Asset Rich But With Debt

sparkydjs

Looking to see if anyone has had any previous success in raising finance whilst having multiple debts.

My situation is i have multiple debts totalling approx 40k including one CCJ, all in default, I am employed salary of approx £40k per year and own my house outright with no mortgage worth approx 500k. My credit rating is abysmal so high street lending is not an option, i was curious if there was a way to borrow money to satisfy debts at a reduced settlement and make a little home improvement.

retiredbanker1

I would be careful, very careful. If I was one of your debtors and I knew you had a mortgage free property I would filling in Land registry papers now to put a charge on your house.

In default and CCJ means money lenders who would shoot you in the knee if you didn't repay!

On the face of it sell your property - downsize - pay your debts in full and move on.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6661571/asset-rich-but-with-debt

You earn £40k per year, have no mortgage, no rent and unsecured debts of £40k. That should ordinarily be entirely manageable.

First thing to do is understand where your money is going currently and delay thoughts of house improvement (further debt) until the current scenario is well understood.

Look at the DfW (Debt-free Wannabee) area of this forum and prepare your SoA (Statement of Affairs) and share in the DfW area for comments if you feel able to.

fatbelly

Full and final settlement is a strategy for those who have defaulted debts and a lump sum, just not enough to pay the debts.

As you don't have one, that is not a suitable strategy for you. Hop over to the dfw board and give us some more detail.

Don't think about more borrowing until those ccjs and defaults are 6 years old. The first thing we will do on dfw is to establish you have a budget that will allow you to live without further borrowing. Debts are secondary to that.

Emmia

https://forums.moneysavingexpert.com/discussion/6661571/asset-rich-but-with-debt

Do you know how this debt has arisen? Gambling? Compulsive Shopping? Marriage went south.. Something else?

Personally, if you want to clear it quickly, the obvious route is to sell and buy a cheaper property which would still be mortgage free.

But if you do this, you may also need to tackle the cause of the debt, so you don't end up in a rinse and repeat situation.

MEM62

https://forums.moneysavingexpert.com/discussion/comment/81940253#Comment_81940253

Absolutely this!

saajan_12

Consolidating unsecured debts to a secured debt is never a good idea, but in your case it wouldn't even work short term. Your assets are only useful if they are used to secure the loan, which means some sort of mortgage, but these lenders want you to use income to pay the capital + interest, and repossessing the asset is only a backup plan. So you still need to have a decent credit rating and room in your budget to pay the monthly payments.. if that's where you're struggling then a secured loan won't help.

As others say, step 1 is working out your monthly budget, so the debt doesn't increase and you have something left to pay down the debts.