Scared of Debt, Divorce & Losing My Home – Please Help

claireizadiamond

Hi everyone,

I’m really hoping for some guidance and reassurance because I feel completely lost right now.

A bit of background:

• I went through a divorce recently and bought a new home for me and my little girl.

• Not long after, I lost my job due to a mix of anxiety, depression and then breaking my ankle (I had surgery, so I’ve been out of action for a while).

• I’m currently on Universal Credit (LCWRA) and ESA, so my income is limited.

My main worry is my debt and keeping my home. I have £12,588 in credit card debt and I’m terrified about what will happen when I come to remortgage in 4 years’ time. Right now I can’t sleep, I feel sick all the time, and I’m scared of everything falling apart.

I don’t want to lose my home, but I also don’t know if I should be doing something now to prepare for the future. Should I be looking into a Debt Management Plan, or would that affect my mortgage chances later?

Any advice, guidance or even just reassurance would mean the world to me. I feel very alone in this and I’m not sure where to start.

Thank you so much in advance.

📋 Statement of Affairs (SOA)

Household Information

• Adults in household: 1

• Children in household: 1

• Cars owned: 1

Income (Monthly)

• Universal Credit £688.00

• ESA: £368.20

• Child Benefit: £104.20

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Monthly Household Costs

• Mortgage: £559.83

• House Insurance: £20.41

• Life Insurance: £0 (none currently)

• Council Tax: £0 (not sure why but I currently pay no Council Tax)

• Phone: £17.69

• Water: £55.20

• Virgin (internet): £30.00

• Gas/Electric: £85.00

• Car Insurance: £86.61

• Road Tax: £17.06

• Amazon Prime: £8.99

Monthly Living Costs

• Food & household shopping: £200.00

• Birthdays/Special Occasions: £0 (set aside as needed)

• Christmas saving: £150.00

• Petrol/Transport: £80.00

---

Debts 

• RBS Credit Card 3073 – £20.00 min payment

• RBS Credit Card 0345 – £5.24 min payment

• RBS Credit Card 9927 – £77.00 min payment

• Fluid Credit Card – £154.00 min payment

• Halifax Credit Card 0124 – £15.00 min payment

• Halifax Credit Card 1425 – £5.00 min payment

• Barclaycard – £5.11 min payment

Grumpelstiltskin

OK Firstly if you stay with the same mortgage provider when you will not be credit checked so no problem just don't try and go with a different provider.

If you can't afford to pay your unsecured debts just stop paying them and let them default.

Do not try and make debt payments before they default, it's the wrong thing to do.

The main thing is not to panic or get upset, they are thousands of people in the same position and there will be a way out.

claireizadiamond

Grumpelstiltskin said:

OK Firstly if you stay with the same mortgage provider when you will not be credit checked so no problem just don't try and go with a different provider.

If you can't afford to pay your unsecured debts just stop paying them and let them default.

Do not try and make debt payments before they default, it's the wrong thing to do.

The main thing is not to panic or get upset, they are thousands of people in the same position and there will be a way out.

Thank you, I will try. I am just not used to all this, I used to have someone I could talk things through with but now its just me trying to hide things and make sure my little girl knows there is nothing wrong

fatbelly

How are you paying your mortgage at the moment?

How long before you expect to be back working?

Are you aware of SMI?

https://www.gov.uk/support-for-mortgage-interest

It's not a great scheme but could be useful if you get to the point of being on UC for 3 months

Brie

I agree with @Grumpelstiltskin that you should stop paying your debts.

you also need to ensure you know that you do not need to pay council tax as they can get quite agressive if you do owe money.  likely it's something to do with the UC etc that you have been put on a zero band but you should ensure you have that in writing somewhere.  

And have another look at your monthly living expenses.  No one has precisely £200 a month for food.  See what your recent bank/credit card statements show you have been spending.  You need also to have a good idea of what you spend on birthdays and not just guess at the time - you need to budget.  And £150 a month saved for Christmas?  No.  £10, ok, or maybe a bit more.  You can't afford to be that lavish.  

