Historical debt but not allowed to remortgage

noofighter

HI all - apologies for the life story, but I think it's important for context! A few years ago I tried to start a business - it was my first (and last!) venture into the world of small business ownership but unfortunately I was naïve and a few mistakes were made, such as not knowing how to borrow, avoiding personal liability and - critically - not knowing when to call it a day. As a result I build up a number of debts, some of which went down with the ship, but some which remain. I also managed to miss one mortgage payment, so am in arrears with my lender. Apart from that, I managed to keep most repayments up to date. Since then I have re-entered the rat race on a generous salary but remain in a bind. Debt-based outgoings are insane, I have a mortgage at 64% loan-to-value but seem unable to solve the issue. The simple way out in my view is to re-do the mortgage to swallow all these silly debts/cards, which then puts my cashflow in a positive place, ensures I can settle the arrears and therefore easily paying the key creditors of the monthly mortgage and car. 
Of course, it isn't that simple in the eyes of the bank. Even though I have around £250k equity, my mistakes have cost me a sensible way out which is mind-boggling. I'm asking on this forum what I can do? I've had chats with places like debtline who start talking about going to the food-bank! I take home on average £6k a month, why on earth should i be taking food from the truly needy?! It's madness. For the same reason, I don't want to get into debt arrangement because that doesn't seem like the right answer to me. I'm desperately seeking some help as to who can help me out of this maddening and stressful situation because I'm in some vicious cycle with no end in sight, and simply shouldn't be!! Thanks for reading!

Naomim

The general advice here is to never turn unsecured debt into secured debt against your property. 

The first thing you should do is post an SOA including the debts and the APR's.

 With a £6k a month income you must be able to reduce your debts down and maybe you're not doing it in the right order. There's snowballing which is paying off smallest debts first or avalanching which is clearing highest interest first.

Get the SOA posted and the good people on here will be able to offer constructive advice.

Good luck

Naomim 

ceremony

As @Naomim says, don't secure any unsecured debts against your property.
Have you talked to the card / loan companies about going on a payment plan?
Catch up with the mortgage, that's a priority debt, and then look at clearing the other debts starting with the highest interest rate ones first. You might be surprised at how much breathing space you can get if you tackle things that way.

[Deleted User]

noofighter said:

HI all - apologies for the life story, but I think it's important for context! A few years ago I tried to start a business - it was my first (and last!) venture into the world of small business ownership but unfortunately I was naïve and a few mistakes were made, such as not knowing how to borrow, avoiding personal liability and - critically - not knowing when to call it a day. As a result I build up a number of debts, some of which went down with the ship, but some which remain. I also managed to miss one mortgage payment, so am in arrears with my lender. Apart from that, I managed to keep most repayments up to date. Since then I have re-entered the rat race on a generous salary but remain in a bind. Debt-based outgoings are insane, I have a mortgage at 64% loan-to-value but seem unable to solve the issue. The simple way out in my view is to re-do the mortgage to swallow all these silly debts/cards, which then puts my cashflow in a positive place, ensures I can settle the arrears and therefore easily paying the key creditors of the monthly mortgage and car. 
Of course, it isn't that simple in the eyes of the bank. Even though I have around £250k equity, my mistakes have cost me a sensible way out which is mind-boggling. I'm asking on this forum what I can do? I've had chats with places like debtline who start talking about going to the food-bank! I take home on average £6k a month, why on earth should i be taking food from the truly needy?! It's madness. For the same reason, I don't want to get into debt arrangement because that doesn't seem like the right answer to me. I'm desperately seeking some help as to who can help me out of this maddening and stressful situation because I'm in some vicious cycle with no end in sight, and simply shouldn't be!! Thanks for reading!

If you are in arrears with the mortgage lender it is hardly surprising they won't allow you to remortgage to release equity.  Turning unsecured debts into debts secured against your home is far from sensible.  In fact it's one of the worst things you can do.  You either earn enough that you can snowball your way out of debt or you look at something like a DMP or IVA depending on your circumstances.  When you say you spoke with "debtline" was that National Debtline or Business Debtline?

Smashingitnow

I don't think you get it. Your attitude is utterly wrong. It's irrelevant how you got the debts, your LTV is irrelevant, your salary is irrelevant and debtline are spot on to tell you to stop spending on groceries and get on top of this. You have debts and you need to either make your monthly payments or come to an arrangement. Stop moaning about your mortgage provider and get a grip.

TheAble

The simple answer is that many lenders, as a policy, don't allow remortgages for debt consolidation. What usually happens is that, because it seems such an easy and obvious solution, the borrower will just get straight back in debt again because they have an underlying spending problem. It's indicative of a bad relationship with money. It's just as well anyway because as others have pointed out you should never convert unsecured debt to secured. You'll just have to do it the hard way! Post an SOA and folks will give some more tailored advice.