Will I have to sell my house?

Betwattled

I was wondering if anyone can help me with a query for my auntie.

She is 70 years old and has accumulated around £25'000 of credit card debt. She was working full-time and could make the credit card repayments. Last month her hours have been cut at work and now she is only working part time and is struggling to pay the minimum payments and day to day bills. She is unlikely to get back full-time work and at her age it's not realistic that she will find further part-time work at least in the immediate future.

The question is, if she went on a DMP with reduced payments would she have to sell her home? (She owns her small property outright but has no other equity or savings.)
She realises when/if she sells her property she will have to pay the debts off BUT can the credit card companies force her to sell her home before she is ready to? Not any of the credit card debts are secured on the property.

Also are the credit card companies less likely to freeze the charges etc if they are aware she has a property to sell at some point?

As you can all imagine she is very worried about losing her home, can anyone help/advise us?

Many thanks

Helena xx

longtermplanner

There isn't a simple answer to this.

If she makes reduced payments, her creditors can take her to court for a CCJ and then try to take a charge over her house. That doesn't mean they will, but it is possible.

Even then it is quite unlikely that a judge would grant them an order for sale, but it's not impossible.

How large would the reduced payments be? If they were a decent size, so the debts were clearly going down. she should be all right. If she is only paying token payments of £5 a month her creditors are more likely to look around for other options.

You say the property is small. I assume downsizing is not an option? is there a spare room she could let out?

I suggest she calls StepChange and talks to them about how a Debt Management Plan would work. http://www.stepchange.org/Howwecanhelpyou/DMPDebtmanagementplan.aspx

Betwattled

Thank you.

No down sizing isn't an option as it is only a modest 2 up 2 down, I don't think houses come much smaller.

Would a credit card company try to force a sale or put a lean on the house so they are paid when there is an eventual sale?

The reduced payments would be at about 25% of their normal rates... so more than token payments but nowhere near the contractual amount.

She is planning to ring Stepchange/National Debtline next week but I just hoped to save her a few nights worrying about losing her home.

Thanks again

Helena xx

Stewart_78

I wouldn't worry too much. One question.

When were the cards first taken out? Do you know the dates the accounts were opened and who were they originally with?

I don't think there are many courts who would throw an old lady out of her home if she is clearly trying to make payments.

tallyhoh

I really wouldn't normally suggest this but has she looked into releasing equity on her house?


I am not recommending it but if she lives alone & has no dependants its worth taking impartial advice

longtermplanner

Betwattled wrote: »

Would a credit card company try to force a sale

very very very unlikely (but as I said not impossible)

or put a lean on the house so they are paid when there is an eventual sale?

this may happen, but it's not likely.

AMILLIONDOLLARS

Maybe she could look into hosting foreign students, for a bit of income, worth having a look into.

AMD

Mrs_Arcanum

Betwattled wrote: »

I was wondering if anyone can help me with a query for my auntie.

She is 70 years old and has accumulated around £25'000 of credit card debt. She was working full-time and could make the credit card repayments. Last month her hours have been cut at work and now she is only working part time and is struggling to pay the minimum payments and day to day bills. She is unlikely to get back full-time work and at her age it's not realistic that she will find further part-time work at least in the immediate future.

The question is, if she went on a DMP with reduced payments would she have to sell her home? (She owns her small property outright but has no other equity or savings.)
She realises when/if she sells her property she will have to pay the debts off BUT can the credit card companies force her to sell her home before she is ready to? Not any of the credit card debts are secured on the property.

Also are the credit card companies less likely to freeze the charges etc if they are aware she has a property to sell at some point?

As you can all imagine she is very worried about losing her home, can anyone help/advise us?

Many thanks

Helena xx

What they look at firstly is how soon the debt will be paid off. If it is close to 10 years time chances are they may try to put a charge on the property (they may do this anyway given your aunts age). If the debt will be paid off sooner and your aunt can show she is paying everything she reasonably can to clear the debt they may not.

If they do go down the charging route it would mean a CCJ. As long as there are no defaults on payments they will not force sale of the house. All it means is they have first dibs on any money when the house is sold but only to clear their debt. Each CC company will be different, one may go for a charge where others may not.

Is your aunt claiming everything she can on benefits/pensions as any extra income she is entitled to will help?

National_Debtline

Hello there, I just wanted to echo Longtermplanner's excellent post. A forced sale is very, very unlikely. Should a creditor seek a county court judgment and then a charging order they generally wait until the house is sold by the owner. To give you extra protection it is possible to have a condition made when the court grants the charging order. This condition prohibits further action whilst a reasonable, affordable instalment arrangement is kept up with.

To give you an idea about forced sales, according to the Ministry of Justice less than half of 1% of charging orders end up with orders for sale. I imagine they are generally not residential properties.

Best wishes,

David @ NDL.

Betwattled

Thank you all for your advice. My aunt feels less fraught about the outcome thanks to your posts. xx

My Aunt is getting some professional help next week and unless advised otherwise will go down the DMP road with the hopes that her creditors don't apply for a CCJ/Charging Order.

Many thanks again all you lovely helpful folks.

Helena xx

harrys_dad

Has she applied for pension credit?