My situation, any advice appreciated

debtbuster2K5

Hi Andy,

You could write to all of your creditors and attempt to set up an " informal" agreement. Which basically amounts to you writing to all of your creditors, explaining your situation, (If you are thinking of selling the house, then make this clear in the letter) make sure you enclose a statement of affairs (needed for the iva, so may as well get one sorted) and make sure you have considered all of the things I mentioned in my first reply to you.
They are under no obligation to accept your offer, however if they do this could give you the breathing space you require to sell your house.

If you want any further info pm me

Regards

zAndy1

We looked into firstplus and it worked out at a secured loan of approx £84000 at approx £900pm for 15 years (or was it 20yrs) to pay off all our debts including the secured loan. That would mean our mortgage + secured loan would be approx £1700pm , no way is that an option basically

zAndy1

Based on the situation described, if I decided to go bankrupt what effect would it have on my wife? One of the loans (the Tesco one with a bal of £19k approx) is in joint names.

Spendalot_2

Sorry to hear about your situation.

Can you give us some background about how you managed to set in this situation?

How do you (and Mrs Andy1) feel about selling your house?

zAndy1

How did we get into this situation... well to be honest I've spent beyond my means really, having said that we were doing ok until my wife had to give up her previous job last year for health reasons (she was earning nearly 20k in that job). 2 or 3 years ago we moved house, got married, bought a new car and had a baby , pretty much the 3 most expensive things you can do! I was out of work for 8 months starting aug 99 when the IT contract market died a death as everyone waited to see the impact of Y2K.
As for selling, we'd rather not to be honest and I also think we'd struggle to sell it. There have been houses up for sale on our estate for 6 months and even longer that haven't sold, not one house that's gone up for sale around here in the last 6 months has got a sold sign on it. We could price to sell but that wouldn't help pay our debts off at all. I just feel like if I declared myself bankrupt and if I could get someone to buy my share in the property then it's a better option than an IVA as we'd achieve the main thing we're doing an IVA for and that's to keep the house. I presume if I was declared bankrupt they couldn't touch my wife's car as it's in her name? One thing I'm not 100% sure about is whether it's ok to concentrate on paying my wife's debts each month if I'm going to declare bankrupt in order to maintain her credit rating but doing that would obviously be at the expense of my creditors. Without my debt repayments my wife could pay her monthly debt commitments quite easily (including the tesco loan payment that would become her liability). If she decides to pay her credit commitments and the tesco loan payment herself is that allowed or is it seen as preferential treatment to her creditors?

Squiffy

Not sure if this helps, but just a random thought...

If you sold the house (even at a lower quick-sale price), could you use the proceeds to pay off the joint Tesco loan?

Then only you would be affected by bankruptcy, and in theory there should be no risk to your wife.

zAndy1

But the only reason I'd go bankrupt is if we could keep the house, that's the main reason we're considering an IVA. If I went bankrupt we'd pretty much not be able to get a mortgage again, certainly not without getting ripped off. Thanks for the reply though...

Squiffy

Ah sorry, I misunderstood. I thought you had given up on keeping the house by going for bankruptcy.

Spendalot_2

Thanks for the additional info. So ideally, you want to keep the house. To summarise your position, you have a mortgge of £148k (inc secured loans) on a property of £180 ish.

You also have unsecured debts of £68,250. You have around £500 surplus income each month to pay your debts.

If I was in your position (and I have been!), I would contact an agency with the plan of renegotiating minimum repayments with each company, and the hope of getting interest frozen. A friend of mine used CCCS and he used to pay X amount to them every month and they distributed that among the creditors. He was happy with the arrangement and so were his creditors. So you could pay £500 each month.

Although this is quite a smallish amount for the total amount you owe, you would also advise creditors that you are looking at ways of increasing your income.

The secured loans would still be paid along with your mortgage.

I would then look to increase your income. Could the wife work more hours? Your budget is a little tight (No entertaining, clothing or holidays), so the idea would be to give the budget a little fat (a little!), and over time increase the amount you pay to CCCS (or whoever you choose to manage the plan - but avoid those who charge fees).

You must also then become passionate about living within your means, and cutting costs where possible.

This way you get to keep the house, you repay your debts, and you live in the meantime.

I would avoid bankruptcy or a IVA, and only look at this is the above plan fails.

Not so long ago, I was £69k in unsecured debt, with a mortgage of £130k. Very simalar to your position.

Now I owe £33k, still struggle to live within my means, but am getting better every day. Dont despair, with the passion to get out of debt, you can.

Good luck.

zAndy1

Thanks for the advice, the problem is that going down that route it will take approx 15 or 16 years to clear our debts and that's assuming everyone freezes interest and charges. Going down that route also doesn't stop creditors getting nasty and changing their minds later, at least with an IVA they're all legally bound to the terms of it. I reckon we have £400 spare each month to be honest after being a bit more realistic about things which you have to be when committing to those payments long term! The unsecured debts total about £74000 actually.