What to do about loan debt

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82096589#Comment_82096589

The main thing I'm trying to do is find a way where it will have minimal impact in the future. I'm very actively trying to turn things around and hoping it will. So I don't want to create a mess that might have a negative effect on us for 6+ years due to credit getting destroyed in the process. I know that might not be an option but as I don't know much about the debt management area, I wasn't sure if perhaps there was something, I just didn't know about it.

If nothing can be done about the debts, then it looks like we will need to sell our house to pay them off and then go into renting while things turn around. It's just that process can take months - year +. That's going to be too slow as we cannot pay these debts now. It's like being between and rock and a hard place!

RAS

Why on earth do you think you need to sell the house! I'm not going to apologise for the exclamation mark.

If your fix ends in 2 months

1. Log into your mortgage account and select the new fix.
2. Get a new basic bank account with anybody other than Lloyds and Amex, if you currently bank with either.
3. Stop paying Lloyds and Amex now.
4. Move(manually) essential DDs over to the new account. Cancel the other DDs.

The sky won't fall in. A few calls, texts and emails. Amex can be a bit more of an issue but otherwise it'll be 6-12 months before much happens. And it may never happen.

Do read letters as anything important has to be sent snail mail.

ManyWays

Because I am now looking for work and the equity in the house is sort of at the maximum to loan ratio, I don't think I can take any money out of the house as I don't have the income to provide and show to get the rest on loan.

That is correct. I just wanted to be clear that you CAN get a new fix from your current lender who will not look at your affordability or how bad your credit record is.

So securing the consumer debt is not an option; but it would have been a very poor option even if it was possible.

Here a debt solution that will harm your credit record does not put you in a worse position. If the house is a suitable size for you and in a suitable position, keeping the house is a normal aim of debt advice. You need to look at your debt options and also perhaps talk to Business Debtline

Business Debtline Debt advice | Free Debt Advice and Support | Business Debtline

about the likelihood of being able to turn the business around.

If the house is not really suitable, then you should consider selling it asap.

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82096894#Comment_82096894

The issue with selecting the new fix (if there is one), is that I will be tied into another fixed term which I cannot get out of and IF things take longer than expected to turn around and it turns out I need to sell the house to settle the debts I'd get hit with an early exit fee.
This is why I may need to sell the house if nothing can be done about the debts without destroying my credit history in the process. As mentioned previously, IF I do manage to turn things around relatively soon and it's within the possibilities, I'd like to avoid a damaged credit file so it doesn't negatively effect us for 6+ years. For example if we wanted to move to a house with more space (which we really need to).

I know I don't have a ton of options and maybe it's just pick the least worst option. I just want to know what's the best course to take with the least impact.

(exclamation marks are fine by me lol)

ManyWays

What makes you think you can turn this situation around? Try and convince us, as at the moment it sounds like a big mess and getting worse every month.

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82097406#Comment_82097406

I'm actively looking for work while also trying to turn the business around. If I manage to find work, that will help out greatly with the situation. I don't know how long that will take though which is why I have to prepare in case it takes a long time.

RAS

You've got a lot of plates spinning and multiple potential plans but haven't given any numbers.

Your current fix ends in 2 months.

If you don't select a new fix, to what rate does your mortgage revert? And how much will that cost you over the next two years, total?

If you select the best next 2 year fix, what would the cost be over the next two years? Now add the cost of the early repayment penalty after 1 year. What's the total cost? IRL you would of course have diverted year 2's mortgage to rental payments.

Ask a couple of local estate agents how much it would cost monthly to rent your existing house. Not the one with more space, just what your already occupy.

And ask what price they would expect for your existing house and look at sold prices locally. Whilst you are at it, also ask how long houses are taking to get an acceptable offer and to complete.

The reason for those is that here houses are not selling. There was one completed this year. Those put on the market last autumn or after New Year are still on the market, although one landlord has reverted to rental after trying to sell for the last 9 months. He reduced the sale price and advertised for rental as an alternative. It was occupied within weeks.

Before you make choices, or reject choices, you need to know if they are viable options.

Shadyocuk

The time to worry about the long term effects on your credit history was before you took out the loan to pay for the car/help pay the bills , that time has passed.

You need to be realistic that selling the house is just likely to make you homeless , how will you rent if you cant prove you have sufficient income? How much equity would you actually have after estate agent and solicitors fees , paying your debts off and providing a rental deposit? (you state you have a high LTV , so not much equity to start with).

Your top priority should be to keep a roof over yours and your dependents heads , not to worry about what potential impact that has on your credit history.

You really need to post a SOA.

Smudgeismydog

Most fixed rates are portable, so if you do fix with your existing lender and need to move house whilst you are still on the fix, then you can simply take the fix with you. If you sell the house as a result of not being able to address your outstanding credit, and move into rented, it’s going to be very hard to get back onto the property ladder.

I would suggest you turn all your efforts to finding an employed position, it might not be a great career move right now, but it’s universally agreed it’s easier to find a job when you already have one. So even if it’s not exactly what you want to do, it doesn’t mean it’s forever. I think you need to leave thoughts of rebuilding the business on the back burner for now.

As others have suggested, please post an SOA, which will give us a much better picture of your overall position, so we can provide more detailed guidance.