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Original poster

Pls help - should I sell up to clear this mountain of debt?

23 replies

allgoodindahood · 24/04/2011 19:02

I've been lurking on mn for a long time, first thread, desperate for some advice please.

My first marriage ended after exh cheated with ow in our bed. I had recently bought this house and also taken out a number of loans to start his business. He was from abroad so had no credit rating but I still don't know how I let him talk me into it. He just wanted more and more and the v best of everything. He left me with 2 boys and lots of debt. I've been paying the debts via a debt management plan for the past 5 years and they have halved.

I am now married to a wonderful man who treats my sons as his own and we also have a newborn DD. We spend at least £800 per month repaying debts and my credit is now so bad that I can't get another mortgage. We live in a 2 bed house and really need another room. My question is should I sell up and rent? Equity might give us £50k, which would be enough to clear these debts and put some in the bank to kick start our savings towards another deposit. But for some reason, I'm really scared of renting with 3 kids, moving from place to place and possibly not feeling like its my home. On the other hand, we are really struggling to survive and are tired of it. We would def save as much as possible but I'm still worried that we'll never get back on the ladder. Dh will do whayever i think is best but im agonising over making the wrong decision for my family. Any advice you have would be v v appreciated, thank you!

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nethunsreject · 24/04/2011 19:09

Sorry you have had such a shit time. But congrat on your lovely new man and family.

I agree with that renting here can be precarious. And it would be hellish trying to get enough together for a deposit. Personally, I'd struggle on with the 2 beds. How long till you clear the debt? How old are the boys?

Original poster

allgoodindahood · 24/04/2011 19:36

Thanks nethuns! It was such a horrible time, things are good now and i really don't want to ruin it. The boys are 5 and nearly 7. It will probably take another 5 or 6 years to clear the debt. I don't think we can expect the 3 kids to share one room for that long and even after the debt is cleared it will take some years to repair my credit score. Oh dear

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nethunsreject · 24/04/2011 19:43

Could you divide a room at all?

Or set up the kitchen as an all purpose room and have the living room as a bedroom? Or use the living room to sleep in with dh?

I'm sure you've already thought of this, lol!

Interested in this thread?

Then you might like threads about these subjects:

Debt General money

Original poster

allgoodindahood · 24/04/2011 19:53

We hadn't thought of that actually, will discuss with Dh to see if its feasible and more importantly affordable! Thank you

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Original poster

allgoodindahood · 24/04/2011 20:25

Dh doesn't think this option will be affordable :(

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Original poster

allgoodindahood · 24/04/2011 20:41

Bump

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davidtennantsmistress · 24/04/2011 20:46

how about if you were to remortgage yours to include the debts, then rent it out whilst moving into rented yourselves - if the rent on your house would cover the mortgage & another place is cheaper to rent that your morgage plus the debt repayment that might work?

that way you keep your house & thus keep building equity (hopefully) and ensure you can get back on the ladder, but also have more cash to live?

LynetteScavo · 24/04/2011 20:51

Is the house just in your name?

Would it be worth going bankrupt?

Probably not if you can repay the debt in 8 years.

A 2 bed house is not good for 3 people. If you were renting, you could have no debt. TBH....that's what you should do. I don't see why you can never get back on the property ladder again. At worst, you could get a small buy to let, which you would own (obviously) while renting something larger. Then, when you retire you would have something small to live in/sell to buy another small property.

LynetteScavo · 24/04/2011 20:51

A 2 bed hosue is not good for 5 people!!

Original poster

allgoodindahood · 24/04/2011 21:04

Thanks for your replies, much appreciated.

David I tried to remortgage and discovered that my credit score is so bad that I wouldn't be considered. This is due to only making part repayments for the past 5 years.

Lynette, yes the house is only in my name. I wouldn't consider bankruptcy as it would impact on my work. You're thinking the same as Dh and I def see your point. Just feel nervous about it but not sure why as being debt free would be amazing!

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davidtennantsmistress · 24/04/2011 21:11

ah yes of course - and it's not possible for your DH to buy it in essence from you directly.

how would it effect your job - are we talking something in the finance sectors whereby you'd loose your job, or is it something which could be minimized? other than that have you looked at all other debt plan avenues? sometimes Debt management works out a very long winded/costly way of doing things. (am thinking IVA/similar, if your rating is shot already then that shouldn't effect you too much) plus in finance working you should still be ok as it's not bunkrupcy. (I could be wrong on that thou)

Original poster

allgoodindahood · 24/04/2011 21:47

DTM He doesnt earn enough to buy it from me unfortunately . I wouldn't lose my job with bankruptcy but it would have to be declared. Wouldn't it also stop me from getting a mortgage in the future? You're right about the dmp being longwinded but with IVA wouldn't the equity in the house still be offered to creditors? And still only 2 bedrooms at the end of it all. Many thanks

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davidtennantsmistress · 25/04/2011 09:03

I don't know tbh - it would mean you'd probably have to stay put unless you rented in DP's name only (which assuming his earnings are low you probably wouldn't get/afford?)

might be worth talking your options out with the national debt line though as to the IVA?

