I need a backup plan!

AdamR_3 · 2 March 2005 at 5:07PM

Hi all, glad I found this forum!

Hope someone can help

Here is my situation:

I am 25, I live in sussex, I have been unemployed for 2 years (my own choice), I own a flat with approx 70k equity in it.

I am currently days away from exchanging contracts (there have been some last minute niggles), and my plan is, that once completed, I will go travel.

However, I also have approx 45k of debts in the form of 4 loans (1 secured), and 5 credit cards.

I basically quit work 2 years ago due to personal problems, and have lived beyond my means since. I have been using credit cards and loans to pay for other credit cards and loans, im sure we all know that story!

I am at breaking point, my outgoing JUST on my mortgage (interest only part) and loands/cc's is nearly 1300 per month.

If the sale doesnt go through, I will basically be forced to default on payments, get a job etc.

This is what my question is:

What is the worst that can happen? All my loans and cc's are with bigger companies like cahoot, natwest, egg, mint, mbna, barclaycard...

I mean, I default, I cant pay them, what will actually happen? will bailiffs be knocking at my door? will I be going to court?

The mortgage and secured loan I will obviously prioritise, I would hate to lose my home, and obviously I would get a job, but I simply couldnt get a job that pays the sort of money needed to actually pay things off, my previous job was as an IT manager with 1200 take home, which wouldnt even cover my debts, let alone my bills.

I've done things like prioritise my debts with the highest interest rates, and I do want clear them, it's just what will happen in the mean time im worried about!

This is of course if the flat sale falls through (wish me luck!)

Thanks in advance,
Adam

AdamR_3 · 2 March 2005 at 6:26PM

I'm selling the flat.

Charlton_Taz · 2 March 2005 at 6:28PM

Best plan for you....is get some sort of job regardless!!! Some money coming in is better than none! How can you expect to keep living as you currently are with no job! You need to match your lifestyle to your income!

AdamR_3 · 2 March 2005 at 6:31PM

Charlton_Taz wrote:

Best plan for you....is get some sort of job regardless!!! Some money coming in is better than none! How can you expect to keep living as you currently are with no job! You need to match your lifestyle to your income!

If the flat sale goes through, I will be able to pay everything off and still have enough for me to go travelling, please dont judge me on that, it's something I want to do, and I really dont see the need to be hostile towards me.

I'm talking about if the flat sale doesnt go through, and the fact that whatever job i go for will not pay me enough to cover my debts, even if i work days and evenings.

As for my lifestyle, I dont have one, believe me. It's just existing debt. I dont lead an extravegant lifestyle at all, my lunch today was 8p asda noodles.

SomeOne_2 · 2 March 2005 at 6:48PM

Not judging you or being hostile here...
but if you do get a job then at least you'll be able tohave a better lunch than 8p asda noodles, plus you'll also have extra spending money for travelling!

Malestrom · 2 March 2005 at 7:49PM

You are currently living a very dangerous lifestyle and I would have to agree that getting a job, no matter how much it pays, is the only option. I'm assuming that you're worried because the cards are all close to or at their limits and the money from the loans has all but dried up? As you say, if the sale goes through then you'll have enough to pay your debts and go travelling. If not then you could be in big trouble. You need income to even be able to think about a debt management plan and with bankruptcy you would lose your flat. I'm sure you already know all this.

As another poster mentioned, the income from a job would at least provide you with decent food while your waiting for completion. I hope your sale goes through quickly!

AdamR_3 · 2 March 2005 at 8:09PM

Hi malestrom,

I totally agree about getting a job, I have no issues there, I will get one if the sale falls through. We should of exchanged tomorrow but a problem has arisen down the chain but (apparently, soliticors eh) it isnt terminal. All things going well, should complete next week, I'll be home dry then.

If not, I will get a job, earn what I can, my question (sorry if i wasnt clear) is what is the worst that can happen in terms of me not paying my cc's/loans. Do they have the ability to take my home from me if i cant (which I wont) keep up repayments.

I've seen in another thread about a free debt management company, which looks as though it could save the day.

Malestrom · 2 March 2005 at 8:41PM

If you were unable to pay the mortgage and the secured loan, then yes, you could quite easily lose your property. Should the sale fall through, your plan has to be:

1. Get a Job
2. Pay the Mortgage every month from your wage
3. Pay the Secured Loan every month from your wage
4. Pay a token amount to all the other creditors every month
5. Contact a free debt management company to seek advice and maybe arrange a repayment plan. I say 'maybe' as i don't know how your debts would be dealt with, due to the gambling angle.

One other option, after gaining employment, would be to remortgage to free up some of the equity in your property and then use this to pay your debts off. This would only really be advisable if you were unable to setup a DMP though.

Personally, I would have remortgaged, paid my debts off, used the remainder to have gone travelling and rented the flat with a reputable letting agency. This would have given you somewhere to return to as well as continuing to pay your mortgage and possibly giving some extra income or savings to return to. Of course, you would need to show your 'ability to pay' to the mortgage company and with no job, this wouldn't have been an option for you.

burbs_2 · 3 March 2005 at 1:50AM

like you say, it was your choice not to have a job, so tough basically. you should have realised after a while that you were getting yourself in trouble, you probably did realise but could not be bothered to get a job.

if you do not keep up repayments then of course they will take your home, thats the whole point of securing the loan. you dont pay you kiss goodbye to your home. as for the debt free companies, they work on giving you a lower monthly payment but extending the period. in the long run you will pay for years and years and you will pay back a fortune, they really are not a good idea.

you need to get a job tommorrow, all you seem to be bothered about is travelling, get a job and sort yourself out first mate

Malestrom · 3 March 2005 at 8:19AM

burbs wrote:

as for the debt free companies, they work on giving you a lower monthly payment but extending the period. in the long run you will pay for years and years and you will pay back a fortune, they really are not a good idea.

Are you talking about free debt management companies here burbs? If so, then I have to take issue with what you have written. For many people they are the ONLY alternative. Also, you do not pay back a fortune, you pay back what you owe, usually with no interest over the plans term.

Debt_Free_Chick · 3 March 2005 at 8:32AM

as for the debt free companies, they work on giving you a lower monthly payment but extending the period. in the long run you will pay for years and years and you will pay back a fortune, they really are not a good idea.

Only those that sell you a consolidation loan.

A debt management plan is completely different. See

https://www.nationaldebtline.co.uk
https://www.payplan.co.uk
https://www.cccs.co.uk

I need a backup plan!

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