Divorce & Debt

silvur

Hello, I’m not sure if this is in the right category but I’m looking for some advice regarding my current situation.

The last 3 years have been difficult to say the least.
in 2022 I was in a well paid job, married & a homeowner with mortgage.
I got depressed & became reckless with my money. 
My wife left me in January 2023 & I left the family home to sofa surf.
By this time, I was over my depression & back on the right path so was doing a lot of overtime to attempt to pay off some of my debt.
In May of 2023 my ex abandoned the family home & left me there with our 2 children & mortgage arrears.
As I was paying all of my wages into my debt I had to borrow money to pay the mortgage arrears. I have a health condition that is affected by stress & ended up losing my job in November 2023.

Since then, have accumulated approx £55k of debt due to having to keep up with the mortgage & bills in family home whilst on universal credit (£1100pcm).
I was issued a CCJ for £25k in April 2024. Which I currently have agreed a token payment of £50 per month until I’m in a better financial position.

The house has been up for sale since March 2024.
It is currently sold stc.
I am expecting around £60k from the sale of the house.
With this money I could clear all of my debt, but will be left with nothing.

I have sought advice from stepchange.org but my debt was too high for them to help, apparently. They said asking for breathing space or bankruptcy was my best bet due to being unemployed.
Im in the process of starting agency work that I may or may not be able to do as my health condition hasn’t got any better but obviously need to try, as I am looking at homelessness following the house sale.

Is there any viable way of applying for bankruptcy without losing my equity or do I need to accept that the money from the home will settle the debt & start over?

I already have the CCJ, so my credit is terrible & bankruptcy won’t make much more difference. I can’t rent anywhere & the council aren’t interested in putting me on the housing register because I’m a home owner. 

Any advice would be great. If you need anymore info let me know.

RAS

It's water under the bridge, but wish you'd come here in May 2023. There are a lot of different threads here.

You might get better help on the main DFW forum? And talking to a specialist charity about other benefits and your health situation, particularly if you struggle with work.

You haven't explained the situation regarding the children? Are they adults who are going to have to find their own accommodation or will they live with you? Because you have to find accommodation whether it is just you or the family. Even if it's lodging with someone who has a spare room?

Obviously, once you get the £60k, unless you are buying a new property, you will have to declare it to DWP, so will lose benefits. They'll expect it to reduce over time in line with essential spends, which allows only for essential debt repayments. If you are at risk of job loss again, I'd try and hang on to as much as possible. 

Also if the house is going, what's happening to the contents? Even if it's only clothes, cooking year and more expensive items, can you store stuff anywhere? For other stuff, car boots etc to get some cash? 

Carry on paying the CCJ as you have been. Do not pay it off unless you have clear guidance that you'll not find yourself penalised if you need benefits.

Work out a proper Statement of Affairs, accepting that you'll need to revise it repeatedly over the next few months. Put the maximum (£16k I believe) into an ISA account that accepts occasional withdrawals but isn't instant access as an emergency fund.

Presumably a lot of the other debts have already got defaults? I'd suggest making small payments towards those. What you want is to find your debts sold on and be able to settle for a discount in a couple of years.

Mean-time concentrate on improving your accommodation situation, looking after your health and seeing what work you can do.

gwynlas

Sorry to hear of your problems

You would be wise to hang on to as much of the money as you can as if you fail to get housed by the council with a bad credit record you might also have difficulty privately renting.

One way you might be able to get around the issues of credit score and referencing is to pay six or twelve moonths in advance.

silvur

RAS said:

It's water under the bridge, but wish you'd come here in May 2023. There are a lot of different threads here.

You might get better help on the main DFW forum? And talking to a specialist charity about other benefits and your health situation, particularly if you struggle with work.

You haven't explained the situation regarding the children? Are they adults who are going to have to find their own accommodation or will they live with you? Because you have to find accommodation whether it is just you or the family. Even if it's lodging with someone who has a spare room?

Obviously, once you get the £60k, unless you are buying a new property, you will have to declare it to DWP, so will lose benefits. They'll expect it to reduce over time in line with essential spends, which allows only for essential debt repayments. If you are at risk of job loss again, I'd try and hang on to as much as possible. 

Also if the house is going, what's happening to the contents? Even if it's only clothes, cooking year and more expensive items, can you store stuff anywhere? For other stuff, car boots etc to get some cash? 

Carry on paying the CCJ as you have been. Do not pay it off unless you have clear guidance that you'll not find yourself penalised if you need benefits.

Work out a proper Statement of Affairs, accepting that you'll need to revise it repeatedly over the next few months. Put the maximum (£16k I believe) into an ISA account that accepts occasional withdrawals but isn't instant access as an emergency fund.

Presumably a lot of the other debts have already got defaults? I'd suggest making small payments towards those. What you want is to find your debts sold on and be able to settle for a discount in a couple of years.

Mean-time concentrate on improving your accommodation situation, looking after your health and seeing what work you can do.

Thank you so much for your helpful response.
I wish I had come here sooner, too. I was too caught up in the stress of everything else & should've sought more advice.  
I thought stepchange & citizens advice was basically the best advice I could get, without paying.
I did contact the debtors regarding the CCJ notice explaining my current situation etc & they still enforced a CCJ. I didn't know the process of what happens...

What is the DFW forum? I have not heard of it. I have attempted to claim PIP, for my health but I did not understand the process of application & ended up getting awarded nothing. Since then, my health has worsened & I am now receiving LCWRA which is £350 per month. Which, still doesn't cover my expenses.