You say you don't want your little girl to know anything is wrong.  I quite understand.  But at some point she will point at something and say she wants it and you'll have to say no.  At some point you will need to explain that you can't be as free with money as you like.  

And maybe you should ditch the Amazon prime?  It's not a lot of money but it seems like money you need for essentials.  Unless you are using that instead of having a TV licence as you aren't watching live TV at all?  

Isthisforreal99

Grumpelstiltskin said:

OK Firstly if you stay with the same mortgage provider when you will not be credit checked so no problem just don't try and go with a different provider.

Only if the OP can maintain the current monthly payments and not to be alarmist that doesn't look viable even in the short term unless there us entitlement to more benefits or a job on the horizon.

Some things I wouldn't just stop paying as suggested, car insurance unless OP cancels and puts car off the road. 

WillowLeaf

Couple of questions to the people who know more about this sort of thing than me...

1) why is it a good idea to default on debts? does that not being court cases and bailiffs?

2) Is it a good idea to speak to the banks and see if they will agree a smaller payment plan and/or write off some debt?

Grumpelstiltskin

WillowLeaf said:

Couple of questions to the people who know more about this sort of thing than me...

1) why is it a good idea to default on debts? does that not being court cases and bailiffs?

2) Is it a good idea to speak to the banks and see if they will agree a smaller payment plan and/or write off some debt?

1) If you start making payments before defaults they are marked Arrangement to Pay,  Defaults disappear after 6 years ( England or Wale, 5 years if Scotland ) even if you don't repay a penny. Arrangement to Pay don't disappear until 6 years after the final payment, so if it takes 5 years to repay it takes 11 years for it to disappear.

Only a very small percentage get as far as a CCJ then often only if you have ignored payment requests, and forget bailiffs for consumer debt.

Never speak to the banks all they are interested in is getting as much money as possible from you.

claireizadiamond

Thank you all so much for taking the time to reply it means a lot right now when I’m feeling so overwhelmed and scared

To answer some of the points raised:

• At the moment, I am just about managing to keep up with the mortgage (I pay that and anything else for my little girl before anything) because I’m so frightened of losing the house. That’s my biggest worry, especially when it comes to remortgaging in 4 years’ time.

• In terms of work, I honestly don’t know when I’ll be able to return. I’m dealing with anxiety, depression, and recovery from my broken ankle, so it could be a long while yet. Ideally I would like to work for myself although I am not sure doing what.

• I’ve heard of SMI (Support for Mortgage Interest), but I am not sure about whether it will look bad when I come to remortgage 

• A couple of you mentioned letting unsecured debts default. That honestly terrifies me — I worry about court, CCJs, bailiffs, etc. Is that something that usually happens quickly, or is there more of a process before it reaches that stage?

• I will go back through my statements and spending to get a proper picture. Food and subscriptions are two areas I know I can probably trim down.

I really appreciate the different perspectives. I know I need to face this head-on, but I’m still learning what the best and safest route is, so any experiences with dealing with creditors or SMI would be so valuable.

Thank you again for the support  it really helps me feel less alone in this x

Grumpelstiltskin

Please stop worrying about mortgage renewal, as I have said just go with your current provider and nothing will be checked. You can usually a few months before the remortgage is due just go on to their website and the new deals will be visible

Read what I said to Willow, any CCJ and only a small percentage of debts get to that would have payments set at an amount you can afford and forget bailiffs, it just doesn't happen.

RAS

Forget bailiffs for Consumer debt, it doesn't happen.

What's worrying is that because you aren't paying Council Tax, you can't claim Council Tax Rebate. When did you move in? Did you contact the Council to tell them?

Non-payment of Council Tax tends to result in large bills for the rest of the year and you won't be able to back-date the Rebate claim.

Please speak to Citizen's Advice locally. They will know local policies and rules (they aren't constant across the country).

And mean-time, try www.turn2us.org.uk and their benefits checker.

What's the situation with child support? Is your ex paying?