Sell House? IVA? Help!

gotmybiggirlpantson

Newbie with lots of questions here looking for advice.

A couple of years ago my partner & I were both made redundant in the same week. We were bringing in around £70k per year between us at the time. We used 1/2 our redundancy money to set up a business which my partner runs. I have p/t and sessional work and have been struggling to find a full time role. We currently bring in around £19k per year :eek:

We have debts of £37k on a loan and 2 credit cards.

We are able (just) to meet our mortgage payments (which include arrears from a payment break), housekeeping and fuel costs (all the "essentials"), but have no money left to pay creditors.

We have previously worked with Stepchange and are currently working with PayPlan towards an IVA. At the moment though we aren't meeting the criteria as we don't have enough surplus left to pay our creditors.

Here's the question; do we
A) continue with the IVA, juggling the figures til they match the criteria?
borrow the £37k from parents (no repayment required) to pay off debts, but still possibly struggle with mortgage. This has not been offered explicitly but is a hinted-at possibility.
C) sell the house using the equity (approx £39k) to pay off the debts, giving us a nest egg to start again with, and renting a property at a lesser cost than our mortgage (need to stay in area due to schools)?
*D) Bankruptcy is not an option as we'd lose everything.

I know it might sound like a no-brainer to some, but it's a huge decision for us & we're stuck. We have estate agents waiting for instructions & creditors who need paying.

All advice gratefully received.

sourcrates

Hi,
As you say, its a no brainer, nice of family to offer, but could lead to future problems, obligations etc.


Option C all the way my friend :money:

When_the_going_gets_tough

I am trying to be helpful here. I think you both need to think very carefully and honestly about how you got into debt last time given your generous salaries, before you make any decision. Whatever you do you need to find a way to live permamently within your current means for your own peace of mind. Only you know the dynamics of accepting such a large gift and how that would work out going forward. The worst thing for a parent is to help a son or daughter start again only to find they are in the same difficulties a few years down the line. Good luck whatever you decide.

dancingfairy

I thought maybe a dmp would be another option you hadn't considered, given that when you get better work you can increase the payments. It depends on how likely you think your circumstances are to change in the near future. If the mortgage looks to be unsustainable then perhaps selling up would be the best option?
df

gotmybiggirlpantson

Thanks guys. I'm really stressing the more I think about the options here. I don't really want my parents to bail me out. We're all too old for that
And yes, I'd feel really in debt to them, no matter how much they said we didn't have to pay them back. And, month for month, we'd be no better off than we are now...
But, selling the house? it seems so extreme and so final. In honesty we're unlikely to ever be able to buy again. Trying to convince myself this is not a bad thing. No property to pass on to kids, but no debt either.
My head hurts...

tlc678910

Hi,
I know job hunting is really tough at the moment - I just wanted to ask if you had been looking with an open mind to a change of direction or a stop gap job. If work is hard to come by in your field and if you are able to do any thing (if you are physically well and no childcare problems). It sounds like any full time work i.e. factory work or shop work would really boost your household income especially places where overtime arises for holiday and sick cover.

If you boosted your income in this way you might feel better about borrowing the money to repay your debt knowing you can cover your mortgage more comfortably and offer some modest repayment to your family each month.

If you can get a job with any large employer opportunities usually arise for bright hardworking people to advance over time.

Good luck with whatever you decide to do

longtermplanner

gotmybiggirlpantson wrote: »

We are able (just) to meet our mortgage payments (which include arrears from a payment break), housekeeping and fuel costs (all the "essentials"), but have no money left to pay creditors.

Then how will you manage when interest rates rise? Which they will do, perhaps end this year, perhaps next year. Most people expect rates to be about 2 % higher within a couple of years.

I think you should probably sell...

However there is one other option you could consider if you are absolutely confident that your incomes are going to go up so you will be able to manage higher mortgage and not borrow anything in future. That is to default on all your unsecured debts now - write to them and offer them a token £1 payment per month, enclose a Statement of Affairs to prove you can't pay any more. Then after 12 months of this, borrow from your nice parents and offer say 50% as a full and final settlement.

(Re-reading your post, I can't tell if you have already defaulted on the debts. If you have, then the 12 months is going to come round sooner.)