In a Real Financial Mess & Don’t Know What to do or How to Cope

Arrianna

Hi,

I’m in so much debt. I don’t know where to start. I’m finding it really difficult reading, responding, meeting deadlines and juggling all the letters I’m getting, I just can’t keep up.  I’m struggling to remain positive about my situation, I really don’t want to lose hope, but I’m due in the county court next month. The solicitor has refused my offer of payment on my mortgage arrears - I’ve been told they will be pushing for 28 days after the hearing to take my property. I can’t envisage being on the streets (not that I suspect anyone really does), I’m just so upset as I only have ~ 3 years left on my mortgage. 

I also have x4 credit cards. I wish I had understood the paradox of defaulting on payments. I have been fighting, scrimping money together to make payments just so that I don’t default! As a result getting myself more and more upset and depressed.

So how did I get myself in this situation? Well I’m self employed and due to a number of factors I now have less money coming in than going out. I’m unable to claim benefits due to my hourly rate being above the minimum wage level and working on average 20 hours a week. I have tried Turn2Us’ benefit checker and I’m not eligible. My income fluctuates so I’m looking for employee work so as to have a more secure reliable income, this in itself is proving difficult…

Just when I thought things were looking up or rather I still had some fight left in me i.e. I would keep to the payment plan that I had proposed to my mortgage provider’s solicitors, I could keep to the payment plans (tight as it might be financially it would not be forever as I’m have the capacity to increate my income moving forward)… I found out this week that two of my customers are unable to keeping me on as they have their own financial difficulties. The precariousness of my situation is getting too much for me to cope with.

I just don’t know what to do and I’m really scared. I want to pay what I owe but need more time and a way of managing things.

If you have managed to get to the end of the above - thank you! I would really appreciate some help, advice or words of wisdom if you have any:

(1) in organising what I should do in preparation for the court hearing (I can’t seem to find legal support)

(2) the best way to deal with my credit card debts x2 cards are about to default x1card is up todate but will likely push me into the persistent debt bracket and x1 defaulted but have been trying to negotiate a payment agreement.

Thank you in advance for any help offered

sourcrates

Hi, well first off you have to stop paying your non priority debts, at the expense of your mortgage, paying credit cards when they are about to take away your home is just utter madness, credit cards are non priority debts, I`m not being harsh here, but pay the dam mortgage first, you need to separate priority debt from non priority.

The card debts simply do not matter, they will default, and likely be sold to the likes of Lowell or similar, who will buy them for pennies in the £, then come after you for the full face value, you just tell them you can`t afford payment at this time due to arrears on your mortgage, come back to me in a year.

Now as regards the court appearance, you should try and come to an agreement with the mortgage lender before this happens, and if you can`t, then be prepared to be able to offer a reasonable deal that the court will find acceptable, in order to stop re-possession.

Citizens advice may be able to help you prepare for court, usually re-possession is the last straw, and courts work with lenders to try and avoid this from happening.

HampshireH

You haven't given any numbers. How much are your arrears? How much are you paying on your credit cards a month.

You've probably done multiple SOAs by now but put one on here people can advise.

However ultimately unless your 20 hours a week self employment was going to be lucrative it isn't sustainable. 

There are jobs out there (we don't know where you are or what your skills are) there is always hospitality work, warehouse work, shop work etc  even if you use it as a stop gap to something you would prefer.

Arrianna

Thank you Sourcrates for the above advice. Yes I understand the difference between priority and non priority debts, at the time I got extremely worried by the credit card letters and until today I did not understand the implications of defaulting. Knowing what I now know about defaulting this will give me more money to pay my mortgage. I will resend a payment proposal to my mortgage provider/solicitor and hope they will agree affordability!

fatbelly

Forget the credit card debts.

Can you afford to pay the contractual monthly instalment (cmi) on the mortgage?

If not, then the judge has to award a 28-day possession order (PO) This does not mean that you have to leave. The lender then has to apply for a warrant, and they may not rush to do that. If you need time to sell the property, tell the judge and the lender. It's usually a better outcome for everyone if the lender can sell in the market

If you can afford the cmi, can you afford something on top of that towards the arrears. If so, the judge may be able to give a suspended PO where you pay cmi plus X, where X is a figure that clears the arrears within the remaining term of the mortgage. And so the PO does not kick in as long as you keep to the arrangement.

The question in your case is whether you could do that in the short time remaining. Most people get into trouble in the early years of the mortgage when there is maybe 20+ years left.

sourcrates

Arrianna said:

Thank you Sourcrates for the above advice. Yes I understand the difference between priority and non priority debts, at the time I got extremely worried by the credit card letters and until today I did not understand the implications of defaulting. Knowing what I now know about defaulting this will give me more money to pay my mortgage. I will resend a payment proposal to my mortgage provider/solicitor and hope they will agree affordability!

Unsecured lenders always make the most noise when you start missing payments because they know they are non priority debts, and that if the money won`t stretch, they don`t get paid, so they make the most fuss, in the hope of scaring you in making payments you cannot afford.

Good luck with the mortgage lender.

Arrianna

Hi HampshireH, 
Thank you for your reply. Sorry not great with acronyms what is a SOA?

sourcrates

Arrianna said:

Hi HampshireH, 
Thank you for your reply. Sorry not great with acronyms what is a SOA?

SOA - Statement of affairs. Basically your income and expenditure, so we can determine what your disposable income is after all essential payments have been made.

fatbelly

The advantage of letting us see your soa is that if there are holes in it we can point them out before your lender or the judge does.

Arrianna

Hi Fatbelly
Very good point you’ve made. Yes I can afford the CMI I restarted paying this last month and can pay it this month. With the loss of customers it may be tight but I need to look at what funds I have again… (plus hope of work via other streams moving forward). I also offered additional payments towards the arrears over the term of the remaining mortgage deal, which I have also been paying. The solicitor did not accept my offer due to affordable but I’m going to write to the lender and let them know with an amended budget (excluding card payments). Hopefully they will accept my offer this time.

Arrianna

sourcrates said:

Arrianna said:

Thank you Sourcrates for the above advice. Yes I understand the difference between priority and non priority debts, at the time I got extremely worried by the credit card letters and until today I did not understand the implications of defaulting. Knowing what I now know about defaulting this will give me more money to pay my mortgage. I will resend a payment proposal to my mortgage provider/solicitor and hope they will agree affordability!

Unsecured lenders always make the most noise when you start missing payments because they know they are non priority debts, and that if the money won`t stretch, they don`t get paid, so they make the most fuss, in the hope of scaring you in making payments you cannot afford.

Good luck with the mortgage lender.

It clearly worked