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Is this a good idea?

(19 Posts)
littleshebear Sat 04-Jun-11 17:07:41

Would appreciate anyone's thoughts.

Basically we are in a very big financial mess. Don't want to give exact figures but our regular income only covers mortgage,direct debits- water, gas etc and debt repayments. We have loads of debt due to DH's redundancy 9 years ago- we had just moved and I was three months' pregnant at the time and not working with three other small children. DH decided to work for himself- he now accepts this was a bad idea! He has never really got enough in to cover our expenses, and about 5 years ago I went back to work, but still there was not enough money coming in to cover everything due to DH's irregular work. DH has now got a full time job, albeit at a much lower salary than before,and also does some self-employed work as well, which is paid regularly. So at last we have a regular more or less fixed income, with just a bit from irregular jobs he gets.

I should say I have been suffering from depression for quite a long time-probably throughout this period- and this has made it hard for me to cope with all this-but now after treatment I am feeling much better and can't believe I've let the situation drag on so long.

At the moment nearly all food/petrol is going on credit cards- although we are paying off other loans we are racking up more debt every month. This can not go on.

The options seem to be either a DMP, or to sell the house and rent. The equity would more or less cover the debts, and with our income now, we could afford to save if we weren't paying off debts. Neither of us are young though(in our 40s). I would rather sell up and rent, as I am concerned that if we go for a DMP we would still be hassled and possibly get charging orders on house anyway.

Has anyone made the decision to sell in similar circumstances and rent? Or have any words of wisdom? The advantage would be as well that we would get a bigger house, which we badly need,disadvantage obviously lack of security and worried we won't ever save enough to buy another house!

Sorry it is so mega, all advice gratefully received.

Hassled Sat 04-Jun-11 17:14:15

What a nightmare for you - you've done bloody well to get through this with your sanity intact with four DCs and depression on top of everything else.

My gut reaction is that you should sell up, clear the debts, start with a clean slate. Do you have enough equity in your house, though? What's the housing market like in your area? Are there nice houses to rent?

Re security - surely having savings will be security too? In much of Europe most people rent - there isn't the need to own a house that the British have.

ivykaty44 Sat 04-Jun-11 17:14:56

phone someone like CCCS and get advice from them about the debts you have and the way forward, they are a charity based operation and will not make a profit from your debt or any advise they give to you.

not sure what a DMP is? debt management process?

CogitoErgoSometimes Sat 04-Jun-11 17:18:57

I think, if your finances are in as big a mess as you describe, it would be worth talking to one of the free debt advice services such as CAB, CCCS or the National Debtline as a first stop. Selling up and renting certainly sounds like a sensible solution but they may have other ideas you haven't considered. FWIW I don't think it's the end of the world not to own your home. In continental Europe, renting is far more normal than buying, for example. And if security is an issue, would you qualify for a Housing Association or Council property?

littleshebear Sat 04-Jun-11 19:00:00

Thank you all so much for replying-I really do appreciate your kind words Hassled especially, particularly because of my depression I have been feeling like such a failure about all of this, but now I am in so much of a happier place emotionally and can appreciate that I have 4 lovely dcs and a DH who I have been with for over 20 years-we all have our health and love each other, and also both us us have reasonably well-paid jobs now.So we are not by any means in as desperate straits as some people.

I have been on the CCS website and done the questionnaire and they suggested a DMP- debt management plan where you pay off debts pro rata according to what you have left to offer- but they do say that you may still be pursued by some creditors - and to be honest my feeling is to wipe the slate clean and start again- there would just about be enough equity in the house to pay things off and also we have a very big mortgage and could definitely rent cheaper.

dontstopbelieving Sat 04-Jun-11 19:13:20

My husband and I reached an all time finacial low last year. 60k unsecured debt and huge mortgage still. We'd had our head in the clouds over it for quite a while. A lot more was going out than coming in etc etc. We sat down added everything up to the penny that we owed. We couldn't imagine having to lose our house so looked at cutting down outgoings but more importantly how we could increase our income. 6 months on yes we are working all the hours god sends and me being all over the country with my work but we're making progress. Is there no way you can re gig your lives to stop you loosing your home? X

MoreBeta Sat 04-Jun-11 19:20:51

We have rented for 25 years. There is no shame in renting and yes it is cheaper than a mortgage and especially if you are funding a credit card at 35% interest or more when you could clear it by selling your house is undoubtedly the right decision. If your debts spiral and you start getting bank charges it will get worse and worse in my experience.

You are very likely to find that your creditors will seek an atachment order on your house anyway if you stop paying them. They can't force you to sell or repossess but will take all your equity to pay down any outstanding debts when you do sell.

In essence, netting of your debts and assets off you have little equity anyway but you are paying a lot of interest. Paying of your debts will leave more money in your pocket once you stop paying interest.

In your position I would seek advice from CAB first. Their website on debt is also excellent and then after taking their advice use CCCS or Payplan to get a DMP with no charges. Do not pay anyone to give you advice on a DMP.

