Confused and in need of advice

magpie01 · 14 May 2018 at 11:37AM

Hi everyone,

I'm just looking for a bit of advice on my current situation which is a little messy.....

So basically I am desperate to move home. I am currently living in a 2 bedroom flat with my wife and two children (boy aged 6 and girl aged 11)
My children currently share a room but my little girl is getting to the age where she really needs her own space.
We bought the flat in 2007 just before the financial crisis hit and also naively took out a Northern Rock together mortgage.
It was bought for 92k and is a leasehold property with approx 60 years left on the lease.
The lease is a huge issue as we can't afford to extend and obviously decreases the value of the property.
Going from recent sales in the area I would guess it would sell for approx 65k. The mortgage currently stands at 75k but as it was a together mortgage we also owe 10k to the unsecured loan.
So as you can see it is already complicated!!

To add to it I am also in an IVA which is in it's 2nd year so my credit rating is not the best.

I'm really just wondering is anyone has been in a similar position and could offer some advice.
I just feel like I'm throwing money down the drain continuing to pay this mortgage whilst the lease continues to decrease. In hindsight I would obviously never have bought this leasehold property or taken out a together mortgage with Northern Rock.

I just don't know what to do though?
I have contemplated handing my keys to the mortgage company but realise that I'd have to repay any shortfall or file for bankruptcy. And if I was to become bankrupt then my wife would also have to or she would be liable for the mortgage.

I really just don't know what to do for the best?! If it was just me affected then I would applied for bankruptcy a long time ago but I want to do whats best for my wife and kids also.

I have attempted to speak to my IVA company about this but couldn't really advise because they don't deal with bankruptcies. I also tried my local CAB and they couldn't advise because I am currently in an IVA so would need to speak to my IVA company.

My head is completely battered and it is so emotionally draining worrying about this constantly.
I'm hoping you kind folks on here might be able to offer some advise or point me in the right direction as I really need to make a decision on what to do.

Thanks

National_Debtline · 14 May 2018 at 12:15PM

Hi Magpie01 and welcome to MSE,

This certainly sounds like a difficult situation, and I appreciate you must feel like you are caught between a rock and a hard place.

I would suggest that you post a SOA (http://www.stoozing.com/calculator/soa.php) to show a few more details, that should help other posters guide you. It may be that bankruptcy is the best option (for you both), and allows you to have the fresh start. If you just hand back the keys to the property, and then try and rent somewhere else, you will have your IVA and the mortgage shortfall to deal with monthly. And whilst that is possible, it isn't ideal.

Bankruptcy would clear the debts, but a key thing here is that you IVA would need to fail before you can go bankrupt (or do any other option) and that may be why you have found it hard to get any advice so far. However, you should be able to get advice now from the free debt charities about the potential options if the IVA were to fail.

Laura
@natdebtline

magpie01 · 22 May 2018 at 1:10PM

Thanks Laura and apologies for the delayed response.
I'll get a SOA sorted and post as soon as possible.

I just want to make sure that I come up with the right solution really.
You hit the nail on the head and we really just feel like we need a fresh start. I personally have made a few bad financial decisions in the past which is why I have the IVA but with the flat and lease it just feels like we are trapped in the property currently.
Even if bankruptcy is not the answer we still need to figure out the best way to move forward.

Many thanks again.
Steven

KeepOnKnitting · 23 May 2018 at 8:03AM

I may be coming at this from the wrong angle, but is there any chance of making a separate room for your daughter? Could you put up a stud wall to create two tiny rooms? I know it isn't an ideal soution, but we aren't in an ideal world.

I too made the mistake of a together mortgage on a flat that became unsellable, and it cost me bankruptcy. Fingers crossed for a workable outcome for you.

Confused and in need of advice

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