64k unsecured debt as homeowner. Terrified

Ruralkarl

hi everyone,

I have spent the last few days reading through everything on here and it has helped me feel a little more settled but I still am terrified of the future path.

I have 64k of unsecured debt split between 7 creditors as below

MBNA 13.5k

Zopa 18.5k

Nationwide 19.3k

PayPal credit 6.2k

Youlend 3k

NatWest overdraft 1.8k

Klarna 800

Our monthly income between my universal credit, child benefit and my wife’s wage is 2480 and that leaves us with no surplus whatsoever after paying the bills and putting food on the table, nothing at all for the debts.

I don’t think affordability claims will help as all was taken out whilst I was working.

We are in the fortunate position that a family member has offered to gift us 15k to help clear these debts and I have started discussing doing a full and final IVA via stepchange.

However doing some reading as we have a help to buy loan I feel there is too much risk of a recall when doing an IVA, as this is our family home it must be protected.

From reading here it sounds as if I would likely be better off letting the loans default and starting token payments and then negotiating settlements once these token payments have begun. I do plan on returning to work once I have completed some nhs counselling and when I am in a better place but right now I am unable.

What would be our best move forward, is the IVA risk just a paper tiger or is there a real risk of losing my home that way? The home is jointly owned between me and my wife

tacpot12

I would say that you need to call StepChange on 0800 138 1111, unless you can access to Debt Advice locally. Given your user name, there might be a scheme focused on helping rural communities that would be able to help. I think the main thing at the moment is to keep an open mind about the solution, and talk to a professional.

They will calculate your equity in your home and help create a legally tight plan that keeps your mortgage, and Help-to-Buy loan and home safe.

Good luck with your recovery.

Sncjw

Are you able to do a statement of affairs so we can see whats going out and in?

sourcrates

@Ruralkarl The debt is unsecured, you can just stop paying it until you find work again.

A simple letter to each lender, outlining your situation, should see them put any collection activity on hold.

Tell them you will update them in say 6 months time, you don`t need to do anything else currently.

Your home was never at risk, if all the debt is in your name, and the house is in joint names, the best any of them can do is to obtain a restriction on the deeds, which is nothing to worry about.

I understand these may be troubling times, but look at the facts of your circumstances, there is very little creditors can actually do here.

Ruralkarl

I’ll write up a full soa later but in brief

mortgage 790(on interest only for 6 months then back to full repayment of 1100)

Tv licence 15.45

Help to buy loan 90.42

Water 107

Dual fuel 110

Car payment 204

Kids swimming lessons 35

Car tax 17

Sky band and tv 75

Phone contracts 118

Car insurance 68

Car tax 17

Petrol 150

Food 300

council tax 217

I haven’t included any home maintenance or actual living expenses in there. That just keeps the lights on and food in belly’s. Once those are added on to my budget sheet on stepchange it balances at exactly 0.

I’ve not included any of the debt payments as I have been advised by stepchange to stop paying them

Ruralkarl

https://forums.moneysavingexpert.com/discussion/comment/82173290#Comment_82173290

I’m currently waiting on stepchange drafting team to get back to me but it seems a glacial process.

Thanks for the idea of rural support but I don’t actually live in a rural area it’s just a username I’ve used for ages

Makingabobor2

My first thought on looking at your SOA, is get cheaper phone contracts

Also, why is water bill so high?

Ruralkarl

https://forums.moneysavingexpert.com/discussion/comment/82173359#Comment_82173359

https://forums.moneysavingexpert.com/discussion/comment/82173548#Comment_82173548

Thank you, it’s reassuring to know the house is safe.

Now just need to find a shovel and start digging out of this hole. By contacting them would that slow the defaults down, as by what I’ve seen I want them as soon as possible to freeze interest?

Also should I totally park the idea of a full and final lump sum IVA due to the risk to the help to buy loan?

https://forums.moneysavingexpert.com/discussion/comment/82173548#Comment_82173548

Unfortunately we are both locked in to those contracts. I have no idea why the water bill is so high, we did have a leak that took some time to find I think it may have been that as it jumped up from 60 to that just after

Makingabobor2

https://forums.moneysavingexpert.com/discussion/comment/82173582#Comment_82173582

That's a shame. Maybe once the contract ends you can find cheaper ones. I pay £9 & my DH has one for £8. Both with loads of data, that we never use all of it

Even at £60, that seems high. Maybe look at ways to cut down. We were on water rates till last year & when they wanted to put it up to £100, we had a meter put in. We now pay £37 a month

Ruralkarl

https://forums.moneysavingexpert.com/discussion/comment/82173638#Comment_82173638

sadly that’s after they put the meter in. I think I can apply for their social tariff though whilst I’m on UC which I will be looking at tomorrow. As well as possible council tax reduction

Brie

Your numbers look a bit too round for me to quite think they are accurate. When you do your SOA you should use 2 - 3 months worth of statements to ensure you are getting a good monthly average for things like food and petrol.

It's a good start though. And I'd vote for forgetting the IVA for the time being. They are rarely a good idea for someone on UC.