WikiSpeaksagain · 25/04/2011 09:08

We did this - sell up, cleared debts and rented.

We live in a house we couldn't afford to buy and we're happy with our decision.

Money is tight still but that's more to do with the fact I work P/T and our childcare bills are at their highest. We'll start saving once the kids are at school.

We made the decision that our children only have one childhood and we wanted to make the best of it with a good garden, and our time. As opposed to working loads to stay in a house that was too small just becuase it was 'ours'.

notthewowy · 25/04/2011 10:17

We have a 2 bedroom house and we wont be moving, we have a DS and a DD and I'd love one more. We live on about 16k pa now and it's tight but we love our home and there's no equity in it. We had some help from the citizens advice, they were really good, worked out what we could comfortably afford to pay and negotiated with our creditors.

There's no harm in renting for now, your credit will repair eventually but as a kid we moved at least once per year and it was a bit traumatic really. My DH on the other hand has a brother and a sister and they grew up happily in a 2 bedroom house (they partitioned the biggest room) I just wanted to offer my support, there are a lot of people in the same position. Whatever decision you make the important thing is having your family around you .

Original poster

allgoodindahood · 26/04/2011 07:53

Thank you so much for your replies, all really helpful.

Wiki, its good to hear from someone who did this and it worked out for them. My fear is like what notthewowy says, moving house again and again would be so hard on the kids. And also having to find new schools and nursery each time. How long have you been renting? Have you been able to stay in the same house?

DTM, thank you for your advice. The thing is that neither Dh or I are on a low wage really, we just don't get to enjoy our money because its spent servicing debts and paying childcare costs which are now set to increase with nursery for new baby. Wiki has given me hope tho!

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WikiSpeaksagain · 26/04/2011 11:14

We rented for 2 years - excellent landlord. We chose to move again to get a bigger garden. We also have a dog. We have been here for a couple of months, really happy. We didn't have schools to consider as our children arent there yet. We did look out of area at houses which were cheaper but decided we wanted to keep existing resources (cm/playgroup) close by. It was a good decision for us but we are a 'curiosity' amongst our friends. We're frequently asked 'when will you buy another house?'

It's just better for us this way at the moment.

Original poster

allgoodindahood · 26/04/2011 12:06

So pleased for you Wiki. Sounds like it feels like home already even though you haven't been there long. Do your friends ask questions because they don't know your reasons for selling? Most of our friends own their own homes and will be bemused by our decision but have to do what's best in the long term...sigh

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littlemisslost · 26/04/2011 12:13

personally I would sell up and become debt free, the sense of freedom alone would be worth it and you can rent somewhere or even apply for a council house just for now while you build your credit rating back up. £800 a month is a huge amount to be working for and paying off and your new life with your new man deserves a fresh start. Houses are just bricks and mortar ! think of the wonderful holidays you could all have together and the relief you could have if you were £8oo a month better off....

WikiSpeaksagain · 26/04/2011 14:22

Our friends just think that we did it for the space. We sold in jan 08 and nobody was really buying anything then. I really don't worry what people think. It's what got this country into a pickle in the first place!

Original poster

allgoodindahood · 26/04/2011 21:43

Littlemiss, really wise words, thank you! Having the chance to spend some of that money on the kids would be a dream come true.

Wiki, I wish I was more like you and not worry what our friends will think if we start rentingg. Dh certainly couldn't care less which is great

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purpleturtle · 26/04/2011 21:55

Allgood - do look into the IVA option. Look for an IVA specialist through a free money advice centre. It's not an instant solution - you'd still be making payments for 5 years or so - but it would protect your home. However, if you can't manage in the house, then selling it sooner rather than later might be the best way to go, as you'd be debt-free sooner.

I would also like to add well done for sticking with the DMP for five years. That's no mean feat.

I understand your reservations about renting - have been there - and I did struggle at times feeling that it wasn't 'mine'. We rented two houses- one for 18 months and one for 22 months - not because the landlords wouldn't have wanted us longer, but because of DH's job. Friends of ours who are landlords would love to know that they have long-term tenants as it gives them security as much as it gives the tenant.

Original poster

allgoodindahood · 27/04/2011 22:07

Purple, thank you for those kind words. I wish I'd done the IVA 5 years ago when xh and I first separated. If we have to rent I just hope we can find a nice place to make our own and a decent landlord too

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