The children are 8 & 11, they live with me for 2 weeks out of a month. Moving forward, they may have to live with their mother until I can figure out where I'm going to live. This situation is less than ideal as my ex lives with her parents & the accomodation isn't particularly suitable. Not to mention, my 11 year old is currently out of school, receiving mental health therapy & under CAHMs referral for potential autism diagnosis. My ex is a narcissist, hence my depression in 2022 & my son unfortunately, also suffered the effect of her abuse, once we separated.

I'm actually in a relationship now & my partner & I would be looking to find somewhere together but obviously with my credit & debt it may be difficult. So, was thinking of her renting a small place/apartment & me basically lodging there until I can sort my credit & get a bigger place together. Failing that, I can probably live with my dad, but he lives 2 hours away from my children. 

We have 2 dogs here, also. Seems like the only option for them is rehoming which, is awful considering it's just more loss for the children to deal with.

So, even if the money from the house was put into clearing my debt & I had nothing left DWP would still take my UC away? I still currently am unemployed, going through the processes of being hired but with DBS checks etc it takes time.

The majority of the house contents will be sold, stored or disposed of. I have already started doing this. But this is a very minor issue for me right now, in the scheme of everything else.

Is an ISA the best place to put £16k, do you think? 

All of the debts are defaulted & been sold on already. I have had 25% offers on a couple, but cannot pay them currently. I just keep asking for more breathing space, as they seem to only give me 30 days at a time.

silvur

gwynlas said:

Sorry to hear of your problems

You would be wise to hang on to as much of the money as you can as if you fail to get housed by the council with a bad credit record you might also have difficulty privately renting.

One way you might be able to get around the issues of credit score and referencing is to pay six or twelve moonths in advance.

I do doubt that the council will house me as I had spoken to them previously regarding my situation over a year ago. They did not seem to care that I was trying to avoid homelessness by applying for future housing & would rather see me homeless, before they can do anything to help.

I would probably look into doing 6-12 months in advance, if my partner cannot afford to rent somewhere on her own. I have had multiple estate agents write me off immediately purely because I have the CCJ.

RAS

Thanks for your reply and hope things get better. Step change isn't a bad place to start with debt advice, but they sometimes prioritise those in debt rather than heading that way.

MSE had a huge number of forums.

You are on the bankruptcy subforum. If you go back to Home, as part of this Reduce debt and Increase Income forum there is a debt free wannabee sub-forum. Good for advice if you've got debt and can't be made bankrupt. Also has a sub-forum for people wanting to chart their journey. 

From Home you can also go to Work and Benefits, which might help you understand benefits. Some of those posting are advisors so can be less empathetic, though factually the information is correct which makes it useful. There are others who explain how to understand the PIP descriptors. Even reading it is useful.

You might want to ask what happens if you use a capital sum to pay off non-essential debts? And check if it's a CCJ? It is important you know the current rules. I do know someone who got an inheritance was advised that paying lump sums towards non-essential debt could be deprivation of assets, but rules may have changed. Maybe read through, identify someone who seems informed and DM? Going on a modest holiday is OK.

If you can pay lump sums, then target the ones offering discounts and bargain lower. 

There's also a Mortgages Homes and renting forum with a subforum on buying and renting. Again, some advice on renting outside the agency market.

If you want to share accommodation with your new partner, lodging would be one way to sort out the practicalities. 

sourcrates

Moved to more appropriate board.

silvur

RAS said:

Thanks for your reply and hope things get better. Step change isn't a bad place to start with debt advice, but they sometimes prioritise those in debt rather than heading that way.

MSE had a huge number of forums.

You are on the bankruptcy subforum. If you go back to Home, as part of this Reduce debt and Increase Income forum there is a debt free wannabee sub-forum. Good for advice if you've got debt and can't be made bankrupt. Also has a sub-forum for people wanting to chart their journey. 

From Home you can also go to Work and Benefits, which might help you understand benefits. Some of those posting are advisors so can be less empathetic, though factually the information is correct which makes it useful. There are others who explain how to understand the PIP descriptors. Even reading it is useful.

You might want to ask what happens if you use a capital sum to pay off non-essential debts? And check if it's a CCJ? It is important you know the current rules. I do know someone who got an inheritance was advised that paying lump sums towards non-essential debt could be deprivation of assets, but rules may have changed. Maybe read through, identify someone who seems informed and DM? Going on a modest holiday is OK.

If you can pay lump sums, then target the ones offering discounts and bargain lower. 

There's also a Mortgages Homes and renting forum with a subforum on buying and renting. Again, some advice on renting outside the agency market.

If you want to share accommodation with your new partner, lodging would be one way to sort out the practicalities. 

Thank you for your response. 

I am pretty up to scratch with benefits now but with regards to PIP I will look into the sub forums & do some reading.

My partner suggested buying out my ex wife's half of the equity & taking on the house but I think with my CCJ I'm not going to be able to remortgage anywhere. Would this be accurate?

I'll check out the mortgages section, too. Thank you

silvur

Do you think, now I’m with my partner & am employed that maybe there was a chance we could put off the sale of the house & continue to live here with plans to buy out my ex wife at some point? 

silvur

I guess not 😞

JadedAngel88

I can't help with your questions but hopefully some of the regulars will respond.

My reply will bump it back up to the top of the board.