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unsecured debt(20 Posts)
I just wondered if anyone has any advice. Myself and dh have unsecured debt of £29k. This is made up mostly of £1-2-3k credit card debt and one unsecured loan of £7k. We've owed this money for quite a few years and accrued this debt as dh who is self-employed had a serious accident and couldn't work for nearly two years. We used credit to live on because he wasn't entilted to any benefits and I had just had a baby. We have been on payplan for a few years and make payments monthly into a debt managemetn plan as we are not eligible for an IVA. I work 25 hours a week and dh is still self employed as we live in an area with literally no jobs available for him. He has been earning hardly anything over the last few months because of Christmas, New Year and we have been managing on my wage and tax credits. I have managed to feed us and pay mortgage, ctax and utilities but could not afford to pay for the debt management plan that we are on. It has now lapsed and I am receiving letters from creditors saying the plan is cancelled. I really don't know when I can start paying them again as the phone is just not ringing for DH and work is scarce. What power do unsecured creditors have? Can they take my home if they take us to court? We have about £40k equity in our home and have managed somehow to never miss a payment on our mortgage. We have thought of selling to pay off the debts but then we will be homeless. We have two young DCs. I am really scared at the moment as things are so bad and are likely to get worse for us especially with the new Universal Credit coming in. Don't know much about it but from what I read it won't be great news for us! Any advice would be very, very much appreciated!
I would seriously look at selling, or remortgaging, to free up the equity from your house. Presumably if you can afford the mortgage on your part time salary, you could also afford the rent on a property to clear your debts.
The rent will be more than we pay at the moment in mortgage. Can't remortgage as we don't have a good credit rating any longer due to the debt. We have tried. This would also mean that we wouldn't be eligible to rent through an agency. Would really love to keep our home if at all possible, the renting situation where we live is not good.
I would sell your house and move to a new area where there are jobs and rent.
If you can't even afford your DMP then how on earth long is it going to take you to clear it all off?
I would never move an unsecured debt to secured, that is utter madness. Especially if you have a poor credit rating as the interest rate would be daft.
You need proper debt advice from someone who you can give all the information to.
Have you called the national debt line? This would be my first point of contact in your shoes, or citizens advice
I would definitely advise doing all you can to keep your home.
Thanks for the advice. My gut instinct is to keep my home no matter what especially the way things are in this country at the moment. We have literally NO secured debt. I have informed Payplan of my difficulty and they have suggested that I pay in priority ie mtge, ctax, utilities and food with the Payplan payment being not a priority. I don't know what other options we have other than a debt management plan which we can't afford. Can our creditors make us bankrupt and force us to lose our home? Each debt is relatively small in it's own right but large when all put together.
No, unsecured debt can't take your home.
I have no direct experience of this so you would need to check this out but from what I understand -
If you are taken to court you have to present your income and expenditure. The court will look at what you can afford to pay and order that amount - could be £5 a month.
I am 99% sure that they cannot take your home but do please get some actual advice from someone 'in the know'.
Thanks, Aspiemum2. I will phone for some advice, I watched a programme not so long ago where a guy was forced to sell his home by the courts to pay a £5,000 credit card debt.
Oh really? Maybe I'm wrong then . I'm sorry.
I do hope you get something sorted, I thought the whole point of unsecured debt was that your home was not at risk??
Maybe there were other factors involved in that case? Surely if you are willing to pay but just need longer they should accept that.
I hope you get it sorted and keep your home.
Unfortunately your creditors can apply for a charge on your property for the debts, particularly as you have equity in the property at present. You need to contact somewhere like CCCS (can't remember what they recently changed their name to) and arrange to start making payments again - even just £1 per month as at least you are showing willing despite not currently being able to afford to make payments.
You also need to look at your income and expenditure, if DH isn't making any money SE can't he look for any job even not within his field? As he's not currently working much, can you work full time? There are options available to you, but ignoring phone calls, and not exploring every avenue to get extra money coming in is the worst thing you can do
My debt management company have re-set my payments to a lower amount starting from end Feb but I'm getting letters now from creditors saying my payment plan has been terminated. Not sure if they'll re-start it or even accept lower amounts or even if we will be able to pay the lower amounts. Definately not unless dh work improves. He has been looking for another job every day but with no luck. I am on the look out for full-time work but there's nothing about that pays more than what I'm earning part time. I can't go full-time in my current post as there's no funding for that.
I hate to tell you this, but you do have secured debt - your mortgage.
And RockChick is right, they can get a charging order. What makes you say that you are not eligible for an IVA?
Your previous payment plan will be terminated and a new one set up under the new payment arrangement, until this time you will receive the usual computer geranerated letters.
How much are you paying towards the DMP?
Although you have unsecured debts, creditors do have the right to charge this to your property if they decided to start court action against you, if you are in a payment plan they are unlikley to take this action although as a DMP is not legally binding it is possible.
Who has said you cannot do an IVA?
I've looked into it with Payplan. Something to do with DH being self employed I think. I know mortgage is secured debt what I meant was I do not have any secured date that has defaulted....yet. My new payments to payplan will be £125 a month and I will do my very best to pay them but if I can't I'm not sure what happens next.
Charging it to my property? Does that mean that if I sell they get their money, which is quite reasonable or do I have to sell to get them their money? Our hope one day is to raise up enough to make offers on them all seperately to clear them one by one. Not going to happen unless the work situation starts to improve soon though.
Oh wow that's really crap . Glad there are more knowledgeable people (than me) helping you out now at least
Yes it means that if there is any equity after you have repaid the mortgage they will get their money.
Being self employed does not stop you entering an IVA but DH will need to provide 3 years accounts and forecasts for the next 12month and tax returns need to be upto date.
Do you have a family member who could help you with a lump sum to do a Lump sum IVA? this is where you inject a lump sum instead of monthly payments and the IVA lasts about 6-12months
I strongly advise that you get some proper debt advice very soon. I expect that something like an IVA might suit you, or a debt management plan. See a CAB not a debt management company as they will just charge you for the plan and add to your debt. Regarding unsecured debts, they are not secured on your property as such. However, if a county court judgment is achieved, then a charging order can be applied for. After that it is possible for the creditor to apply for an order for sale. Such an order might be delayed for a short time if you have children or propose a sensible payment plan, but your home is at risk, yes. Alternatively a creditor might apply for a bankruptcy order, and the trustee would sell your home to pay the debt. In essence then, your home is vulnerable to all debt. This is why you need specialist (free) advice.
You run the risk of being made bankrupt if you don't stick to your payment plan & then you would lose your home. I would try another iva company other than payplan & see what they say.
If you are considering an IVA, you should seek advice from a 2 or 3 companies so you can get a feel for which company is right for you. Type IVA Forum into google and you will find an excellent forum with IVA experts.
Good luck and i hope you find a solution soon x
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