What to do for the best.....

MJGS

Trying to work out what to do for the best. We have debts of approx. £50,000. We struggle every month to cover everything. What we are thinking of doing is selling our house and clearing our debts. We would then rent for a while, until our credit is better. We currently can not get a mortgage due to our debts / bad credit. We have enough equity in our home that selling it would clear out debts and leave us with enough money to put safely away until we are able to get another mortgage. With our debts clear we would have more than enough money to pay rent and bills and still have money left to add to our savings.

Currently we struggle to make ends meet every month. We have 3 children and I hate stressing over having enough to feed them. I do always manage, but only just. The house we have the mortgage on is going to need money spending on it sooner rather than later and we just won't be able to find the cash.

Just worried that if we get of the property ladder we might never get back on it I guess. Also selling to clear our debts seems like an easy answer. We have certainly learnt our lesson and we have talked lots and we are not going to do this again. All decisions for non typical monthly purchases will be agreed between us. I just want to ensure that our children are protected for the long term. 2 of our children are autistic, with developmental delay and learning difficulties, and may well never be able to live on their own (without support) and need to ensure that they are protected for the long term.

Scared to get off the property ladder, but struggling to survive on it. Would you sell and start over? It would be lovely to go a day without worrying about, well everything. Thanks for reading.

La_escocesa

Hi MJGS,

Have you spoken to a few brokers to check for sure that you won't be able to re-mortgage onto a better deal? Are all the debts in joint names? If the debts are in one name could you re-mortgage with the other person getting the mortgage (i.e. just based on one salary but with no debt attached).

Could you get a smaller mortgage and downsize?

I know a lot of people will disagree with me but I personally wouldn't give up my house to rent if I thought I would struggle to get back on the property ladder. I sold my house 3 years ago and moved into a rented place - had a bad rental experience and just hated the uncertainty, but it may be the answer for you and work out a good way of doing it.

System

Hi,
I'd really recommend calling Stepchange to talk through your options?
One of them is certainly selling your house, but it is a huge huge step, and there may be a different route which would be better for you?

We've just started a DMP - debt management plan - I got advice from Stepchange, but decided to manage it ourselves.

Good luck Ramble x

January2015

Post an SOA so that people can give some advice.

Personally if you can manage your mortgage and essential bills (council tax, electric, gas etc. etc.) then I would look at a debt management plan (DMP). Selling my home would be my last resort.

As you will see from my signature we were over £90k in debt and still have a long way to go, but through a DMP we are able to live in our home home, pay what we can afford to unsecured debts - and it is now all interest free. We have sufficient equity in the house to clear the debts, but through a DMP we don't have to sell and lose that equity. Importantly we have quality of life now which we never had whilst we were scrimping and scraping to pay the debts when we were trying to meet minimum payments. We ended up borrowing more to try and consolidate - big mistake. Seriously, for us moving to a DMP was the best financial move we have made in years. It does trash your credit file - but if you are struggling you are either there already, or well on the way there.

Also try the Stepchange Debt Remedy online tool.

DMP is not the solution for everyone and there are other options, including selling your home - but before you do anything, post some more info here and take advice and speak to one of the free debt support services such as Stepchange.

Wishing all the best - remember it's only debt; you have your family and that's the important thing

Edit: should have included that when times are tough, even on the DMP there are options - for instance contact the creditors and drop payments to £1 a month whilst you get through. It sounds impossible, but creditors understand people who are working through their debts on DMP hit bumps in the road (broken boiler/washing machine etc. etc.) and they accept this. Even if they don't accept it formally, they do nothing drastic other than moan about it - that's my experience over the last 18 months.