Stepchange help.

Martin_f

So here’s my story. Ex initiated divorce 6 years ago. I took on the family debt not thinking for one minute she would drag it out for 6 years. 

Been living rent free with my mum ever since.

We finally get to court and the judge decides I have to pay all of the debt out of my share of the house. This isn’t a few quid. It’s 46k. 

So now I’m on my own making minimum payments on credit cards and still paying half the mortgage on a house I no longer live in. 

I can just about pay the monthly fees but that is my entire income gone. Im literally left with nothing.

i probably should have done something sooner but I’m at the point now where £900 is coming out my account on Monday on card fees and only £500 going in. I’m in big trouble. 

The house is up for sale. Although I suspect my ex is doing everything in her power to put off potential buyers. 

Once the house is sold I can clear all debts and have around 20k left. Meanwhile my ex walks away with 100k and everything I’m paying for. 

I’ve contacted stepchange and they recommended a dmp. I’m not sure this is the right option as once the house sells I can instantly clear all the debts. This could be next month or if my ex gets her way 10 years. I just don’t know when it will sell.

If anyone has an opinion I would be very grateful to hear it.

fatbelly

The mortgage will be cleared by the proceeds of the house sale. Normally anything remaining on a jointly owned property gets split 50/50

So the 46k debt - is that nonpriority debt in your name, hers or joint - or a mixture. If a mixture, can you break it down for us?

I don't understand how she will come out 80k better than you.

Basic rule with nonpriority debts is if you can't pay, then don't.

Martin_f

The debt is all in my name. At point of separation it stood at 35k. But I’ve had 6 years of living with no money and had solicitor fees (might as well have flushed that down the toilet) and other living costs

The judge has split it 55/45 in her favour and saddled me with all the debt.

I presume this is because my income and earning potential is a lot more than hers and we have children. I’m fine with that. I understand the children come before me and her housing needs need to be met. 

What I’m not ok with is what I’m supposed to do in the meantime whist the house sells.

fatbelly

Nonpriority debt is things like unsecured loans and credit cards

Priority debt is income tax, rent and mortgage.

You can stop paying nonpriority debt and not a lot happens

If you stop paying priority debt, stuff happens. Having said that, if a house is being sold then you could stop paying the mortgage and it all gets sorted out at the point of sale. Possession action would be unlikely for a year or two, by which point the house should be sold

As your debt appears to be non-priority, you cannot afford the contractual payments, and you have a lump sum coming, I am surprised that stepchange did not discuss full & final settlements as a strategy.

You would need to stop paying and wait for defaults, which would affect your ability to get credit for 6 years, and make sure you are banking where you do not have debt.

In 6-12 months you could start exploring settlement deals and so clear the debt for less than 100%, maybe less than 50%.

ManyWays

Do you hope to be able to get a mortgage soon if the house is sold and your debts are cleared, or will 20k be an inadequate deposit?

sourcrates

Martin_f said:

What I’m not ok with is what I’m supposed to do in the meantime whist the house sells.

Well you stop paying the non priority debts, as advised, creditors of unsecured debts have very little recourse if you stop paying, whilst secured lenders have the equity in your property to fall back on, unsecured lenders don`t have that lifeline, so there is very little they can do if you don`t pay.

Plus the debt collection process can take many months, even years to play out, so you do the sensible thing and work your budget so that you live within your means as best you can, the non priority debts can wait a few years to be sorted out.

By then they will have all likely been sold on and reasonable settlement offers can be obtained.