of work so cant keep up with the mortgage payments

You've taken the first step giving stepchange a call. They were wonderful with us and were a god send!

National_Debtline

Hello there.

First things first. Please don't feel irresponsible, as you've said yourself a few years ago things were very good for you and your family - and I'm sure there will be more good times in the future. The severity of the economic downturn was predicted by very few people, it has caught hundreds of thousands of people out - if not millions. Myself included! I bought my place at the start of 2007 and it too is in negative equity! There are plenty of other people in very similar situations to you, so please don't feel alone!

As PippaGirl has mentioned you've certainly done the right thing by contacting our friends at Stepchange. You also investigate whether there are ways to maximise your income - for example do you know if you are able to claim tax credits?

http://www.hmrc.gov.uk/taxcredits/

If you are keen to learn about your housing options to consider speaking to your local authority or possibly Shelter on 0808 800 4444.

As the property is in negative equity it may be possible to declare yourselves bankrupt and stay in the property. If you are unable to service the mortgage and the house is sold/repossessed any shortfall can be included within the bankruptcy also - even if you give up the property after your bankruptcy date.

Speaking with my Money Adviser (rather than Social Media) hat on I often to speak to families who have encountered a large reduction in income. It can be a very tough and difficult time but you are completely doing the right thing by seeking advice - not only via debt charities but also by spending time on this very forum.

I'll keep an eye on your thread, if you have any questions feel free to ask!

Best wishes,

David @ NDL.

Family_in_debt... wrote: »

I was really asking for shared experiences.
We feel that we are very irresponsible having 3 young children and getting into this situation and feel in a hopeless situation.
We may end up homeless and with limited financial resources and I am concerned about the impact on the children and their lives.

I came on to see if we were alone to go through this in at this level of complexity or can I find some people who have been through it and can put my mind at ease a bit. We need to make sure the children are ok

PippaGirl_2

My situation was different but I had some similarities. I left an abusive xh with the clothes on my back with one of my children. I left a mortgaged jointly owned home with little equity (£400 left once mortgage was paid when eventually sold later) and moved into rented and then my other two children joined me once my xh had moved out of the FMH to move in with his new woman and child and my other two were left alone. All I can say is that my children had turmoil for a while but they coped and are absolutely fine. Moving house is a normal part of life for most children at some stage, if you have to move at all. What else do they need to know? With BR you are left enough to live on so they will have all they need.

Your decisions need to be a) whether to go BR and b) whether to let the house go or try to keep it going. Even if you tried to keep it but failed, as ndl says as long as you have not signed any new agreement with the mortgage company then any shortfall would be taken into the BR at any later date.

If letting the house go is inevitable it would be better to seek a suitable property I would think. But, to reassure you, your children will be fine.

Family_in_debt...

I expect we would have to apply for social housing and try to get HB if OH is not working. Does that seem reasonable....

PippaGirl_2

You could put your names down on the waiting list at your LA. Here the waiting list for a house is about 8 years so is unlikely you will get one anytime soon. However if you wait until you are evicted from your current property and have only not paid the mortgage because you cannot afford to then you will be deemed to be homeless and most importantly not intentionally so. As you have children the LA have a duty to house you but normally nowadays that is not within social housing as this is deemed to be unfair to people waiting patiently in the queue for a house. They might rent a property from a private individual and then rent it to you, or they may offer bed and breakfast or a hostel or shared accommodation. Or, they might offer you a loan of the deposit needed to rent a property you have sourced yourself which you then pay back slowly. Certainly worth getting yourself on the waiting list.

Family_in_debt...

But if we are bankrupt with no income how would we pay for a private rent and a loan repayment I dont want to be in a hostel forever