Neck deep in debts

tylery

Hi i am neck deep in debts and I can't service the debts anymore i have about £70k in credit cards and loans. I was hoping to start a side hustle but that did not go as planned. I have a mortgage and i haven't missed any payments on it. I want to make a new start and bin every credit card that i have and never fall into this trap again. 

Several questions

(1) I was thinking of defaulting on these debts and then negotiating a payment plan. Like paying £20 or so  a month

(2) does this affect my mortage renewal if i stick with the same provider.

(3) Will i be forced to sell my house to pay these debts although they are unsecured debts

Thanx

Roger-D

Personally, I'd look at selling the house and downsizing / moving and using the equity to pay off the debt.
DO NOT imo, default on any payments or declare Bankcruptcy etc. It will slap your record and you'll struggle to get a loan, a mortgage or even a rental in the future.

Emmia

How much equity is in your home? How have these debts arisen?

Perhaps you could post a Statement of Affairs to help forumites see if there are ways of you paying off your debts rather than bankruptcy or needing to sell your home.

 https://www.lemonfool.co.uk/financecalculators/soa.php 

Fill it out, then format for MSE before pasting here. 

13thlegion

Roger-D said:

Personally, I'd look at selling the house and downsizing / moving and using the equity to pay off the debt.
DO NOT imo, default on any payments or declare Bankcruptcy etc. It will slap your record and you'll struggle to get a loan, a mortgage or even a rental in the future.

This advice on contrary to the well trodden path often recommended on this forum. This sticky thread explains in detail. https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps/p1

Answers to the OPs points.
1. Solid plan please read the link I posted above.

2. Not massively as they won't do a credit check.

3. No you will not be forced to sell the house.

enthusiasticsaver

tylery said:

Hi i am neck deep in debts and I can't service the debts anymore i have about £70k in credit cards and loans. I was hoping to start a side hustle but that did not go as planned. I have a mortgage and i haven't missed any payments on it. I want to make a new start and bin every credit card that i have and never fall into this trap again. 

Several questions

(1) I was thinking of defaulting on these debts and then negotiating a payment plan. Like paying £20 or so  a month

(2) does this affect my mortage renewal if i stick with the same provider.

(3) Will i be forced to sell my house to pay these debts although they are unsecured debts

Thanx

I would start with doing an soa so we can advise appropriately. There is a link in my signature.

Do not prioritise unsecured debt repayments over secured and you should not have to sell your house. A bad credit record is not the worst thing in the world if you have defaults as borrowing more usually leads to higher debt.

You can renew your mortgage with your current provider even if on a DMP. 

My advice for now is to default on the debts if you cannot make minimums and cut the cards up and save an emergency fund. Check the first steps debt thread for more advice and get an soa up on here. 

fatbelly

The answers that 13thlegion gave to your questions a, b and c are correct.

In the longer term you need to develop a plan that gets you free of the nonpriority debts without affecting your property. I wonder why you have suggested a dmp at £20 per month as surely you could afford more than that. Were you thinking of a low payment dmp and saving on the side to make full & final settlement offers down the line? That would make sense.

The other strategy is the one that I'm not a big fan of, which is an IVA. You do have enough debt for one, and an asset to protect. The devil is in the detail and if you post a soa we can help further

tylery

Emmia said:

How much equity is in your home? How have these debts arisen?

Perhaps you could post a Statement of Affairs to help forumites see if there are ways of you paying off your debts rather than bankruptcy or needing to sell your home.

 https://www.lemonfool.co.uk/financecalculators/soa.php 

Fill it out, then format for MSE before pasting here. 

Not planning on selling the house i have family. Will post an SOA. Thx

tylery

13thlegion said:

Roger-D said:

Personally, I'd look at selling the house and downsizing / moving and using the equity to pay off the debt.
DO NOT imo, default on any payments or declare Bankcruptcy etc. It will slap your record and you'll struggle to get a loan, a mortgage or even a rental in the future.

This advice on contrary to the well trodden path often recommended on this forum. This sticky thread explains in detail. https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps/p1

Answers to the OPs points.
1. Solid plan please read the link I posted above.

2. Not massively as they won't do a credit check.

3. No you will not be forced to sell the house.

Ok will do so. Can the creditors put a Charging Order on my house.

sourcrates

tylery said:

13thlegion said:

Roger-D said:

Personally, I'd look at selling the house and downsizing / moving and using the equity to pay off the debt.
DO NOT imo, default on any payments or declare Bankcruptcy etc. It will slap your record and you'll struggle to get a loan, a mortgage or even a rental in the future.

This advice on contrary to the well trodden path often recommended on this forum. This sticky thread explains in detail. https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps/p1

Answers to the OPs points.
1. Solid plan please read the link I posted above.

2. Not massively as they won't do a credit check.

3. No you will not be forced to sell the house.

Ok will do so. Can the creditors put a Charging Order on my house.

It`s theoretically possible yes, but as a rule of thumb, if your repaying your debt via debt management, then they won`t bother going to the expense of legal action, obtaining a CCJ, then applying for a CO.

Should that happen, as long as DMP payments are maintained, no further action is possible.

If the house is jointly owned, but only one of you is the debtor, any CO will just be recorded as a restriction.

Yours may be one of the rare cases where an IVA might be suitable, 70k plus of debt, an asset to protect, maybe worth looking at, an IVA provides you with legal protection against any enforcement action by your creditors, so your house remains 100% safe.

tylery

sourcrates said:

tylery said:

13thlegion said:

Roger-D said:

Personally, I'd look at selling the house and downsizing / moving and using the equity to pay off the debt.
DO NOT imo, default on any payments or declare Bankcruptcy etc. It will slap your record and you'll struggle to get a loan, a mortgage or even a rental in the future.

This advice on contrary to the well trodden path often recommended on this forum. This sticky thread explains in detail. https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps/p1

Answers to the OPs points.
1. Solid plan please read the link I posted above.

2. Not massively as they won't do a credit check.

3. No you will not be forced to sell the house.

Ok will do so. Can the creditors put a Charging Order on my house.

It`s theoretically possible yes, but as a rule of thumb, if your repaying your debt via debt management, then they won`t bother going to the expense of legal action, obtaining a CCJ, then applying for a CO.

Should that happen, as long as DMP payments are maintained, no further action is possible.

If the house is jointly owned, but only one of you is the debtor, any CO will just be recorded as a restriction.

Yours may be one of the rare cases where an IVA might be suitable, 70k plus of debt, an asset to protect, maybe worth looking at, an IVA provides you with legal protection against any enforcement action by your creditors, so your house remains 100% safe.

I read this on beat my debt...

"A disadvantage of a debt management plan is it doesn’t give you any legal protection from your creditors. This means they can still take further action to enforce their debt even after the Plan is in place.

One of the options available is to apply to secure their debt against your property with a Charging Order.

Where a Charge is granted, the creditor can’t force you to sell your house to pay the debt, but they can then add interest (normally at 8% per year). This will significantly increase the debt over time so it will then be in your interest to repay it as soon as possible.

High street lenders (banks and credit card companies) will not normally take this type of action after a DMP is in place. However, some creditors are known to do so. In particular these include business loan providers and debt purchasing companies" 

So is this correct that a CO can be applied even when DMP is in place. We have a severely disabled child that we look after...thats why i am more worried about the house.

fatbelly

I don' t know what Beat my Debt is but that's very skewed advice. More wrong than right

You will get better advice on here and if anyone does post something odd other will correct it quickly

Edit: they are IVA pushers.

Let me say that if an IVA turns out to be your best option we would signpost you to Stepchange and not one of the myriad scammers out there