HELP Please!!

Favourite_worst_nightmare

Hi my husband and I are in a massive amount of credit card debt...HUGE! There are reasons behind this which our circumstances have changed but we are now struggling to keep up with the payments. We've not defaulted on any payments and our priority debts etc are all in order, mortgage payments up to date, no CCJs etc. However, we are now being seen as being in persistent debt by the card companies who want us to pay even more. We are already paying over the minimum but we can't afford to. I've rang step change and business debt line for advice (husband is self employed). We don't want to do anything that would ruin our credit score as my husband still needs credit for running his business, he has credit accounts for the materials he needs to purchase. Please do not judge us, we know we are in a mess but my husband feels the best way to deal with this is to get a further advance on our mortgage or a secured loan. I know secured loans are not advised, and believe me I don't want to do this but I'm really after advice and desperate.

Firstly we have about £186k worth of equity left in our house against current value, we only have 7 years to run left on our mortgage. I really, really do not want enter into any agreements that would put the house at risk in terms of insolvency, we also have a dependant child living at home. We feel that with a remortgage to get some equity then we would absolutely 100% use this to pay up all our existing debts and start afresh, with a one more affordable monthly payment. I've read everything on debt consolidation and the risks yet still for us in our situation feel this is the best option. We are becoming unwell with the stress and strain it is putting on our marriage and believe me when I say we will never get in this mess again.

My issue is this. We have our mortgage with Santander, we've looked at their further advance option and it says they won't give it for debt consolidation. So what should we do? We know that any mortgage provider looking at our debts outstanding and my husbands self employment status (he's been a sole trader for 19 years and does have audited accounts) would not look favourably at us.

We have cut back our expenditure and I'm doing everything I can to raise more money, selling stuff etc but the interest on our credit cards is crippling (we've already done all the 0% swapping we could) but we now have 9 cards between us as a result of that and deals have come to and end we feel trapped.

We have a good mortgage deal with Santander and would ideally like to stay with them but what would be the likelihood of how they would respond if we told them were in debt and can they help. I've read you should approach your existing lender first but equally having read what I've read on line I'm worried this would go against us. I'm worried they'll try to call in our existing mortgage. Could they do this - if we haven't defaulted on any of our payments on our existing mortgage? As I said we've only 7 years left and our home is everything to us. What would your advice be to approach Santander first or is it not worth the risk?

Failing that - could we move our entire existing mortgage plus a new advance to cover our debt to a new provider - who would take us on when my husband is self employed and they can see our huge outstanding debts on our credit file - even if we will be paying them off with the money?

Lastly if our only options is a secured loan - where can I find out about reputable lenders. I've heard loads about sharks and would want some independent advice on this and I've looked at some comparison websites and they are charging about £4-5k just in fees alone, plus I would need someone to look at a joint application which these don't do.

I've been in a secure role for the last 5 years and I have recently started searching for alternative higher paid employment. One vacancy i've applied for and have been shortlisted for, does vetting checks on your finances so it may not go anywhere because of our credit but equally if I got the job I'd be earning more money. Yet I know to get anything changed on our mortgage I need to have a good employment history and not have been in a job five minutes so just don't know what to do.

Please any help or advice would be welcome and time is of the essence.

Thank you!

Willing2Learn

I would urge you to reconsider moving unsecured debt on to secured debt against your home. It would put your home at risk if things turned out badly in the future...

Grumpelstiltskin

With so much equity why don't you consider selling and either downsizing or renting. May sound drastic but what other viable alternatives are out there?

getmore4less

That was a long post I was going to extract the relevant info to help those that don't read these long wordy post but the only bit of information is

Firstly we have about £186k worth of equity left in our house against current value, we only have 7 years to run left on our mortgage.

start with the SOA

http://www.stoozing.com/calculator/soa.php

Are the businnes accounts totally separate from the personal ones?

macman

How much CC debt is 'huge'? Sorry, but that tells us nothing.
You need to list out the amounts owed on each card, and the rates applicable.
You don't state the value of the house, but with £186K of equity in it you would be crazy to secure further debt against it.

NeverendingDMP

Whose names are the debt in. Yours, his, joint business etc. I initially had a single person dmp with stepchange as hubby wouldnt sign up.
My name and my debts only and i then had affordable payments and frozen interest due to being on a dmp. I did a budget based on my income and hubbys contribution to the house after his bills and personal spends and used that to make my offers.
You would have to reconsider having your name on any joint accounts and remortgaging would be more limited as your credit rating would be trashed but it may get part of your debt more manageable if some is in your name only. You just then have to be very strong at not resorting to credit in your partners name otherwise you will end up in more of a mess.;) also you have to decide if thats okay with you both that your credit file is marked while his plods along.

EssexHebridean

Willing2Learn & getmore4less in particular both make important points above.

The SOA is indeed the starting point here - get it filled out - accurately and reflecting the way things are right now - then post it in here and let's see if we can find any savings on your current expenditure that you may have missed - always a great place to start as outsiders will look at your spending a lot more objectively than you can - and in turn that will lead you to question things you wouldn't have questioned previously.

You totally contradict yourself in your post - in one breath you say you don't want to do anything that will put your home at risk, and in the next you go on to tell us the very thing you have decided is the right course for you and it's the one thing that will do just that - it immediately takes you from a position where you home is at no risk, to one where it is at risk.

You say you had 0% deals but they have now finished - have you checked via the MSE Credit Club how your eligibility for new deals might look?

Don't worry about being judged on here - it's not what we do. Just get that SOA filled in and let's see how we can help.

enthusiasticsaver

An soa is the first thing to do.

I would have reservations about using your home as security to consolidate credit card debt. Having a lot of equity does not mean you will get a secured loan anyway. They will look at existing debt and your income situation so if you have high debt already and your husband is self employed (erratic income) then this may not be easy to get approved. If you are unable to get 0% deals then a secured loan at a good rate may also be impossible.


Rules for credit card companies have recently changed meaning they are targeting people in persistent debt presumably like yourself and asking for increased payments. Are you paying interest on all these credit cards and are the minimums covering interest and repaying the debt or are you falling further into debt each month? Are you still spending on credit?


Approaching Santander would not mean they would call in your mortgage but equally if they do not lend for debt consolidation then I cannot see what good that could do. Approaching the credit card companies and seeing if they can stop interest may be useful providing you do not end up with a default on your record.