Once you are on the DMP use that as a breathing space to sell your house and get your debts cleared.

littleshebear Sat 04-Jun-11 19:40:02

Hi dontstopbelieving- the problem is my DH is already working fulltime plus two evenings, and although I had to cut my hours last year because I was ill I am going to increase them soon- I can't do more than full time or I will get ill again.The figures still don't add up really. we have cut back as far as we can anyway. Thank you all for your advice- I am going to take it all on board, I am really grateful for you taking the time to post.

LoveBeingAbleToNamechange Sat 04-Jun-11 19:52:03

Have a look at Christians against poverty their leaflet is online and has great advice.

dontstopbelieving Sat 04-Jun-11 19:53:25

Of course really sorry didn't take into account your depression. Therefore your health has to be number one and anything you can do to take the pressure off must come first. That changes things a lot and renting would take a huge amount off your shoulders.
(mental note to read posts in more detail before replying).

Seek some professional help re debt on Monday. I think the worst feeling there is is the unknown and making a decision that will allow you to make a plan will be really good for your state of mind as well x

littleshebear Sat 04-Jun-11 20:17:52

Thank you all so much, I was in two minds whether to post or not but it has been really helpful. No need to be sorry dsb- thank you for posting it is appreciated X

Earlybird Sat 04-Jun-11 20:31:20

Do either you or dh have family that could help financially? Or any family member who could perhaps help with childcare (to defray costs) so you can work the longer hours you need for additional income?

You've said that have a large mortgage - do you have equity in the house? If so, could you pull some out as a way of paying off some debts? Is your mortgage on a fixed rate?

Could you take in a lodger as a way of getting another steady income stream?

How many cars have you got? Do you own them outright? Could you sell one, or downgrade to a more basic/cheaper model?

Could you/dh barter some services in exchange for things you need? For instance - a friend cuts/colours the hair of a (private) doctor's wife in exchange for an elective procedure she wants but wouldn't get on the NHS. Another friend who is a photographer agreed to do family portraits and photos for a new business brochure in exchange for an old, but reliable car. Would that sort of thing be a possibility for you/dh?

Try to think creatively.

I would sell the house as a last resort - especially as it appears to be the only real asset you've got (based on information given).

littleshebear Sat 04-Jun-11 21:33:04

Hi Early bird thanks for all the ideas-We could ask DH's mum and dad but not really for the amount we would need to make a difference- also they may say no. I have very little childcare now- 3 at secondary school and only need childcare after school 2 days- it was childcare when I first started work that took up a load of money but fortunately we don't have that now.DH is lucky in that he has most school holidays off- he does try to work as well then for himself but can keep an eye on kids.Only have one car we own outright- probably worth less than £1000 and 8 years old.No room to take in a lodger, only have 3 bed and 4 kids! We have a large mortgage because as well as unsecured debt we remortgaged a few years ago when you could do such things!

The idea was for DH to try to get as much extra work as he can- but this is hard because he hasn't physically got much time- for me to up my hours as much as possible which hopefully should be able to do soon- and then see if we can at least stand still for a while until a few things are paid off. It is all such a struggle though.You are right that we should be creative but not sure what else to do- I buy my clothes from ebay and have my hair cut at local college- but will have a think and see if there's anything else we could do. With Dh working evenings and 4 children there isn't much free time.We would have enough equity to pay off everything I think. I was thinking selling as a last resort but now not so sure.

littleshebear Sat 04-Jun-11 21:35:15

Should have said- can't remortgage- looked into it but now the amount we would need would take us over the maximum percentage lender would lend up to.

Earlybird Sat 04-Jun-11 21:45:23

Could any family member help financially? Either a loan, gift or an 'advance' on inheritance (cousin's MIL did this when they were buying a house. She had the cash to spare, and was able to enjoy seeing them use the gift during her lifetime).

littleshebear Sat 04-Jun-11 21:55:38

Hi Earlybird- I don't think we could ask DH's mum and dad for an amount that would make a difference- also I would be worried it would affect our relationship with them if they said no. My mum does not have enough money to give us anything.

DH are I have never really been interested in making lots of money- prob part of the problem! and we both like simple things and are not bothered about material possessions - but when you can't even afford a week's camping in the UK as a holiday, or your weekly grocery bill, things are a bit grim. Literally every time I spend money on anything I feel sick because I know the money's not really there and it's that feeling I want to get rid of!

Earlybird Sat 04-Jun-11 22:01:34

So, if you got rid of the mortgage you could clear the debts?

And you say you both earn enough to cover day to day living expenses (without debts)?

Realistically, could upping your hours bring in enough additional money to sustain your family and relieve the pressure?

littleshebear Sat 04-Jun-11 22:16:46

Yes, all, or the majority of the debts would be gone-at the moment we earn enough to cover everything without debts- if I up my hours, we would be in a better position but it still doesn't quite bring in enough. It would however mean that if we sold the house we would be able to save.We have got into quite frugal ways. DH usually gets a few extra freelance jobs a year that bring in a few hundred -occasionally more- but I don't want to factor in these mythical amounts at all because depending on projections of freelance work coming in is what got us into this mess in the first place!

ivykaty44 Sat 04-Jun-11 22:59:36

Could you rent out the house to cover the cost of the mortgage? Then rent somewhere yourselves cheaper?

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